On March 31 2020 Shanghai Fosun Pharmaceutical (Group) Co., Ltd ("Fosun Pharma"; Stock Code: 600196.SH, 02196.HK), a leading healthcare group in China, reported its annual results for the year 2019 ("the reporting period") (Press release, Fosun, MAR 31, 2020, View Source [SID1234556058]).

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During the reporting period:

The revenue increased by 14.72% as compared to 2018 to RMB 28,585 million;
The net profit amounted to RMB 3,744 million, representing a respective increase of 23.96%;
The net profit attributable to shareholders of the listed company amounted to RMB 3,322 million, representing a respective increase of 22.66%.
The cash flow from operating activities continued to rise. Net cash flow from operating activities amounted to RMB 3,222 million, representing an increase of 9.23% as compared to 2018.
Wu Yifang, President and CEO of Fosun Pharma, expressed that "2019 marks a crucial period for the pharmaceutical industry to experience comprehensive transformation. On the basis of properly carrying out the existing business and industrial upgrade, Fosun Pharma is firmly committed to the path of innovation and international development. Focusing on unmet medical needs, it continuously improved its product competitiveness and brand strength, persistently enhanced its capability of innovation, integration and international development, and conducted efficient operations, thereby maintaining the balanced growth of its principal businesses. We believe that our efforts in innovation will help Fosun Pharma realize its innovation transformation. The steady international-oriented development will make us more competitive internationally in terms of operation standards and market expansion."

Revenue for core products grew steadily and deeply cultivated the whole-industry chain of healthcare industry

The business areas of Fosun Pharma cover the whole-industry chain of pharmaceutical and healthcare. Its business development is based on China while Fosun Pharma actively conducts global layouts. In 2019, the core business of Fosun Pharma, pharmaceutical manufacturing and R&D segment, maintained stable growth and recorded segment operating revenue of RMB 21,766 million, an increase by 16.51% as compared to 2018.

After years of professional operations, Fosun Pharma owns several advantageous products in the metabolism and alimentary system, anti-tumor therapeutic area, anti-infection therapeutic area, the central nervous system, cardiovascular system, blood system and other areas. In 2019, Rituximab injection (Han Li Kang) was launched as the first biosimilar that was independently developed in PRC. The number of preparation products of Fosun Pharma with annual sales revenue of over RMB100 million rose to 35, among which ten products reported annual sales revenue of over RMB500 million. The sales growth volume of core products, febuxostat tablets (You Li Tong), pitavastatin calcium tablets (Bang Zhi) and enoxaparin sodium injection recorded growth of 105%, 113% and 57%, respectively.

By virtue of endogenous operations and epitaxial M&A, the medical devices and medical diagnosis segment achieved favorable growth and recorded operating income of RMB 3,736 million in 2019, an increase of 2.66% over 2018, 28.5% YoY increase on the same basis. The existing medical devices and products of Fosun Pharma, including medical laser equipment for aesthetic treatments, high-end medical emergency ambulance and surgical robots, ranked top in the segmented industry and market. In particular. Da Vinci surgical robotic system, created by the joint venture Intuitive Fosun, is the world’s only minimally invasive endoscopic surgery robot product licensed by both FDA and China National Medical Products Administration. It recorded a rapid increase in its installation and number of surgeries performed, with 60 Da Vinci surgical robotic system installed and over 40,000 surgeries performed in Chinese Mainland and Hong Kong SAR in 2019. A rapid increase in sales recorded in HPV diagnostic reagent and genetic testing reagent for Thalassemias.

The revenue from the Healthcare services segment amounted to recorded operating income of RMB 3,040 million, representing an increase of an increase of 18.61% as compared to 2018. Fosun Pharma always adheres to the guideline of "Valuing Discipline Development and Offering Quality Medical Services" for medical services. Fosun Pharma had completed a strategic deployment of healthcare services in specialty and general hospitals with the Pearl River Delta Greater Bay Area, Yangtze River Delta and Huaihai Economic Zone being the regional focus for healthcare services. As of the end of 2019, over 10 medical institutions controlled by the Group, with a total of 4,328 authorized beds available for the public. In addition, Fosun Pharma proactively developed new medical services and products based on the Internet and constructed a service network from communities to hospitals. During the reporting period, Foshan Chancheng Hospital obtained the first internet hospital license within the Guangdong Province private hospital system.

Boost investment in innovation and R&D to build an international R&D platform

Fosun Pharma regarded innovation and R&D as the core-driving factor of development and continued to enhance its R&D expenditures. In 2019, the R&D expenses amounted to RMB 3,463 million, representing an increase of 38.15% as compared to 2018; the R&D expenses reached RMB 2,041 million, up by 37.97%. Specifically, R&D investment in the pharmaceutical manufacturing business was RMB 3,131 million, up by 39.12% and accounting for 14.38% among the revenue of the pharmaceutical manufacturing segment.

Fosun Pharma continuously optimized its pharmaceutical R&D system of "Combination of integrates biosimilars and innovative drugs", conducted layouts in China, the US, India and other places, developed efficient small-molecule innovative drugs platform, high-value generic drugs platform, biologics platform and cell-therapy platform, and has formed a globally interactive R&D system as well as strong R&D capability.

As of the end of the reporting period, Fosun Pharma had 264 pipeline innovative drugs, generic drugs, biosimilars and consistency evaluation projects of generic drugs (including 19 small molecular innovative drugs, 12 biopharmaceutical innovative drugs, 21 biosimilars, 133 generic drugs of international standards, 49 consistency evaluation projects, 2 traditional Chinese medicine drugs, 28 external projects (including 8 imported innovative drugs and 20 generic drugs were introduced)).

In 2019, Fosun Pharma focused on increasing its R&D investment in small molecular innovative drugs and monoclonal antibody biopharmaceutical innovative drugs and biosimilars, and CAR-T cell drugs, and systematically carried forward the introduction and registration of drug approvals and the consistency evaluation of generic drugs.

As of the end of 2019, Fosun Pharma has obtained approval for clinical trial in Mainland China on 9 small molecule innovative products (including 1 improved new drug) and 9 indications; as well as approval for overseas clinical trials for 3 small molecule innovative drugs and 3 indications. In particular, ORIN1001 had launched phase I clinical trials in the U.S. and recognized by the U.S. Food and Drug Admistration (”U.S. FDA”) under the Fast Track Development Program. In 2019, rituximab injection (Han Li Kang), the first domestic biosimilar, was approved for sales in Chinese Mainland; 2 monoclonal antibody biosimilars (Trastuzumab for injection and Adalimumab solution injection) were accepted for new drug application and included in the priority review procedure in Chinese Mainland; and 12 monoclonal antibody products and 8 combination therapies had launched more than 20 clinical trials worldwide;Axicabtagene Ciloleucel (code FKC876, i.e. anti-human CD19 CAR-T cell injection) of Fosun Kite, a joint venture, completed the bridging clinical trial of the Product for the treatment of adult patients with relapsed and refractory large B-cell lymphoma in Chinese Mainland and commenced clinical trials in Chinese Mainland and was granted priority review status for the launch and registration of drugs in March 2020.

Persist with international development for greater global competitiveness

In addition to constant innovation, Fosun Pharma furthered its international development strategy, with the proportion of overseas revenue rising to 23.17%. Revenue of an equivalent of RMB 6,622 million was recorded in other countries or regions, representing an increase of 12.12% as compared to 2018. Particularly, the core enterprise Gland Pharma’s net profit increased by 52.2% year-on year during the Reporting Period. During the reporting period, totally 15 generic drug products were approved by the US FDA for sales in the market. As of the announcement date, Gland Pharma for a total of 2 imported products for registration and marketing authorization, and applications for import registration and clinical trials for 4 products.

By centering on the unsatisfied healthcare needs, Fosun Pharma connected excellent scientist teams, leading technology and high-value products across the globe through permitted introduction, deep incubation, risk investment and other diversified and multi-tiered cooperation modes, so as to promote the global development, transformation and implementation of innovative technology and products.

In 2019, in order to further enrich the product lines, Fosun Pharma engaged in cooperation with ReNeuron Limited, a global leader in cell therapy, and imported cell therapy products targeting post-stroke disability and retinitis pigmentosa to advance the development of the stem cell platform. Fosun Pharma was authorized by MimiVax LLC to exclusively develop and commercialize SurVaxM, an immunotherapy product targeting recurrent glioblastoma. In addition, Fosun Pharma has accelerated the clinical trials and launch of permitted imported drugs Avatrombopag tablets and Tenapanor tablets. In terms of international expansion, Fosun Pharma not only established subsidiaries and developed its operating capability in mature markets such as the US and Europe, but developed markets and production capacity through self-development and M&A in emerging markets such as Africa and India. As at the end of 2019, Fosun Pharma has built a marketing team consisting of nearly 5,300 people, including nearly 1,000 overseas pharmaceutical, medical equipment marketing team. In oversea market, artemisinin-based antimalarial products are highly recognized in the African market.