China Medical System (867.HK): Introducing Six Injection Products and Acquiring Elcitonin Rights July 30, 2018 172

Investment Summary

We see stock price decreasing during recent market fluctuation. Expect for market factors, we partly attribute price volatility to unfavorable test results of one key pipeline product (Traumakine). However, we emphasize that R&D will not affect the growth momentum of current portfolio and introduction of new drugs. We maintain previous EPS forecast of RMB0.77/0.86 and TP HKD21, and suggest buying around price bottom. (Closing price at 26 July 2018)

Introducing of Six Injection Products

On 20 July, CMS entered into an agreement with Venus Pharma to acquire d all assets of Venus Pharma`s current product portfolio related to China market (involving know-how,all intellectual property or the right of application for the intellectual property, and other rights to commercialize the products in China). There are six main products and all included in Class B content of NDRL, commonly used drugs for clinical anti-tumor therapy and recommended by guidelines. Other two drugs belong to carbapenem antibiotics, having a wide range of antibacterial effects and being used to treat a variety of infections. We know from our checks that these drugs may attain drug import registration certificate within 1 to 1.5 years, and we regard these mid-term drivers for company development.

About the author

Profile photo of Eurus Zhou

Eurus Zhou
Phillip Securities (HK)

Graduated from Hong Kong Polytechnic University, Master of Finance (Investment Management). Possess bachelor degree majoring in Financial Management from Southwestern University of Finance and Economics. Focus on industry prospect and corporate fundamentals to explore investment value and cover pharmaceutical and consumer industry.

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