Hong Kong’s China Medical System Holdings plans SGX secondary listing

SINGAPORE: Hong Kong-listed China Medical System Holdings (CMS) plans a secondary listing on the Mainboard of the Singapore Exchange (SGX), with shares set to trade in July 2025.

This is part of its regional expansion strategy to tap investors in the city-state and expand in Southeast Asia’s fast-growing healthcare market. The secondary listing is expected to raise its profile and tap a pool of sophisticated healthcare and life sciences investors. The firm has already secured a letter of eligibility from the Singapore bourse.

China Medical System is part of the Hang Seng Large-Mid Cap (Investable) Index. Since 2023, it’s also been part of the Hang Seng Innovative Drug Index. This is due to its evolving focus on cutting-edge therapies.

The last two years have been challenging for the company due to the impact of Beijing’s stand on volume-based procurement (VBP) policy. Designed to reduce the cost of drugs and medical devices, the VBP scheme has driven steep price competition, affecting firms with more traditional product lines.

This led CMS to transition to an innovation-led business model that focuses on high-value, clinically driven products. According to company reports, it’s in gradual recovery from the effects of VBP. It predicts renewed growth momentum, with a pipeline of approximately 40 innovative projects as of the end of 2024.

With a regional population close to 700 million, Southeast Asia’s growing demand for medicine is fuelled by a mix of factors. This includes a growing regional middle class, the spread of lifestyle diseases, and ageing demographics in countries like Singapore and Thailand.

CMS will tap this market through two entities. The first is Singapore-based Rxilient Health, a regional unit focused on global licensing and commercialisation of pharmaceuticals.

The second is CMS’s associated firm, PharmaGend Global, which has acquired a Singapore-based contract development and manufacturing organisation (CDMO). This facility spans over 60,000 square metres and can produce up to 1 billion tablets and capsules annually.

Rxilient Health has operations in Malaysia, Vietnam, Indonesia, the Philippines, and Thailand. This will enable market localisation, while commercial production in Singapore, which began at the end of 2024, will enable supply to regional customers.

The Singapore facility has received a Good Manufacturing Practice certification from the US Food and Drug Administration (FDA) and passed inspections by Singapore’s Health Sciences Authority (HSA). 

FY2024 saw China Medical System face significant financial challenges. Its earnings dropped by 32.5% compared to the previous year, falling to RMB 1.62 billion (~US$288 million or S$367 million). This also saw a decline in gross profit (11.2%) as well as net profit (32.3%).

The company is banking on its investments in innovation and overseas market expansion to drive future recovery and growth.

The timing of the secondary listing comes amid strong momentum on the Singapore bourse. SGX shares rose 7.2% last week, hitting a five-year high of S$14.72 on Jun 27. The Straits Times Index (STI) closed the week at 3,966.20, up 0.7%.

Investors appear to be leaning on Singapore’s stability as global concerns over inflation, oil prices, and tariffs continue. Trading activity has picked up noticeably, especially in the small and mid-cap segments.