Politics aside,China Medical System bets on a burgeoning healthcare industry

Company News

       LONDON(Daily Telegraph) – A quick chat with the investor relations director for China Medical System, Vincent Hui, fast reminds you what it means to invest in this Communist country.
       The pharmaceuticals company submitted the results of trials on a liver cancer drug to the State Food and Drug Administration(SFDA) in 2005. But the process was held up when the head of the SFDA was executed following an anti-corruption drive in the Chinese government  health authority.Everything came to a standstill because people were worried for theis lives.
       Mr Hui continues pragmatically,“Now things are up and running, we estimated that the product will be ready for marketing for 2012.“
       Troubling politics aside,CMS is well placed to weather the ongoing financial storm.
       The company imports,markets and sells patented medicines from both overseas and domestic China. Over the past 15 years, it has built up a massive sales network serving some 6,500 hospitals. As well as the liver cancer drug, the company has a strong pipeline of drugs it is developing, and a small unit selling traditional Chinese medicine.
       Driven by China‘s development and a growing reliance on Western medical treatments, CMS has grown at between 30pc and 40pc over the past two years.
       “More of the population are getting used to the idae of Western medicine,“says Mr Hui. The milk powder scandal also boosted demand for inported products,considered more trustworthy.
       CMS benefits from having its consumer base at home,where spending is likely to grow even in the current climate.It listed in June 2007 at 138p.The shares are now trading on 114p,despite the sell-off of small-cap stocks.
       Unlike many AIM stocks, CMS pays a generous dividend, with an expected yield of around 11pc of earnings this year and 14pc in 2009.