Acquisition of a Dermatology Specialty Company Luqa Ventures Co., Limited

Company News

The Board of
Directors (the “Directors”) of China Medical System Holdings Limited (the
“Company”, together with its subsidiaries, the “Group”) is pleased to announce
that on 1st  February 2021,
the Group through a wholly-owned subsidiary of the Company acquired all the
and outstanding shares of Luqa Ventures Co.,
Limited (the “Target Company”), a dermatology specialty company, from certain
third party seller
s (the “Sellers”) (the “Acquisition”). Following the Acquisition, the
Target Company became a wholly-owned subsidiary of the Company, and the
results, assets and liabilities of the Target Company
will be consolidated into the accounts of the Group.


The Target Company has an
extensive product portfolio of prescription medicines, medical devices, medical
aesthetic solutions and skin care products, that meets the diversified needs of
consumers and provides the market with safe and effective solutions
for a broad range of skin conditions.

Prescription Medicines and Medical Devices

Aethoxysklerol® (Polidocanol Injection, Launched in Mainland China)

Aethoxysklerol® (polidocanol injection) is a cleansing sclerosant that can
act locally on the vascular endothelium for the treatment of the sclerotherapy of small to large
varicose veins, varicose of central veins of spider veins and reticular veins. Aethoxysklerol® was first approved in Germany, and subsequently approved in the United States, Japan and multiple other European countries. It is the world’s
leading brand for the treatment of varicose veins in the lower extremity with a
track record of decades of clinical application and has won many Chinese and foreign
guidelines/consensus recommendations. The German high quality
production technology of Aethoxysklerol® makes it ensure the
appropriate concentration and purity of its active ingredient, improve curative
effects while reducing the recurrence of complications. Aethoxysklerol® is protected by formulation/use patents, with a protection
period until 2030.

Varicose veins in the lower
extremity are a group of syndromes of lower limb blood infusion, superficial
varicose veins due to obstruction of reflux, venous hypertension, and skin
microcirculation disorders caused by great saphenous vein valve insufficiency,
venous obstruction, and muscle pump insufficiency. Chinese and foreign
guidelines recommend that sclerotherapy should be applied to all types (C0-C6)
patients with varicose veins in the lower extremity. The prevalence in China of
superficial varicose veins in the lower extremity is 8.56%, with
about 100 million patients, which provides a vast potential market for

StratamarkTM / Strataderm® (Self-drying Silicone Scar Therapy Gels, Launched in Mainland China
and Hong Kong

StratamarkTM and Strataderm® are self-drying silicone scar therapy gels. Both products are indicated for
prevention and improvement of hypertrophic scar, and are classified as type II
medical devices in Mainland China. StratamarkTM and Strataderm® have been on market in countries/regions including the United States (Type I medical
device), Europe (Type IIa medical device) and Australia (Type I medical device)
for several years and received good recognition with clinical studies indicated
for different population to satisfy diversified clinical needs.

StratamarkTM is widely applied to prevent and treat stretch marks in
Europe and the United States resulting from pregnancy,
weight gain or loss, adolescent growth spurts, etc. with a clinically proven
efficacy and safety. StratamarkTM is proven to safely and effectively
prevent and treat stretch marks and related skin itching and discomfort in two
randomized clinical trials which enrolled 577 patients in total in Europe and Australia,
respectively. Once daily application leads to 70.2% stretch mark prevention and
80% improved in existing stretch marks. The number of new births in China is
nearly 15 million per year, with a growing concern amongst China’s pregnant women
on the prevention of pregnancy related skin conditions. StratamarkTM could provide people in need of treatment, a safe, effective, and reliable

Strataderm® is indicated
for the prevention of hyperplasia and improvement of old scars in various parts
for a wide population. Applying once to twice daily, Strataderm® can
improve patient compliance by reducing application frequency. Silicone gel is
recommended by the scar treatment guidelines as a first-line option for the
treatment of hypertrophic scars. Strataderm® can significantly
increase the elasticity and compliance of the scars, depigment the skin to a
natural look, and smoothen the scar faster.

Zalain® (2% Sertaconazole Nitrate Cream, launched in Mainland China and Hong Kong)

Zalain® (2% Sertaconazole
Nitrate Cream) is a topical sertaconazole nitrate cream, which belongs to family of
imidazole broad-spectrum antifungal for the treatment of fungal
infections of the epidermis, such as tinea pedis, tinea cruris, tinea corporis,
tinea barbae, tinea manuum and tinea versicolor. It is the first choice for the treatment of epidermal
fungal infections, with higher antibacterial activity and lower resistance

Epidermal fungal disease is prevalent and very common in China. It is estimated that there are
approximately 750 million people with epidermal fungal infections in China, of
whom 250 million have tinea pedis. Zalain® is marketed in more than 50 countries worldwide, covering important
international markets such as the United States and Europe. As an innovator drug, Zalain® has enjoyed advantages of having fewer competitors, high academic status and
broad market space in China, and provides a safer and effective treatment
option to the Chinese patients.

Medical Aesthetic Solutions and Skin Care

In the field of medical aesthetic solutions and skin care, the Target Company has a core product portfolio comprising a series of high-end
products mainly authorized from several leading European brands. The medical aesthetic solutions mainly include products authorized from the Spanish leading
medical aesthetic brand Mesoestetic and the product
portfolio from the Swiss well-known
hyaluronic acid fillers brand Neauvia. Medical skin care products mainly
consist of Mesoestetic’s
medical skin care products and the professional care brands「Repavar」 and 「Atopic Piel」dedicated to fragile skin
from the well-known Spanish pharmaceutical company Ferrer.

Among the medical aesthetic solutions, 「mesohyal」, a subsidiary brand of Mesoestetic’s medical aesthetic range, are formulated with
exclusive formula with a hyaluronic acid base and selected active ingredients
of recognised therapeutic efficacy in accordance with pharmaceutical quality
standards. Compared with other skin booster products currently available on the
market, this extensive range of products give physicians versatile treatment
options for a tailor-made patient centric solution, breaking the status quo of
single product. The anti-aging
method, 「mesoéclat」,
is a professional non-injectable treatment for static wrinkle removal, restoring
vitality and elasticity of the skin. Neuvia’s hyaluronic acid (HA) products series
(multi-specification hyaluronic acid for injection) are the next generation of
HA fillers. Based on a unique cross linker technology SMART CROSSLINKING
TECHNOLOGY with polyethylene
glycol (PEG),
Neauvia HA fillers have the advantages of excellent rheology, high
biocompatibility, and good integrity, making it both safe and durable and can
thus enhance clients’ trust.

the medical skin care products, the Target Company has Mesoestetic’s
medical skin care products and Ferrer’s two personal care brands which seeks
for safe, efficient and professional skin solutions and are widely praised by
many bloggers in Chinese social media network. The Target Company’s medical skin care
products not only provide Chinese consumers with professional skin care experience, but also serve as an addition to
professional medical aesthetic
solutions, fortifying and maintaining efficacy whilst satisfying the unmet
personal care needs of different consumers.


Group is deeply involved in the field of skin health and has a reserve of
marketed products and short, medium and long-term innovative product portfolio, including dermatology line products such as the
Hirudoid (Mucopolysaccharide Polysulfate Cream),  Lamisil (terbinafine
hydrochloride tablets), both of which are marketed in Mainland
China, and Tildrakizumab, an
innovative bio-therapeutic product marketed overseas and at the clinical stage of registration in Mainland China, and which
has started to gain brand awareness. The Group believes that skin health and
high-end medical aesthetic solutions market has excellent prospects. In order
to expand its market share, one of the Group’s development strategies is to diversify and enrich the
product matrix and expand the territory of related field by making investments.

The Target Company’s product portfolio will be
complimentary to the Group’s existing dermatology line products and together
they will strengthen and bolster the Group’s medical aesthetic
and skin care product portfolio,
providing a significant development opportunity for the Group to advance into the field
of medical aesthetic solutions and skin care. The Group plans to build a
comprehensive skin health product
matrix consisting of prescription medicines, medical devices and medical aesthetic solutions and skin care products
based on which the Group will develop its market in the field of skin health. Meanwhile, the Group will
leverage on its advantage in its commercialisation capabilities in the Chinese market, a team of experienced
professionals and a professional and efficient academic promotion system to
fully exploit the opportunities presented by hospitals, professional medical
institutions, online and offline retail
channels to further penetrate the Chinese market, and to
raise the market awareness of the products as well as their brands. Looking forward, the Group will continue to introduce global
high-quality products, promote innovative research on skin lines, explore
investment opportunities, develop and build a China’s leading skin health and
high-end medical aesthetic solutions line with first-rate competitiveness, and
continue its growth to meet Chinese consumers’ increasingly diverse health and beauty needs.

After having considered the above, the Directors believe that the
terms of the
agreement in relation to the Acquisition, which are based on normal
commercial terms, are fair and reasonable and in the best interests of the
Company and its shareholders as a whole.


To the best of the Directors’ knowledge,
information and belief after having made all reasonable enquiry,
the Sellers are third parties independent of
the Company and its connected persons (as defined in the Rules Governing the
Listing of the Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”). Therefore, the Acquisition does not constitute a
connected transaction of the Company under Chapter 14A of the
Listing Rules. As all relevant applicable percentage ratios (as defined in the
Listing Rules) of the Acquisition are less than 5%, the Acquisition does not
constitute a notifiable transaction of the Company under Chapter 14 of the
Listing Rules.