Financial Highlights

Final Results for the Year Ended December 31, 2016 (U.S. GAAP)

March 13, 2017
Consolidated financial results of the Group are reported under U.S. generally accepted accounting principles (“U.S. GAAP”) and in U.S. dollar currency unless otherwise stated.  Chi-Med also conducts its business through three non-consolidated joint ventures, which are accounted for under the equity accounting method as non-consolidated entities in our consolidated financial statements. Within this announcement, certain financial results reported by such non-consolidated joint ventures are referred to, which are based on figures reported in their respective consolidated financial statements prepared pursuant to International Financial Reporting Standards (as issued by the International Accounting Standards Board).  Unless otherwise indicated, references to “subsidiaries” mean the consolidated subsidiaries and joint ventures (excluding non-consolidated joint ventures) of Chi-Med.

Group Results

  • Consolidated revenue up 21% to $216.1 million (2015: $178.2m).
  • Net income attributable to Chi-Med of $11.7 million (2015: $8.0m).
  • Strengthened cash position: Available cash resources of $173.7 million as of December 31, 2016 (December 31, 2015: $38.8m) at the Chi-Med Group level, including cash and cash equivalents, short-term investments and unutilized banking facilities.  Increase in cash reflects the strong performance of our Commercial Platform and the $95.9 million net proceeds of our March 2016 Nasdaq listing.

Innovation Platform

a broad, risk-balanced, global oncology/immunology pipeline

  • Consolidated revenue of $35.2 million (2015: $52.0m) and net loss attributable to Chi-Med of $40.7 million (2015: -$3.8m) driven by $76.1 million (2015: $55.8m) in research and development expenses on an as adjusted basis spent on our 30 active clinical trials, four of which are pivotal Phase III studies on fruquintinib and sulfatinib, as well as the continued expansion of our scientific team, which now numbers about 330 scientists and staff.
  • Amendment to our collaboration with AstraZeneca under which Chi-Med agreed to provide up to $50 million for the joint-development costs of savolitinib in return for a 5 percentage point increase in royalties payable on savolitinib sales across all indications in all markets outside of China.

Commercial Platform

a deeply established, cash-generative, pharmaceutical business in China
a commercialization framework for our Innovation Platform candidate drugs

  • Total consolidated sales up 43% to $180.9 million (2015: $126.2m) mainly due to progress on the Prescription Drug commercial services business and expansion on Seroquel®.
  • Total sales of non-consolidated joint ventures up 14% to $446.5 million (2015: $392.7m) due primarily to continued expansion of coronary artery disease prescription drug business.
  • Total net income attributable to Chi-Med from our Commercial Platform up 180% to $70.3 million (2015: $25.2m) which includes a one-time property compensation gain from Shanghai Hutchison Pharmaceuticals Limited (“SHPL”) of $40.4 million which was triggered by the payment of $113 million in land compensation and subsidies from the Shanghai government.
  • Growth achieved despite the weakening of the Chinese RMB during 2016 which reduced both our top- and bottom-line growth rates by over -6% in U.S. dollar terms.

FY 2016 Group Results

(US$ millions)20152016Change
Revenues178.2216.121%
     Unconsolidated JV Revenues392.7446.5
Net (Loss)/Income: [1]
     Innovation Platform(3.8)(40.7)~10x
          Base HMP Operations(0.0)(36.5)
          50% share of Nestlé JV (NSP)[2](3.8)(4.2)
     Commercial Platform (Con't. Operations)25.270.3180%
           Prescription Drugs Business15.961.1
                 - Base business15.920.730%
                 - Land compensation (SHPL)[3]-40.4
           Consumer Health Business9.39.20%
     Chi-Med Group Costs(13.4)(17.9)-34%
           General & administrative Expenses(10.9)(12.6)
           Interest/Tax(2.5)(5.3)
     Discontinued Operations--
Net Income Attrib. to Chi-Med8.011.746%
     EPS Attrib. to Company (Basic) (US$)0.150.2034%
           Accretion per share on redeemable NCI-Non-Cash[4](0.79)-
     EPS Attrib. to Ordinary Shareholders (Basic)[5](0.64)0.20n/a

[1] Net (Loss)/Income = Net (Loss)/Income attributable to Chi-Med; [2] NSP = Nutrition Science Partners Limited; [3] SHPL = Shanghai Hutchison Pharmaceuticals Limited; [4] Non-cash accretion relates to Mitsui’s share in Innovation Platform, which was exchanged for Chi-Med shares in July 2015; [5] Including adjustment for accretion on redeemable non-controlling interests.

Revenues

(US$ millions)

Net (Loss)/Income[1]

(US$ millions)