More than 40 years ago, when Michael Jackson moonwalked into global stardom, his shifting skin tone brought mainstream attention to a little-known condition: vitiligo.
Today, more than ten million people in China live with vitiligo, yet effective treatments remain limited. That began to change last September, when ruxolitinib cream—developed specifically for vitiligo—was submitted for regulatory approval in China.
Though not yet approved, investors are already eyeing the drug as a potential blockbuster. Its commercial rights holder in China, China Medical System (CMS), has wasted no time. It is spinning off its dermatology-focused subsidiary, Dermavon Holdings, for an independent IPO in Hong Kong.
With Dermavon’s prospectus now public, investors are getting their first detailed look inside. The pipeline spans globally sourced dermatological therapies—part of a broader push by CMS into skin health—and includes several already on the market.
Dermavon is not yet profitable but has delivered strong cash flow over the past three years. In 2024, revenue exceeded RMB 600 million (USD 84 million). Now, as it steps out from under CMS’s umbrella, Dermavon enters a high-stakes landscape—one where licensing deals dominate and biotech investors expect more than just repackaged therapies.
Dermavon is inheriting one of the most promising business lines under CMS: dermatology and skin health.
Founded in 1995, CMS built its reputation on the contract sales organization (CSO) model, with strong commercialization muscle. But its edge came from licensing. While many Chinese pharma firms raced to be first with generics, CMS specialized in identifying niche foreign drugs with low overseas sales but untapped domestic potential—then turning them into local blockbusters.
What worked in cardiovascular and gastrointestinal (GI) drugs is now being applied to dermatology and medical aesthetics. Ruxolitinib cream is the standout.
Licensed from longtime partner Incyte, ruxolitinib is the only Janus kinase (JAK) inhibitor approved by the US Food and Drug Administration (FDA) for repigmentation in vitiligo patients. It doesn’t treat a life-threatening disease, but vitiligo’s visibility—particularly on the face and neck—can have a major psychological impact. In a survey of over 1,000 Chinese patients, more than 45% reported facial lesions, and over 20% had lesions on their neck.
Traditional therapies are often unapproved, inconsistently effective, or poorly tolerated. Ruxolitinib has shown meaningful results: in two Phase 3 trials with 674 patients, around 30% saw a 75% improvement in severity scores after 24 weeks. At 50 weeks, half had improved, and safety remained favorable over a three-year follow-up.
In 2023, its first full year on the market, ruxolitinib cream brought in USD 340 million globally. While still awaiting formal approval in China, it is already available in Hainan’s Boao Lecheng pilot zone, priced at RMB 6,800 (USD 952) per 100-gram tube. Mild cases may use one tube over six months, while severe cases can require two per month.
Beyond ruxolitinib, Dermavon’s portfolio includes three marketed therapies and five pipeline drugs, all selected using a playbook from CMS: target underserved indications with few or no competitors.
These therapies address conditions like atopic dermatitis, psoriasis, and superficial phlebitis—each affecting millions. Many are exclusive or significantly differentiated.
Polidocanol injection, for instance, acquired via the 2021 purchase of Luqa, remains the only approved drug in China for varicose vein sclerosis. MPS (mucopolysaccharide polysulfate) cream, another legacy Luqa asset, is the sole approved treatment for superficial phlebitis in China. No competitors are even in clinical trials, suggesting a runway for exclusivity.
This stands in contrast to its slumping cardiovascular and GI segments, where three major products recently lost out in national procurement bidding. The dermatology and medical aesthetics segment, though still smaller, has grown: revenue reached RMB 569 million (USD 79.7 million) in 2023 and RMB 673 million (USD 94.2 million) in 2024, up 20.2% and 18.2% year-on-year, respectively.
Dermavon’s contribution was substantial—RMB 473 million (USD 66.2 million) in 2023 and RMB 618 million (USD 86.5 million) in 2024—representing more than 80% of CMS’s dermatology revenue.
With IPO sentiment gradually recovering, Dermavon may have timed its move well.
With at least one potential blockbuster in hand, Dermavon may follow its parent’s path of becoming a CSO specialist for dermatology.
That path hinges on scale. Dermavon was spun out in 2020 and became an independent unit in 2021. Its leadership team largely hails from CMS, many rising from entry-level to senior commercial roles. Today, 653 of its 764 employees—over 85%—are in sales and commercialization.
Hospital coverage and insurance inclusion are critical. Dermavon has invested heavily, building a presence in over 10,000 hospitals and more than 100,000 retail pharmacies and e-commerce platforms. Two key products—polidocanol and MPS cream—are already covered under China’s national insurance plan. Polidocanol grew at a CAGR (compound annual growth rate) of 54.2% between 2022–2024.
Dermavon is also eyeing the consumer skincare boom. In 2022, it acquired Heoling, a brand focused on sensitive skin, dermatitis, and acne. Though still only about 10% of revenue, the unit’s gross margin hit nearly 75% in 2024, higher than that of the prescription drug business.
To expand reach, Dermavon is investing in new media campaigns and extending its presence beyond hospitals. Heoling products now regularly appear on platforms like Xiaohongshu and Douyin.
To become a long-term player, Dermavon needs to keep adding high-quality assets. That’s where its limitations are showing.
The company is light on R&D. It spends under RMB 100 million (USD 14 million) annually and has a team of just over 40 researchers. Like CMS, it favors in-licensing over in-house development. CMS has long relied on LP (limited partner) investments in healthcare funds to gain access to pipelines—such as Xihong Biopharma, whose medical aesthetic injectables, including Ellanse, CMS introduced to China.
But without the direct backing of CMS, it remains unclear whether Dermavon can maintain the same level of access to promising pipelines.
Margins are also slipping. Between 2023–2024, Dermavon’s gross margin fell from 76.88% to 63.46%. More than half of 2024 revenue was spent on sales and marketing. Cash reserves stood at RMB 282 million (USD 39.5 million) by year-end, and the IPO notably does not include a fundraising component.
In a make-or-break moment for product expansion, the real question is: how much can Dermavon afford to spend scouting its next winners? The answer may ultimately define whether this spinoff becomes a sustainable force—or fades into the crowd.