HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>The 7th National VBP released results. 60 kinds of drugs won the bidding successfully, with price reduction of 48% on average. We analyzed its impact on companies. </li>
<li>The newly issued document about the payment management measures for new technology out of CHS-DRG payment scope is a solid encouragement to innovation and an important policy reform signal.</li>
<li>The national centralized procurement of orthopedic spine consumables has officially started, which is beneficial to those leading companies with complete product line.</li>
</ul>


The 7th National VBP released results. 60 kinds of drugs won the bidding successfully, with price reduction of 48% on average. We analyzed its impact on companies. 
The newly issued document about the payment management measures for new technology out of CHS-DRG payment scope is a solid encouragement to innovation and an important policy reform signal.
The national centralized procurement of orthopedic spine consumables has officially started, which is beneficial to those leading companies with complete product line.


China Healthcare Weekly (July.15)-7th VBP, Policy Correction Signs, Orthopedic Spine Consumables VBP

Equity Bottom-Up

Shanghai MicroPort MedBot Group / Equity Bottom-Up

<ul>
<li>To achieve massive sales expansion, surgical robots and consumables have to reduce price largely to enter NRDL reimbursement. This is at odds with expectations that they will generate high profits.</li>
<li>The actual market share gained and revenue generated by Medbot may fall far short of expectations, resulting in an inability to cover years of rapid growth in R&amp;D/selling/administrative expenses.</li>
<li>Due to uncertainties on commercialization and profitability outlook, Medbot lacks an “anchor” for valuation.The large fluctuation in share price would continue. Surgical robots are not a good business for now.</li>
</ul>


To achieve massive sales expansion, surgical robots and consumables have to reduce price largely to enter NRDL reimbursement. This is at odds with expectations that they will generate high profits.
The actual market share gained and revenue generated by Medbot may fall far short of expectations, resulting in an inability to cover years of rapid growth in R&amp;D/selling/administrative expenses.
Due to uncertainties on commercialization and profitability outlook, Medbot lacks an “anchor” for valuation.The large fluctuation in share price would continue. Surgical robots are not a good business for now.


MicroPort MedBot (2252.HK)- Lack an “anchor” for Valuation Due to Uncertainties in Commercialization

<ul>
<li>Due to the centralized procurement in PRC market and decreasing volume of operations in overseas markets during pandemic, <a href="https://www.smartkarma.com/entities/microport-scientific-corp" target="_blank" data-smartkarma-citation="entities:4487:1" rel="noopener">Microport Scientific (853 HK)</a>’s 2021 performance missed expectations. </li>
<li>Even if Microport could finally digest the negative impact of centralized procurement, its “unique” development mode would still put pressure and uncertainties on future performance/outlook, leading to lower-than-expected results.</li>
<li>Our earnings estimate of Microport in 2022 could be about HK$-1.7, and revenue estimate could be about HK$7.3 billion. It’s quite possible that the Company will not end up profitable.</li>
</ul>


Due to the centralized procurement in PRC market and decreasing volume of operations in overseas markets during pandemic, Microport Scientific (853 HK)’s 2021 performance missed expectations. 
Even if Microport could finally digest the negative impact of centralized procurement, its “unique” development mode would still put pressure and uncertainties on future performance/outlook, leading to lower-than-expected results.
Our earnings estimate of Microport in 2022 could be about HK$-1.7, and revenue estimate could be about HK$7.3 billion. It’s quite possible that the Company will not end up profitable.


Microport Scientific (853.HK)-The “unique” Development Mode Leads to Lower-Than-Expected Performance

<ul>
<li>Recently, the VBP results of Chinese patent medicine led by Guangdong Alliance were released.Investors had better confirm whether their products have been included in VBP before investing in related stocks.</li>
<li>The reason why domestic pharmaceutical companies lag behind foreign companies is not only the innovation capability or clinical speed, but also the ability to actively identify innovation and thinking mode.</li>
<li>There would be quite a few consolidations or acquisitions of Biotech at low prices. There could also be some delisting of Biotech in secondary market in the coming year.</li>
</ul>


Recently, the VBP results of Chinese patent medicine led by Guangdong Alliance were released.Investors had better confirm whether their products have been included in VBP before investing in related stocks.
The reason why domestic pharmaceutical companies lag behind foreign companies is not only the innovation capability or clinical speed, but also the ability to actively identify innovation and thinking mode.
There would be quite a few consolidations or acquisitions of Biotech at low prices. There could also be some delisting of Biotech in secondary market in the coming year.


China Healthcare Weekly (Apr.22) - TCM VBP Results, R&D Thinking Mode, Biotech Delisting

<ul>
<li>Laparoscopic surgical robots are one of the most important R&amp;D directions of surgical robots, which is the largest market segment and can be applied in a broad range of surgeries.</li>
<li>The launch of laparoscopic surgical robot from domestic companies with high cost performance would be very helpful to seize the markets with great potential in early stage of the industry.</li>
<li>The medical insurance coverage offers a viable way for the commercialization of surgical robots in China, which is important. The revenue/profits generated from disposables and services would be more attractive.</li>
</ul>


Laparoscopic surgical robots are one of the most important R&amp;D directions of surgical robots, which is the largest market segment and can be applied in a broad range of surgeries.
The launch of laparoscopic surgical robot from domestic companies with high cost performance would be very helpful to seize the markets with great potential in early stage of the industry.
The medical insurance coverage offers a viable way for the commercialization of surgical robots in China, which is important. The revenue/profits generated from disposables and services would be more attractive.


Industry Report – Insights on China Surgical Robots Industry

China

Microport Scientific Corp. manufactures interventional and minimally invasive devices for keyhole surgery. The Company's products are used to treat vascular diseases and is developing devices to treat diabetes and orthopedic diseases.

Lifetech Scientific Corporation develops, manufactures and markets minimally invasive interventional medical devices for cardiovascular and peripheral vascular diseases and disorders.  The Company produces congenital heart defect occluders, vena cava filters, stent grafts, balloon catheters, and vascular plugs.

Edan Instruments Inc develops, produces and sells medical electronic equipments.  The Company's main products are fetal dopplers, electrocardiographs, fetal monitors and ultrasound scanners.

Shanghai Tofflon Science and Technology Company Limited develops, designs, produces and markets pharmaceutical freeze dryer and related systems. The Company's main products include in-place sterilisation, in-place lyophilization cleaners, laboratory freeze dryers, production freeze dryers, liquid nitrogen freeze dryers and freeze drying systems and equipments.

AK Medical Holdings Limited manufactures medical devices. The Company produces and sells orthopedic implants, spinal interbody cages, artificial vertebral bodies, and other products. AK Medical Holdings markets its products throughout Hong Kong.

Dirui Industrial Company Limited develops, manufactures and sells medical testing equipment and corollary reagents. The Company's main products are analyzers used in the research of bodily fluid, biochemical substances, and hematology.

Zhende Medical Co., Ltd. manufactures medical products. The Company researches, develops, produces, and sells medical dressings, pressure treatment and fixation, modern wound care, surgical infection management, and other products. Zhende Medical markets its products worldwide.

Blue Sail Medical Co., Ltd. manufactures and sells PVC gloves and other plastic products. The company also engages in the sale of  nitrile gloves, latex gloves,  paper pulp molding products, and a range of medical equipments.

Truking Technology Limited develops, designs, manufactures, sells and provides services for aqueous pharmaceutical equipment. The Company offers ampoules linkage lines, vial linkage lines, oral liquid linkage lines, and infusion linkage lines, and other related products.

Beijing Bohui Innovation Technology Company Limited develops clinical examination rapid detection technology, manufactures and sells its application systems. The Company's main product is human body trace elements detection system, which include instruments and reagents.

Atrion Corporation, through its subsidiaries, designs, develops, manufactures, markets, sells, and distributes medical products and components.  The Company's products are used in ophthalmic, diagnostic, and cardiovascular procedures. Atrion's products are sold primarily to health care companies which market and distribute its products in conjunction with their name-brand products.

Avanos Medical, Inc. operates as a medical technology company. The Company offers infection prevention, surgical, respiratory, digestive health, and pain management solutions. Avanos Medical serves healthcare sector worldwide.

Pegavision Corp is a result of a joint venture by Pegatron Corp and Kinsus Corp. The Company manufactures and sells soft contact lenses and other ophthalmic medical devices. Pegavision operates in Taiwan.

Paramount Bed Holdings Company Ltd. operates as a holding company. The Company, through its subsidiaries, designs and manufactures hospital, medical, electric, motorized, and orthopedic beds.

Cardiovascular Systems, Inc. developed and manufactures a medical device that removes hardened plaque and calcium from arteries.

Draegerwerk AG & Company KGAA manufactures medical, safety, and aerospace equipment. The Company produces ventilators, monitoring equipment, transport incubators, anesthesia machines, surgical lights, ward equipment, home care equipment, systems for safe breathing in industry, mining and fire fighting, and airplane crew and passenger oxygen systems.

Pulse Biosciences, Inc. operates as a development stage medical device company. The Company offers a local and drug-free technology that utilizes nanosecond pulsed electric fields to induce cell signaling and the activation of cellular pathways in tissue.

Arjo AB develops, manufactures, and markets medical equipment for elderly and disabled patients. The Company offers medical beds, flusher disinfectors, prevention pumps, hygiene lifts, and shower systems. Arjo markets its products worldwide.

Silk Road Medical, Inc. produces and distributes surgical equipment. The Company offers develops and manufactures less-invasive medical devices intended to improve the treatment of carotid artery disease through proprietary transcarotid therapies. Silk Road Medical serves medical sector in the United States.

Genertec Universal Medical Group Company Limited provides healthcare services. The Company offers medical financing, hospital investment and management, digitization, and clinical department upgrade advisory services. Genertec Universal Medical Group serves customers in Hong Kong.

Shanghai MicroPort MedBot Group Co Ltd manufactures and sells medical equipment. The Companu produces and sells laparoscopic surgery robots, orthopedic surgical robots, and other products. Shanghai MicroPort MedBot Group markets its products throughout China.

Shanghai MicroPort MedBot Group (2252 HK)

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Shanghai MicroPort MedBot Group (2252 HK)

China Healthcare Weekly (July.15)-7th VBP, Policy Correction Signs, Orthopedic Spine Consumables VBP

The 7th National VBP released results. New technology payment management measures out of CHS-DRG scope is a policy correction signal.Orthopedic...

Xinyao (Criss) Wang

MicroPort MedBot (2252.HK)- Lack an “anchor” for Valuation Due to Uncertainties in Commercialization

Medbot lacks an “anchor” for valuation due to uncertainties on commercialization/profitability outlook. Surgical robots are not a good business for...

Xinyao (Criss) Wang

Microport Scientific (853.HK)-The “unique” Development Mode Leads to Lower-Than-Expected Performance

Microport’s 2021 performance missed expectations due to VBP and pandemic. Its “unique” development mode will lead to lower-than...

Xinyao (Criss) Wang

China Healthcare Weekly (Apr.22) - TCM VBP Results, R&D Thinking Mode, Biotech Delisting

Guangdong Alliance released the VBP results of TCM; The ability to identify innovation and the thinking mode is more important for Pharma; There...

Xinyao (Criss) Wang

Industry Report – Insights on China Surgical Robots Industry

We analyzed the China surgical robots industry in terms of market potential, policy support, laparoscopic surgical robots from domestic companies...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

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