The comprehensive layout of the domestic orthopedic implant market
Dabo Medical is one of the enterprises with a complete range of products, leading scale, and market competitiveness in the domestic orthopedic implant industry. In the first half of 2021, the company achieved operating income of 847 million yuan, an increase of 26% over the previous year; net profit returned to the mother was 317 million yuan, an increase of 20% over the previous year. The trauma, spine, and minimally invasive surgery businesses accounted for 62.27%, 21.62, and 7.18% of revenue, respectively.
The market space for orthopedic implants is broad. Under the trend of import substitution, domestic enterprises rapidly rose to about 9.2 billion yuan in domestic trauma products in 2019, and the CAGR in 2019-2024 was 13%. In 2019, the company's domestic market share of traumatic implant consumables was 7.79%, ranking first among domestic brands and third among all brands. In July 2021, the company successfully selected all representative products in orthopedic trauma belt procurement in the 12 provinces (districts and cities) of Henan. This time, the cross-provincial coalition collected 12,300 pieces of Dabo Medical and Boyining's common bone plate system, accounting for 15.04% of the total demand of the alliance; the total demand for locked compression plate systems was 101,800 pieces, accounting for 17.58% of the total demand of the alliance; the demand for intramedullary nail systems was 33,300 pieces, accounting for 24.86% of the total demand of the alliance. The selection results were ideal.
Actively participating in centralized procurement, successfully winning the bid for trauma and joint collection is expected to consolidate its leading position. According to Orthworld statistics, the total global hip joint market in 2020 was 7.054 billion US dollars. Domestic companies were listed for the first time among the top ten companies with market share. Thanks to good medical cooperation and a rich number of domestic cases, the quality of domestic joint products continued to improve, gradually narrowing the gap with imported products, and began leading the development of the industry in some fields such as 3D printing and artificial intelligence technology development. As domestic products gradually penetrate the grassroots level and break through to the top three hospitals, it is expected that joint implant products will continue to be imported and replaced. The proposed selection results were announced on September 14, 2021 by the national organization. The company selected all four groups of ceramic-ceramic, ceramic-polyethylene, and alloy-polyethylene hip and knee products in this batch procurement. The company is expected to benefit from this national procurement to improve clinical use, thereby accelerating product development and technological upgrading.
Build an oral implant production line and plan the long-term development of the dental business. The number of dental implants in China exceeded 3 million in 2019. The number of dental implants maintained a rapid growth rate of around 30%. The domestic oral implant market has been occupied by imported brands for a long time, and there is a lot of room for domestic production to replace imports.
Dabo Medical Implant System obtained a medical device product registration certificate in September 2019. The company's dental implant brand, Baiditai, began official promotion and sale in early 2020. The representative product is SLA cylindrical implant Driving. Since its launch, it has received good feedback from the market.
Profit forecast and valuation: We expect ① the localization rate of the spinal implant and joint implant markets to continue to grow; ② the market concentration of traumatic implant products will continue to increase, and the company will occupy more market share; it is estimated that the company's net profit to the mother in 2021-2023 will be 783/99/1,249 million yuan respectively, giving the company 35 times PE in 2021, corresponding to the target price of 68 yuan, with initial coverage and purchase rating.
Risk warning: Risk of product development progress falling short of expectations, product sales and promotion falling short of expectations, and core products not winning bids in volume procurement