Abstract: Innovent submitted a prospectus to the Hong Kong Stock Exchange on June 14, 2023 to be listed on the Hong Kong Main Board. The company is an integrated solution provider for non-vascular interventional surgery. Revenue in 2022 was 340 million yuan (year-on-year growth rate of 33.51%), with a net loss of 220 million yuan.
LiveReport learned that it was founded in 2012 by Shanghai Innovex Medical Devices Co., Ltd. (hereinafter referred to as “Innovex”) submitted a listing application on the Hong Kong Stock Exchange on June 14, 2023, to be listed on the Hong Kong Main Board. This is the third time the company has submitted a listing application. The co-sponsors are Goldman Sachs and CICC.
The company is an integrated solution provider for non-vascular interventional surgery in China. The company has developed proprietary technology to provide integrated solutions for endoscopes, active medical devices and passive consumables for all major medical specialties that perform non-vascular interventional procedures in urology, gastroenterology, hepatobiliary surgery, respiratory, thoracic surgery, otolaryngology, gynecology and general surgery. The most comprehensive medical device product portfolio for urological non-vascular interventional procedures in the world and China has been developed. As of the last practical date, the company has 36 products approved in China, the US, Europe and/or Japan. The company's collaboratively innovative product portfolio includes active medical devices, endoscopes, and passive consumables.
Non-vascular intervention procedures are widely used in diseases of the respiratory, digestive, urinary, and reproductive systems. Interventional procedures are less invasive than ever, and endoscopes and active medical devices are rapidly replacing scalpels and sutures. With the company's deep insight into these industry trends, the company has established a comprehensive product portfolio including endoscopes, active medical devices and passive consumables for a wide range of non-vascular interventional procedures.
The company's product portfolio is comprehensive in terms of product types and coverage of indications. By offering all three product types, the company is able to provide a one-stop solution, including all major medical devices for non-vascular interventional procedures. The company uses design and technology across the entire technology platform to develop highly compatible and collaborative products and improve patients' surgical results when used together, which is very convenient for surgeons. Furthermore, the company's product portfolio covers all major medical specialties that perform non-vascular interventional procedures, including urology, gastroenterology, hepatobiliary surgery, respiratory medicine, thoracic surgery, otolaryngology, gynecology, and general surgery.
The company has established a strong brand reputation and market-tested commercialization network in China and around the world. Since the company's first product was approved in China in 2010, the company has accumulated more than 10 years of sales and marketing experience to establish the company's commercial network and sell the company's products in more than 60 countries and regions on five continents. In China, the company's products have penetrated more than 1,500 hospitals, including more than 400 level-III hospitals and more than 1,100 level-II hospitals.
The table below provides a breakdown of the company's revenue by product category for the year shown.
Investment highlights
The company is a leading provider of integrated solutions for non-vascular interventional procedures in China and has a strong global business layout;
The company provides a comprehensive portfolio of disposable endoscopes with industry-leading operation performance and huge market potential;
The company is developing a set of active medical devices, starting with core products, to promote the application of plasma electrosurgery in non-vascular interventional procedures;
The company has a strong and collaborative portfolio of passive consumables covering a wide range of indications, which is critical to the company's cost effectiveness and future revenue growth;
The company has established a systematic integrated platform, has strong R&D and commercial-scale production capabilities, is familiar with regulatory regulations, and has global commercial capabilities that have withstood the test of the market;
The company is led by a visionary and experienced management team and is supported by leading healthcare investors.
Company Information:
Official website: www.innovexmed.com.cn
Company address: East of the 1st and 2nd floors of Building 7, No. 150 Cailun Road, Shanghai Pilot Free Trade Zone
Hong Kong address: 5th Floor, Manulife Provident Fund Building, 348 Kwun Tong Road, Kowloon, Hong Kong
Financial analysis
For the 2 years ended December 31, 2022, 2021 and 2022:
Revenue was approximately RMB 260 million and RMB 340 million respectively, with a year-on-year growth rate of 33.51% in 2022;
Gross profit was approximately RMB 160 million and RMB 210 million respectively, with a year-on-year growth rate of 30.09% in 2022;
R&D was approximately RMB 290 million and -140 million yuan respectively, with a year-on-year growth rate of -51.28% in 2022;
Net profit was approximately RMB 690 million and -220 million yuan respectively, with a year-on-year growth rate of -68.17% in 2022;
The gross margins were about 63.66% and 62.03%, respectively;
R&D accounted for about 41.87% and 64.09% of losses, respectively;
The company's revenue and gross profit grew rapidly, and the net loss narrowed somewhat.
As of April 30, 2023, inventory was 175 million, cash on account was 14 million, and total current liabilities were 272 million.
Industry prospects
The global and Chinese endoscopes market has been growing steadily in the past, and the Chinese disposable endoscope market is growing even faster. From 2022 to 2030, China's disposable endoscope market is expected to grow at a compound annual rate of 44.0%. The figure below shows the global and Chinese market size of endoscopes suitable for non-vascular intervention procedures during the period shown.
Active medical devices are medical devices that rely on an external energy source to perform a function by changing the energy density and form of energy. The global market size of active medical devices increased from 7.7 billion US dollars in 2016 to 11.9 billion US dollars in 2021, with a compound annual growth rate of 9.2%. It is expected to reach 34.2 billion US dollars by 2030, with a compound annual growth rate of 12.4%. The market size of active medical devices in China increased from RMB 6.6 billion in 2016 to RMB 13.8 billion in 2022, with a compound annual growth rate of 10.2%. It is expected to reach RMB 49.6 billion by 2030, with a compound annual growth rate of 17.7%.
Plasma electrosurgery is a new technique for converting electrical energy from electric current to plasma. Through the dissociation of molecular bonds between tissues, plasma energy can remove tissue while limiting damage to surrounding tissue and reducing surgical smoke.
Plasma electrosurgery is currently one of the most widely used interventional procedures, and medical devices for plasma electrosurgery are growing faster. The global penetration rate of plasma electrosurgical medical devices is expected to increase from 32.1% in 2022 to 38.4% in 2030. In China, the penetration rate of plasma electrosurgical medical devices is expected to increase from 26.5% in 2022 to 34.3% in 2030. The table below shows the size of the global and Chinese market for plasma electrosurgical medical devices during the period shown.
Passive consumables used in non-vascular interventional procedures mainly include guide wires, balloon catheters, stone net baskets, occlusion catheters, and sheath tubes. Driven by the increasing adoption of non-vascular interventional procedures, the passive consumables market has grown rapidly over the past few years. The table below shows the market size of the global and Chinese non-vascular intervention passive consumables market during the period shown.
Industry status
As of the last practical date, the company has the most comprehensive endoscopy product portfolio in the world and China for all major medical specialties that perform non-vascular interventional procedures, including urology, gastroenterology, hepatobiliary surgery, respiratory surgery, thoracic surgery, otolaryngology, gynecology and general surgery. The following chart illustrates the product coverage of major domestic and international disposable endoscope manufacturers.
As of the last practical date, apart from the company's single-use electric coils and plasma surgery equipment (NW100), there are no approved plasma surgical devices or active consumables for gastroenterological interventional procedures worldwide. The company's single-use electric cob and plasma surgery equipment (NW-100) is the first in China and is expected to be the first similar product approved for gastroenterological interventional surgery in the world. The figure below shows the global competition pattern for the main active medical devices for gastroenterological interventional surgery as of the last practical date.
As of the last practical date, only four Chinese manufacturers had developed passive consumables covering all major medical specialties that perform non-vascular interventional procedures, with the company being the only domestic manufacturer. The table below shows the product coverage of major domestic and international manufacturers of passive consumables for non-vascular interventional procedures as of the last practical date.
Comparing IPOs of companies in the same industry
The companies selected for comparison in the same industry this time are: Nanwei Medical
The main business of Nanwei Medical Technology Co., Ltd. is the R&D, manufacture and sale of minimally invasive medical devices. The company's main products include examination and minimally invasive surgical instruments used in conjunction with endoscopes, equipment and consumables required for microwave ablation. The company's endoscopic diagnosis and treatment equipment mainly includes more than 60 specification series products in six categories, including biopsy, hemostasis and closure, EMR/ESD, expansion, ERCP, and EUS/EBUS. Single-use endoscopes mainly include products such as disposable cholangiopancreatic imaging systems (cholangioscopes) and related consumables.
Major shareholders
Mr. Yan is the controlling shareholder of the company and directly holds 26.4% of the shares; Mr. Chai Zhaogang, Mr. Yuan Zheng, and Mr. Zhou Yuan jointly hold 4.9% of the shares;
Mr. Yan has the right to exercise or control the exercise of voting rights attached to approximately 63.4% of the company's total issued shares through his direct ownership rights and indirectly through his interests in Ningbo Zhongyu, Shanghai Qingqing, Wisdom 3, Wisdom 3, Wisdom and Novartis, as well as authorizations granted by Mr. Chai Zhaogang, Mr. Yuan Zheng, and Mr. Zhou Yuan.
Other shareholders include Temasek holding 4.2% of shares through Temasek Elbrus; Gao Lin holding 3.5% of shares through GSUM XXIII HK and HSUMXII HK; and Taikang Insurance holding 1.0% of shares through Taikang Life.
Management situation
Mr. Yan Hang, 55, Executive Director. Mainly responsible for the overall management of the company's business strategy and enterprise development. He has over 30 years of experience in business management and strategic planning, focusing on the medical device industry in China and overseas. He has held management positions in various companies in the import and export industry. Served as the chairman of the board of directors of Shanghai Zhongyi International Trade Co., Ltd. and served in ShanghaiKELLY TAY(6.680, -0.01, -0.15%) Medical Technology Co., Ltd. (Director. He received a bachelor's degree in engineering majoring in underground construction and tunnel engineering from Tongji University, and an economics degree in world economics from the Shanghai Institute of Foreign Trade. Received a master's degree in business administration from Peking University for senior executives.
Mr. Chai Zhaogang, aged 56, Vice President and Executive Director. Mainly responsible for the company's operation management and enterprise development. Has over 28 years of experience in sales, business development and corporate management. He worked for a subsidiary of Shanghai Zijiang Aluminum Spray Environmental Materials Co., Ltd. He obtained a bachelor's degree in mechanical engineering from China Textile University and an economics degree in world economics from the Shanghai Institute of Foreign Trade. Received a master's degree in business administration from the China-Europe International Business School.
Ms. Jiang Yelan, 38, is an assistant to the chairman and an executive director. Mainly responsible for the company's finance and corporate management. He was an employee of the finance department of Shanghai Pudong Shopping Mall Co., Ltd., and was the financial manager of Shanghai Jinhui Commercial Plaza Co., Ltd. Received a bachelor's degree in economics from East China University of Political Science and Law, majoring in finance.
Pre-IPO financing
Intermediary team
According to LiveReport's big data statistics, there are 8 intermediary teams, including 2 sponsors in total. The data performance of the nearly 10 sponsorship projects is average; there are 2 company lawyers in total, and the comprehensive project data is average. Overall brokerage team historical data.
Sponsor underwriting history
Goldman Sachs recently sponsored a 37.76% breakout rate;
The breakout rate of CICC's recent sponsorship was 42.31%.
Analysis of public opinion
Currently, Shanghai Innovex Medical Devices Co., Ltd. was discovered through the Tianyan Research website and found the following risk tips:
Of the 22 own risks, most of them were court announcements where companies were sued and legal lawsuits suing others;
Of the 318 related risks, most were court announcements from company shareholders or related companies suing others;
Of the 2 historical risks, 2 were mainly when the company was administratively punished;
Of the 185 warning reminders, 1 was product recall information, and the rest was information such as investor changes and key personnel changes;
Overall, for a company that began operations in 2012, the legal litigation aspect falls within a relatively normal range, and Tianyan's risk level is low.
Recent market conditions for Hong Kong stock IPOs
According to LiveReport's big data, the average issued market value of the last 10 listed IPOs was 9.557 billion, the largest market capitalization was Li Du, and the lowest market value was Yijun Group Holdings; the average number of issued PE was 19.07 times, and PE was in the middle upper level; the average number of subscribers was 5539, and the average subscription multiplier was 7.14; the average cornerstone share was 45.96%, and the proportion recently rebounded slightly;
Recently, the performance of the Hong Kong IPO market has been poor. The average decline in the dark market of the last 10 IPOs was 9.48%, and the average drop on the first day was 15.2%. Zhongbao Xincai, Kitasen Holdings, Zhenshu Li Du, and Luzhu Bio-B all plummeted, and Hongxin C&D, which was spun off from Yuandong Hongxin, was not spared.
