On September 27, China's largest life science research digital solution provider, Meihua Medical Technology, officially launched its IPO with the stock code 2576. The company will end the IPO on October 3 and plans to be listed on October 8. The company will sell at no more than HK$13 per hand, with 200 shares per hand, an entry fee of about HK$2,600, Morgan Stanley and China International Capital Corporation as joint sponsors.

At this time, the interest rate cut cycle is starting. The Fed's interest rate cut will improve global liquidity conditions, and the Hong Kong stock market is particularly sensitive to external liquidity changes, thus directly benefiting from the interest rate cut. With the continuous improvement of Hong Kong stock market liquidity, coupled with a boost in market confidence, investment opportunities in high-quality tech companies in the Hong Kong stock market are highlighted. Meihua Medical Technology is positioned at the intersection of the pharmaceutical and medical equipment industry and digital technology, backed by top shareholders such as Tencent, SoftBank, and Hillhouse, drawing significant attention.

1. In a rapidly developing track

Meihua Medical Technology is a high-tech enterprise focusing on digital solutions in the pharmaceutical and medical equipment industry. Since its establishment in 2013, the company has continuously deepened the digital needs of the pharmaceutical and medical equipment industry, committed to providing an integrated solution from pharmaceutical and medical device research and development to marketing, covering multiple areas such as pharmaceutical research, drug vigilance, and pharmaceutical marketing. With a series of independently developed professional software, Meihua Medical Technology utilizes advanced technologies such as artificial intelligence, big data, and cloud computing to improve pharmaceutical research and development efficiency, optimize commercial marketing activities.

From a global perspective, the biopharmaceutical research and operation mode is facing multiple severe challenges, including ongoing regulatory changes, loss of patent exclusivity, and rapid technological advancements. Deloitte Consulting emphasizes in its 'Measuring Pharmaceutical Innovation Returns' series of reports that in this context, in order to reverse the trend of declining industry investment returns and continue to provide innovative products for patients, biopharmaceutical companies must undergo a transformation in research and development productivity. It is noteworthy that the medical equipment industry is also in the midst of this transformation, facing similar challenges and opportunities to the biopharmaceutical industry. Deloitte further emphasizes that with the acceleration of technological innovation and the widespread penetration of artificial intelligence technology, the time is ripe for the pharmaceutical industry to expand its digital technology applications, a key factor in achieving sustained value growth.

Compared to other countries globally, China has a more advantageous development environment in the digital field. Over the past decade, China's pharmaceutical and medical equipment industry has experienced significant growth, with the market size leaping from 2.295 trillion yuan in 2019 to 2.9475 trillion yuan in 2023, achieving a compound annual growth rate of 6.5% and becoming the world's second largest market, as well as one of the fastest-growing markets. This provides a fertile ground for the digital application in the pharmaceutical and medical equipment industry.

In fact, the penetration rate of digital solutions in the Chinese pharmaceutical and medical equipment market is rapidly increasing, showing huge market growth potential. According to iResearch Consulting's forecast, from 2023 to 2028, the market size of digital solutions for pharmaceutical and medical equipment research and development in China will achieve a leap from 6.4 billion yuan to 16.3 billion yuan, with a high compound annual growth rate of 20.7%; at the same time, the market size of digital solutions for pharmaceutical and medical equipment marketing in China will also surge from 3.3 billion yuan to 8 billion yuan, with a compound annual growth rate reaching 33.5%. This data indicates that although the market is still in its early stages, its rapid growth rate and immense potential are already indicative of an emerging blue ocean market set to double rapidly.

In conclusion, Tai Me Medical Technology not only closely follows the development trends of the global pharmaceutical industry, but also accurately grasps the urgent demands for the digital transformation of China's pharmaceutical and medical device industry. With the sustained prosperity and deepening digital transformation of the Chinese pharmaceutical market, Tai Me Medical Technology, with its outstanding technological strength and keen market insight, will embrace even broader development prospects.

Second, Achieving Multiple Industry 'Firsts'

In the dynamic and rapidly growing field of pharmaceutical and medical device research and development, Tai Me Medical Technology stands out as the industry leader, achieving multiple 'firsts': The TrialOS platform launched by Tai Me Medical Technology in 2019 is the 'first' company in the world to provide an integrated digital solution based on the platform for pharmaceutical and medical device research and development. According to data from Beacon Insights, Tai Me Medical Technology is also the 'first' domestic company, and the only one able to provide a one-stop digital solution from research and development to marketing for the Chinese medical science industry. In addition, based on revenue in 2023, Tai Me Medical Technology ranks 'first' in market share for digital solutions in the research and marketing of pharmaceuticals and medical devices in China.

The prospectus also disclosed that as of March 31, 2024, Tai Me Medical Technology has provided services to over 1,400 pharmaceutical companies and entrusted research institutions, including 21 of the top 25 global pharmaceutical companies and 90 of the top 100 Chinese pharmaceutical innovative enterprises. The company has also established partnerships with over 700 national drug clinical trial institutions, with over 80% being tertiary grade-A hospitals, which fully demonstrates the company's leading position and wide recognition in the industry.

Behind Tai Me Medical Technology's multiple 'firsts' lies its leading advantages in innovation and market competitiveness. The two complement each other, jointly establishing an efficiently operating ecosystem.

In terms of innovation capabilities, as of March 31, 2024, Tai Me Medical Technology holds 220 granted patents in China, 195 computer software copyrights, 11 copyright works, and 322 and 4 registered trademarks in China and abroad, respectively. In terms of competitive strategy, Tai Me Medical Technology, unlike other digital solution providers that focus only on single functions, has built an all-in-one medical digital ecosystem covering from research and development to marketing with its innovative TrialOS and PharmaOS platforms, forming a closed loop. This ecosystem effectively aggregates data pools and industry participants, creating a strong synergetic effect. Industry participants such as pharmaceutical companies, hospitals, third-party service providers (such as CROs, SMOs, etc.), doctors, patients, etc., are closely connected through Tai Me Medical Technology, enhancing customer stickiness and bringing opportunities for cross-sales. In 2023, the retention rate of core customers reached 87.3%, while the overall customer retention rate was 77.8%.

Faced with the challenging market environment of the past three years, TaiMei Medical Technology has achieved contrarian growth with its strong innovative capabilities and differentiated competitive strategy. In 2021, 2022, and 2023, the company recorded revenues of approximately 0.466 billion yuan, 0.549 billion yuan, and 0.573 billion yuan, with a compound annual growth rate of 10.9%; gross profits were approximately 0.164 billion yuan, 0.185 billion yuan, and 0.179 billion yuan, with a compound annual growth rate of 4.4%. Particularly noteworthy is the first quarter of 2024, where the company recorded a gross profit of approximately 49.52 million yuan, a year-on-year increase of 28.6%, indicating a potential further enhancement in profitability for the full year of 2024. With the completion of the listing process, TaiMei Medical Technology is expected to accelerate its expansion further, ushering in a leap in value.

Conclusion

After a four-and-a-half-year hiatus, the interest rate reduction cycle has resumed, injecting vitality into the market.

As one of the first new stars to debut on the Hong Kong Stock Exchange after the interest rate cut, TaiMei Medical Technology is expected to leverage this opportunity to bring fresh blood to the market and create investment opportunities for investors to benefit from the bullish interest rate environment.