Company Overview

Taimei Medical Technology (“Company” for short) is a digital solution provider focusing on the pharmaceutical and medical device industry. It designs and provides industry-specific software and digital services to help the development and marketing of pharmaceuticals and medical devices.

On the financial side, the company continues to grow in size, but it is still in the red. Revenue increased from 0.47 billion yuan in 2021 to 0.57 billion yuan in 2023, and the company achieved revenue of 0.13 billion yuan in the first three months of 2024, an increase of 2.2% over the previous year. In 2021, 2022, 2023 and the first three months of 2024, the company generated net losses of 0.48 billion yuan, 0.42 billion yuan, 0.36 billion yuan, and 120 million yuan respectively. Excluding the impact of share-based payments and listing expenses, the company lost 0.35 billion yuan, 0.33 billion yuan, 0.32 billion yuan and 119 million yuan respectively.

Status and prospects of the industry

China's pharmaceutical and medical device R&D and marketing digital solutions market is growing rapidly. According to Insight and Consulting statistics, the market size grew from 3 billion yuan in 2019 to 9.7 billion yuan in 2023. The CAGR is 34.1%, and the market size is expected to reach 24.3 billion yuan in 2028.

In terms of the competitive landscape, the market is relatively fragmented. Based on 2023 revenue, the company is the largest supplier of digital solutions in the field of pharmaceutical and medical device R&D and marketing in China, with a market share of 5.9%. As of March 31, 2024, the company has provided services to more than 1,400 pharmaceutical companies and contract research institutes, covering 21 of the world's top 25 pharmaceutical companies and 90 of the top 100 pharmaceutical innovators in China.

Advantages and opportunities

An early market participant and major player in pharmaceutical and medical device digital solutions, with a first-mover advantage; digital platforms supporting a comprehensive product matrix; a large and loyal high-quality customer base; mature technical and data capabilities; balanced monetization of software and services; a visionary and experienced management team; and strong shareholder support. Tencent is the company's second shareholder.

Weaknesses and risks

Risk of R&D technology falling short of expectations; risk of commercialization of solutions and services; risk of policy regulation; increased industry competition; risk of technical failure, etc.

Use of proceeds from issuance

Approximately 35% or HK$65.0 million will be used to optimize and upgrade the TrialOS platform and the PharmaOS platform and their respective cloud software and digital services; approximately HK$30% or HK$55.7 million will be used to enhance the company's core technology and R&D capabilities; approximately 10% or HK$18.6 million will be used to enhance the company's marketing and sales capabilities; approximately 15% or HK$27.9 million will be used to selectively seek strategic investments and acquisitions; and approximately HK$18.6 million will be used for operating capital and general corporate purposes.

investment strategy

The IPO price is HK$10.0-13.0, and the total market value after issuance is approximately HK$5.6-7.29 billion. Based on 2023 revenue, the corresponding P/S valuation is 8.8-11.5 times. Considering the marginal improvement in Hong Kong stock liquidity due to the recent interest rate cut announced by the Federal Reserve, as well as the company's fundamentals, unfounded investors, and the valuation level of comparable companies, we gave the company an IPO specific rating of “5.6.”