① Oriental Biotech is expanding the Southeast Asian and South Asian markets by setting up a new company in the Philippines to expand the medical device wholesale trade business; ② Currently, Oriental Biotech's key overseas markets are mainly in America, Europe, etc., but in recent years, overseas market revenue has declined rapidly year by year.
“Science and Technology Innovation Board Daily”, September 12 (Reporter Zheng Bingxun) On the evening of the 11th, IVD company Oriental Biotech (688298.SH) revealed that the subsidiary “Oriental Genes International Holdings” and Oriental Biotech's actual controller Fang Xiaoliang and his spouse Li Rongzhen have jointly invested to establish a new company “Philippine Hengjian” in the Philippines, which is mainly engaged in the wholesale trade business of medical devices.
The newly established company has a registered capital of 0.34 million US dollars, equivalent to 2 million ordinary voting shares. Oriental Gene International Holdings holds 99.9999% of the shares, and Fang Xiaoliang and his wife each hold 0.00005% of the shares. This foreign investment constitutes a related transaction.
The total investment amount is 1.2 million US dollars. After the investment is completed, Philippine Hengjian will be included in the consolidated scope of Oriental Biotech's financial statements.
Oriental Biotech said the move was based on the company's global strategic layout and the need to expand markets in Southeast Asia and South Asia. Looking further, Philippine Hengjian will carry out the wholesale business of medical equipment, professional equipment, scientific research equipment and precision equipment, as well as various types of non-dominant products.
In response to this incident, the “Science and Technology Innovation Board Daily” reporter sent a letter to Oriental Biotech asking what specific disease fields the new company will do business in the Philippines and whether it has currently received intended orders. Company personnel said that the new company has just been set up, and more expansion matters need to wait until the business starts. “For our industry, we need to have a certificate to enter; that doesn't mean I can start a business right away after I've passed.” The other party said.
The “Science and Technology Innovation Board Daily” reporter discovered that as Oriental Biotech is further seeking the Southeast Asian market, its overall revenue and existing overseas market business are declining year after year. Until then, Southeast Asia was not a key market for Oriental Biotech.
Specifically, in 2021-2023, Oriental Biotech achieved revenue of 10.169 billion yuan, 8.768 billion yuan, and 0.82 billion yuan respectively. Revenue declined rapidly year by year. Among them, revenue for the full year of 2023 fell 90.65% year on year, resulting in a net loss of 0.398 billion yuan for the full year of 2023. Entering the first half of 2024, Oriental Biotech's performance did not improve. Revenue fell 16.61% year-on-year to 0.418 billion yuan, and the net loss to mother was 0.152 billion yuan.
In the process, Oriental Biotech's overseas revenue also declined year by year, to 10.09 billion yuan, 5.747 billion yuan, and 0.491 billion yuan respectively in 2021-2023. Furthermore, the share of overseas revenue in total revenue also declined from 99.22% in 2021 to 59.88% in 2023.
According to the IPO documents of that year, before Oriental Biotech entered the Science and Technology Innovation Board, the region with the largest revenue share of major products had always been North America. In 2016, North America's revenue was 71.1966 million yuan, accounting for 40.33% of the main product revenue. By the first half of 2019, the region's revenue had grown to 92.2885 million yuan, accounting for 55.15%.
After the listing, although Oriental Biotech did not disclose revenue amounts in different segments, it also stated that according to its market positioning, it will focus on the US, Europe, and China, as well as countries including Japan, New Zealand, and Australia. In the 2024 semi-annual report, Oriental Biotech added the Philippines as a supplementary market.
According to data on exports of China's IVD related products to the world's top three regions disclosed by the General Administration of Customs for the first half of 2022, the United States is the largest exporter, followed by European countries. Also, according to the Kalorama Information report, judging from the geographical breakdown, in addition to the Chinese market, North America accounts for about 48% of the global IVD market.
However, Oriental Biotech also said that the local medical equipment industry in most developing countries has limited supply and is quite dependent on imports. The IVD market in developing countries is characterized by a small base and high growth rate, and will become the main direction for domestic IVD traders to expand overseas in the future.