Recently, many companies have submitted batches of applications, and IPO projects have also shown a clear acceleration, including high-quality investment symbols that the market has been anticipating. On October 8th, Tai Mei Medical Technology, known as the 'first stock of medical saas' officially went public. As the first Hong Kong-listed stock to go public after the National Day holiday, and with endorsements from star-studded institutional investors such as Hillhouse Capital and Tencent, Tai Mei Medical Technology has attracted the attention of many investors.

1. Learning from Others: The once underestimated field of digital solutions in the life sciences sector in the US stock market.

Tai Mei Medical Technology focuses on digital solutions for the pharmaceutical and medical instruments industry, by designing and providing industry-specific software and digital services to empower the research, development, and marketing of pharmaceutical and medical instrument companies, as well as contract research organizations (CROs) and clinical research institutions.

The term 'digital solutions for life sciences' refers to the intersection of life sciences and digital technology, utilizing advanced technologies such as big data, artificial intelligence (AI), to provide a comprehensive, digital business model for the life sciences industry (such as pharmaceutical and medical instruments industry) to improve and optimize research, development, production, marketing, and management processes.

In the past 10 years, the US stock computer sector has seen many outstanding dark horses emerge, one of which is Veeva Systems (VEEV.US), a leading company that provides cloud-based research and marketing solutions for the life sciences and related industries. Since its inception, the company has been committed to meeting the unique operational and regulatory requirements of life science companies, targeting needs from research and development to commercialization, involving areas such as CRM, content management, data management, to help life science companies bring products to market faster and more efficiently, sell more effectively while meeting government regulatory requirements.

At the time when Veeva Systems went public, the market held a rather pessimistic view on the related track, considering the market size to be small. However, stock prices do not always correspond with market attention—Veeva's stock price has nearly increased tenfold in the past decade, becoming an outstanding investment symbol and bringing substantial returns to US stock investors. Its current market cap has exceeded $33 billion, nearly 170 billion yuan. The emergence of such a huge unicorn in what was once an inconspicuous track is something that investors could not have imagined.

The splendid performance of the capital markets fully proves that this track has high growth elasticity. Looking at the global perspective, the R&D and operation modes of biopharmaceuticals are facing multiple severe challenges, including continuous regulatory changes, loss of patent monopolies, and rapid technological development. According to the analysis of the past 14 years, Deloitte pointed out that the R&D costs of the biopharmaceutical industry are increasing, and R&D productivity and internal rate of return are decreasing. In addition, Deloitte Consulting believes that the amount of data generated during clinical trials is exponentially increasing, and effective management, processing, and utilization of relevant data must be carried out to extract feasible insights in order to fully benefit from them. Considering the pace of technological innovation, the opportunity for related industries to expand the use of digital technology to obtain lasting value has matured.

Due to the similarity in the logic and driving forces of industrial development, the development trajectory of the Chinese market is similar to the past trends in the United States. With China's pharmaceutical and medical device industry becoming the world's second-largest market, the demand for digitalization in the industry is rapidly increasing. Analysis by Bright Insight indicates that from 2023 to 2028, the R&D digital market for Chinese pharmaceuticals and medical devices will significantly expand, with the market size expected to grow from 6.4 billion yuan to 16.3 billion yuan, with a compound annual growth rate of 20.7%. At the same time, the marketing digital market is also expected to grow rapidly, with the market size expected to increase from 3.3 billion yuan to 8 billion yuan, with a compound annual growth rate of 19.2%.

This means that the market size will double rapidly in the future, making it a golden track with ample development potential.

With the rapid growth of the industry, related investment targets are expected to demonstrate high stock price elasticity, similar to investment opportunities that have appeared in the US stock market in the past. In other words, in the future, this track is expected to produce a 'dark horse' in China.

Can Tymi Medical Technology become the next 'dark horse'?

In the digital field of life science technology in China, Tymi Medical Technology is a rare symbol that can be compared to Veeva Systems. Both cleverly use the flywheel effect, continuously expanding and deepening their product lines, successfully covering the entire process from research and development to sales for life science companies.

In economics, the 'flywheel effect' vividly describes a phenomenon where when a part of a system or organization gains momentum, it is able to drive the entire system to operate more efficiently, accelerate development, just like a flywheel, once it starts spinning, it will continue to accelerate due to its own inertia.

Before 2019, Taimei Medical Technology deeply cultivated the field of medical research and development software, using cloud-based life science SaaS solutions to assist in new drug research and development. The company has made significant achievements in clinical data collection, project management, document management, and other aspects, thereby establishing its leadership position in the digital market for life science research and development. This period of profound accumulation injected the initial driving force into the flywheel effect of Taimei Medical Technology.

In 2019, Taimei Medical Technology took a crucial step in strategic transformation, launching the TrialOS platform, marking the company's successful transition from a traditional software supplier to an integrated digital solution provider. The TrialOS platform not only promotes efficient data transmission and seamless process collaboration but also effectively breaks down information silos, creating favorable conditions for accelerating the flywheel effect.

In 2021, Taimei Medical Technology once again exerted its efforts by launching the PharmaOS platform designed for pharmaceutical and medical device marketing. With flexible development tools and cloud software, the platform helps customers efficiently manage sales teams and distributors, achieve channel transparency, and optimize customer relationship management. Thus, the dual-platform architecture of Taimei Medical Technology provides a continuous source of power for the flywheel effect.

In addition, Taimei Medical Technology is not stopping there but actively developing the next generation of digital collaboration platforms, such as Trials and Wu Jie, aiming to further enhance user experience and collaboration efficiency. These subsequent platform and product layouts will undoubtedly serve as strong catalysts to accelerate the flywheel effect.

In summary, Taimei Medical Technology and Veeva Systems have shown amazing similarities in many aspects. From the initial single software product to building platforms, providing digital services, and perfecting ecosystem layout, Taimei Medical Technology has always been continuously evolving, pushing boundaries, and demonstrating strong business expansion and innovation capabilities.

Apart from competing in the same arena, Taimei Medical Technology and Veeva Systems share many similarities. Similarly, Taimei Medical Technology leads the trend of reshaping the life science industry with digitalization. The TrialOS platform launched by Taimei Medical Technology in 2019 pioneered the platform-based integrated digital solution for global pharmaceutical and medical device research and development. According to the data from Burning Glass Consulting, Taimei Medical Technology is not only the first domestic company but also the only one so far to provide a one-stop digital solution from research and development to marketing for the Chinese pharmaceutical and medical device industry. This achievement also set a precedent.

In terms of industry position, Taimei Medical Technology is equally outstanding as Veeva Systems. According to data from Burning Glass Consulting, based on the 2023 income calculation, Taimei Medical Technology is the largest digital solution provider in the field of research and marketing of Chinese pharmaceuticals and medical devices. At the same time, the company is also the largest digital solution provider for research and development of pharmaceuticals and medical devices in China, with an income share of 8.2% in 2023. According to Burning Glass Consulting, in terms of customer numbers, the company has become the most widely used digital solution provider in the field of research and marketing of pharmaceuticals and medical devices in China.

Through years of deep cultivation and unremitting exploration, Taimei Medical Technology has gradually embarked on the path of using technological innovation to drive development, building a self-reinforcing virtuous cycle system, and has emerged in the field of digital life science. With the continuous deepening of digital transformation, the future development prospects of Taimei Medical Technology are broad, and it is expected to become a 'dark horse' in the industry.

Three, the 'flywheel effect' drives future growth potential.

When a originally static 'flywheel' is successfully started and accelerated to a certain critical point, it gains a self-sustaining inertial force. Thanks to this powerful force, Taimei Medical Technology has achieved counter-trend growth in a challenging market environment over the past three years. From 2021 to 2023, the company's annual revenues reached approximately 0.466 billion yuan, 0.549 billion yuan, and 5.73 billion yuan, with a compound annual growth rate of 10.9%; meanwhile, the gross margin also increased from approximately 0.164 billion yuan, 0.185 billion yuan to 0.179 billion yuan, and the net loss has been gradually narrowing year by year. Particularly worth mentioning is that in the first quarter of 2024, the company's gross profit was approximately 49.52 million yuan, a year-on-year increase of up to 28.6%, demonstrating strong growth momentum. As of March 31, 2024, Taimei Medical Technology's backlog of orders has exceeded 1.6 billion yuan, covering about 3,500 software products and digital service projects, with high visibility of performance growth.

Looking ahead, Taimei Medical Technology plans to build a self-sustaining and profit-generating virtuous cycle system by expanding revenue sources, improving profit margins, and optimizing operational efficiency. These potential energies have long been accumulating, hidden in their 'flywheel.'

Specifically, in the future, Taimei Medical Technology's 'flywheel' will be driven by the following strong forces:

(1) Cross-selling strategies significantly enhance user lifetime value:

Under the synergistic effect of the company's internal ecosystem, once customers purchase core products, they are more likely to continue purchasing other products. This transition from single product to multi-category products, even with the same customer base, can significantly increase revenue. According to the prospectus, the average purchase value per customer is increasing, and the number of customers purchasing three or more products or services is also increasing. In 2023, these customers contributed over 77% of the total revenue of Taimei Medical Technology.

(2) Enhanced customer penetration rate and customer stickiness:

The customer penetration rate of TaiMei Medical Technology continues to rise, while maintaining high customer stickiness, which constitutes another important driver of the 'flywheel effect.' The number of customers has increased from 908 in 2021 to 1107 in 2023, showing a steady upward trend. In the first seven months of 2024, the total number of customers has reached 967, an increase of 100 from the previous three months, demonstrating the company's strong market expansion capability and customer attractiveness. As of December 31, 2023, the company has 235 core customers, contributing as much as 83.8% of total revenue, highlighting the crucial role of core customers in the business. At the same time, the core customer retention rate is as high as 87.3%, and the overall customer retention rate has also reached 77.8%, indicating a solid and enduring cooperation relationship between the company and its customers.

(3) Amplification of scale effects and improvement in profitability:

With the expansion of business scale and enhancement of brand awareness, TaiMei Medical Technology is gradually benefiting from economies of scale and network effects. This enables the company to attract and acquire new customers at lower costs, thus gaining a competitive advantage in the market. The amplification of scale effects has directly driven up the company's profitability. Taking the gross margin as an example, in the first half of 2023 it was 31.0%, while in the first half of this year it increased to 40.7%, nearly 10 percentage points higher than the first half of 2023, setting a new high in recent years.

It is evident that the future growth momentum of TaiMei Medical Technology is clearly visible. The company not only holds a leading position in the market but is also a rare domestic enterprise that can be compared to Veeva Systems. With the industry entering a golden growth period, the company itself is also entering an expansion phase, with a clear long-term growth logic and promising prospects.