Release date: 2016-08-19
On August 15th, the 2016 China Investment Annual Conference held by the China Investment Group with the theme of “Change-Driven China†was held in Shenzhen, and a series of important lists such as the list of people and the industry list were released.
Share Investment won the Top 10 Award for Investment in the Medical Device Sector in 2016. The investment in Maipu Regeneration was awarded the top ten investment cases in the medical device field in 2016.
The entire Chinese medical device market was 480 billion in 2015. This is a huge market space. Looking for investment opportunities and grasping the evolution of the industry is key. So what is the changing trend of the medical device industry, and how to grasp it?
Zhao Hong, Managing Director of Share Investment, has long been concerned about the field of medical devices and has deep thoughts and unique insights on the above issues.
The following is Zhao Hong's share of investment trends in the medical device sector:
In 2015, the national market for ultrasound, nuclear magnetic and CT were 7.7 billion, 8.9 billion and 8.2 billion respectively. This is the latest figure released at the annual meeting of the China Medical Equipment Association held in Guiyang on July 16, 2016.
Even with some moisture, this set of numbers is still very large, making people drool. These three types of products are only a few representative ones in the imaging equipment. All the imaging equipments together have more than 30 billion, which is still less than one tenth of the entire medical device market. According to the statistics of the Equipment Association, the entire Chinese medical device market was 480 billion in 2015.
Ultrasound, nuclear magnetic, CT, these three types of products, although the market size is not much different, it is a very different rivers and lakes.
After more than ten years of development competition, the market below the mid-end of ultrasound has long been the world of domestic manufacturers. There are nearly 100 registration certificates. Through various OEMs, it is as simple as making computers in Zhongguancun. GPS firmly grasps the mid- to high-end and high-end markets, and strictly guards the penetration of Mindray from the mid-end to the mid-to-high end.
Compared with the price of hundreds of thousands of ultrasound, the number of nuclear magnetic machines is tens of millions, which is obviously not conducive to the sales of domestic enterprises, especially entrepreneurs. In addition, the integration of several important components of nuclear magnetic and image processing are much more difficult than ultrasound, resulting in the nuclear magnetic market is mainly occupied by foreign capital.
CT is the most difficult type of equipment to integrate. I want to fix the tube high-pressure detector together, let the hundreds of kilograms of this iron rotate at a speed of less than 0.5 seconds, and have to connect the power supply to the image signal guide. Come out, it is also drunk. The result is that domestic CT companies still account for less than 10% of the entire market.
I take ultrasound, nuclear magnetic and CT examples because they can discharge a relatively beautiful series of equities if they are ranked according to the market share of domestic brands. In fact, there is one that should be ranked at the forefront, DR, there is almost no foreign investment in this field, and domestic brands have already reached the stage of melee. A little bit of winterfell outside the city, the bow and arrow volleying cavalry interspersed after the infantry smashed flesh and blood. meaning.
At the same time point, ultrasound, nuclear magnetic, and CT present a very interesting historical section of the development of the subdivision. Several sub-divisions with similar market sizes are in such a different import substitution process.
Major trends in the medical device industry
I just mentioned that the medical device market is very large, more than 400 billion, and the subdivisions are very numerous and complicated, which is the static of the market. Looking for investment opportunities is to look at the future based on the past. It is to connect the static pictures on the entire timeline to watch the movie. Simply put, it is to grasp the trend.
Import substitution is the development trend
Import substitution is an unquestionable development trend in the field of medical devices.
Looking at the development history of well-known medical device companies in China, almost all of them started from acting as foreign agents and imitations, digesting and absorbing technology, reducing costs through various methods, and achieving or exceeding the technical level of foreign products through micro-innovation and re-innovation. Thereby achieving import substitution.
Since 20 years ago, Mindray’s monitor has gone this way. Ten years ago, Lepu’s heart stent took such a path.
Since import substitution is a trend, is it an area that looks for investment opportunities in a market with a large share of foreign brands? Logically, but the specific operation is difficult, because you probably don't know where to start, or simply don't know which product areas.
At this time, you can change the dimensions and collect the annual reports of large companies in the target field, such as GPS in the field of imaging and MJJ in the field of surgery. Their product line layout will generally be more comprehensive, and their fields will be stronger, their main product lines and fists. Products are often the target you are looking for.
The trend is a vector, the direction of judgment is simple, and the judgment time is too difficult. Time is the biggest enemy for funds that last less than 10 years. Perhaps you can find a field worthy of attention, such as CT, the process of import substitution has just begun, there should be a great opportunity for domestic startups, but how fast will this trend be? Is this product too difficult to do so that domestic companies will not make any progress in a few years? This is part of the investment that is more "art". Fortunately, Mingfeng, Sino, Bo Ying and other entrepreneurial teams have or will soon obtain CT registration certificates, I believe they will surprise us in the market.
It is also a good example to share the leading Weimai medical care at the end of last year. DSA is a special type of imaging products, which has high requirements for technology and reliability. The import substitution process has just begun. On the other hand, with the increase in the number of interventional procedures, the demand for such equipment in the clinical market is very large, requiring domestic companies to provide more cost-effective products. Trends and needs are probably the "winds" we often hear in the Internet.
Go upstream, invest in key components
Rivers tend to attract people's attention as they go downstream, but when the water reaches the downstream, they are lazy and the situation is exhausted. The process of import substitution has reached a late stage, which is a red sea of ​​domestic brands, blood-stained. If it is a special liking for a certain Red Sea area, do you have to vote for it, or actively say whether there are investment opportunities in the Red Sea area?
I judge yes, there is upstream. But there is a need for counter-current efforts and courage without fear of danger.
For the downstream machine companies, many key components or technical barriers can not be overcome at a time, or the scale advantage is obvious that their production is not cost-effective, so often a large part of COGS directly gives the upstream enterprises become the family's revenue (DR ball) Tube and flat panel detectors, nuclear magnetic magnets and coils, ultrasonic probes, CT bulbs are all such). This is actually a terrible thing. Especially when the competition is getting more and more fierce and starting to fight the price war, it is a prisoner's dilemma with an unlimited number of participants. You want to find someone to discuss the market guidance price and don't know who to look for. . Therefore, in the Red Sea market, all the whole machine factories are working upstream.
The upstream is really good, but investing in key components requires the investment team to have a deeper understanding of products and technologies, and deeper network resources in the industry; on the other hand, if the upstream key component suppliers are start-ups, It also faces a life-and-death problem, which is a huge risk for investors: the technical difficulty is only a small step. In the initial stage, there is not enough order to guarantee the quality control of mass production, and there is no cost advantage at all. And quality and price are the life of the upper reaches. Establishing trust to obtain start-up orders, gradually stabilizing product quality and gaining cost advantages through mass production, such a positive cycle is often beyond reach.
Go downstream and find new market applications that are more segmented
For the Red Sea market, in addition to going upstream, you can simply go further downstream to see more subdivided areas. Some segments will be less competitive because of fewer people, or new applications of old technology.
For example, in the field of ultrasound, there are professional applications in various departments, such as portable, hand-held, super-mammary, and ophthalmic ultrasound. These are also in the field of imaging. The brain hole is larger and can be extended to the field of ultrasound therapy. Another example is OCT technology, which is mature in ophthalmology and later developed by St. Jude for cardiovascular testing. Now I know that there are teams in the world who are doing otolaryngology, digestive tract, and gynecology.
In this respect, it is necessary to carefully explore and identify the needs, as well as the better technology that matches the real needs.
Source: Investment Group
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Mianyang United Ultrasound Electronics Co., Ltd , https://www.uniultrasonic.com