2 middle-level medical device Philippines were killed, and the listed company behind it has become a "penny stock"

Bronco Finance

2024-07-02 21:54Bronco Finance official account

When going to sea, there are both opportunities and risks.

Author | Wu Lijuan, Zhang Kaijing

Editor丨Gao Yan

Source | Bronco Finance

Two veterans of Chinese medical device companies originally agreed to go to the Philippines to expand their business, but they didn't expect to leave and never came back.

Recently, the news that two "middle-level" Chinese medical device companies were kidnapped and torn off tickets in the Philippines has been widely circulated in the industry. According to media reports such as "Yicai" and "Southern Metropolis Daily", one of the victims, Xia Kefu, is a Hong Kong-listed company Runmaid (2297. HK), and another victim, Sun Jing, was the head of a distributor of cardiovascular medical devices.

On the evening of July 1, the Chinese Embassy in the Philippines announced that China and the Philippines will strengthen law enforcement cooperation to jointly combat transnational crimes. On July 2, the official website issued a document confirming the above news, expressing condolences to the two victims, saying that it had urged the Philippine side to step up the handling of the case and arrest and severely punish the murderers as soon as possible.

In addition, because Sun Jing is a Chinese-American, this case has also attracted the attention of the Federal Bureau of Investigation (FBI), and China and the United States are currently cooperating with the Philippine police anti-kidnapping team in the investigation.

However, at present, Runmed has not officially responded to this matter publicly.

How does a business come to be a murder? The kidnapping and murder of two medical device executives in the Philippines has also sparked discussions in the industry about the safety of medical companies going overseas.

Managers of Chinese enterprises are set up in a "chain set"?

According to the self-media Filipino-Chinese platform "Feihua Bar", Xia Kefu met Sun Jing when he participated in the European Conference on Cardiovascular Interventional Medicine (EuroPCR) in Paris, France in May this year. At the conference, the two met "Li Na", a distributor who claims to be well versed in Philippine business. According to the victim's family, during the meeting, Li Na mentioned that her boss is a well-known Fujian businessman in the Philippines, who is mainly engaged in the real estate industry, and this time Philippine President Ferdinand Marcos Jr. came to power, and he was also helped by this boss.

Source: Xiaohongshu netizens

"Fei Hua Bar" believes that in order to gain the trust of Xia Kefu and Sun Jing, Li Na must have mentioned the name of a well-known and influential Fujian Chinese businessman in the Philippines, and even proved her relationship with the Chinese businessman in some way. This led the two to fly to the Philippines together in June to expand their new business.

However, shortly after getting off the plane, Xia Kefu and Sun Jing lost contact one after another, and their family members then received threatening phone calls from the kidnappers. One of the family members paid a ransom of 3 million yuan to the kidnappers, but to no avail, the victim was torn up after being tortured by the kidnappers for four days.

Hong Yuhua, founder of the Campaign to Restore Law and Order, an anti-kidnapping organization in the Filipino-Chinese community, believes that the case may have been committed by an international criminal group, and the modus operandi is similar to that of a Chinese businessman in Cyprus who was kidnapped in the Philippines a few years ago.

At that time, two Chinese businessmen from Cyprus were also picked up by the kidnappers as soon as they landed, and fortunately, in this case, the kidnappers released them after the family paid the ransom.

There is also a view that from the Manila airport, where Xia Kefu and Sun Jing were kidnapped, it is speculated that the case may also be a kidnapper raised in Clark No. 3 Park (a well-known fraud park in the Philippines), or a Chinese kidnapper gang related to the local illegal online gambling operator "Lucky South No. 99 Outsourcing Company" in the Philippines.

Frequent kidnapping cases are deeply rooted in the Philippines, which was once known as the "kidnapping center of Asia", and the capital Manila has also been named the "kidnapping capital of the world".

According to the Beijing News, on July 1, the victim's family held a memorial service in Beijing and is now returning to their hometown with ashes for burial. The family said that the company has given corresponding help to the family, and the aftermath work is ongoing.

The market value evaporated by HK$7 billion in two years

Runmed has become a "penny stock"

Xia Kefu's experience also made people pay attention to the "first vascular intervention robot" Runmed behind him.

Founded in 2014 by Huo Yunfei and Huo Yunlong brothers, Runmed is a medical device company positioned as a vascular interventional surgical robot.

The background of the two entrepreneurs is that in recent years, the diagnosis and treatment of coronary artery diseases have been developing from the traditional structural indicators based on coronary angiography to the direction of accurate diagnosis and treatment of functional indicators represented by FFR (fractional blood flow reserve) and IMR (microcirculation resistance index).

来源:Pexels

At present, patients with moderate coronary stenosis in Europe, the United States and other developed countries generally undergo FFR diagnosis before deciding whether to install cardiac stents. IMR can be used to assess the state of coronary microcirculation. The combination of the two can provide a comprehensive assessment of coronary blood flow in patients with coronary heart disease.

However, it is not easy to measure these two data accurately, and the traditional methods have many problems such as high difficulty, high risk and long time, and IMR quantitative measurement is a research hotspot in the cardiovascular field in various countries.

Huo Yunfei studied computer science at the University of Manchester with a master's degree, and worked in the world's top 500 companies for many years after graduation, and is a technical expert in the field of computing. Dr. Huo Yunlong studied mechanical engineering at Washington State University and has been deeply involved in the field of biofluid mechanics for many years. The two believe that the combination of fluid mechanics and computer technology can create more advanced diagnosis and treatment methods, improve the efficiency of surgeons' testing, and benefit patients with coronary artery diseases.

Therefore, since its inception, Runmaid has been rooted in the FFR and IMR testing track. Its core product, the caFFR system, has been approved by the European CE certification, the State Food and Drug Administration and other countries. The caIMR system was also approved by the NMPA in April 2023, making it the world's first minimally invasive IMR system approved for commercialization.

In 2023, Runmed will achieve revenue of 73.219 million yuan, most of which will contribute to the commercialization of caFFR and caIMR systems. By the end of 2023, more than 1,350 hospitals in China have used Runmed's caFFR system.

Source: Company announcement

However, vascular interventional robots still face many problems in actual use scenarios.

For example, the threshold for the use of robots is very high, not only to master the practice license of a medical institution, but also to have a complete medical field, and spend a lot of time training doctors.

In addition, as an innovative medical device, vascular interventional surgery robot has not been approved in the domestic market for a long time, and relevant companies can only educate the market independently, which must take into account multiple factors such as hospital budget, department needs, and clinical recognition. Even if hospitals are willing to procure, the high procurement fees and start-up fees will be passed on to patients, making it difficult for business to spread on a large scale.

In fact, since the beginning of commercialization, Runmed has been in a deep profit dilemma. Wind data shows that since 2019, Runmed has never made a profit, and the cumulative net loss has exceeded 2.2 billion yuan.

In this context, and coinciding with the overall downturn in the stock price of the medical sector in the past two years, Runmed broke on the day of listing, down 10.26% from the issue price. As of July 2, the stock price has fallen by more than 96% from the listing high, and the market value has evaporated by nearly HK $7 billion. At present, the stock price is only HK$0.186 per share, with a market value of HK$217 million, which has long been reduced to a "penny stock". ("Xian" is a transliteration of the English "cent" (分).) Penny stocks refer to stocks whose price has fallen below $1 and therefore can only be denominated in cents. ）

As of the end of 2023, 99.35% of Runmed's revenue comes from the domestic market. In the 2023 annual report, Runmed has made an outlook for its business in 2024, and will actively deploy overseas markets and strengthen the penetration of the domestic market, and strive to achieve healthy growth and high-quality development throughout 2024.

According to the announcement information, Runmed's vascular interventional surgical robot is currently under development and is expected to be launched by the end of 2024. The company also has RDN equipment, and another product under development, the Flash renal artery denepathetic ablation ("RDN") system, is expected to be launched in 2025.

Unexpectedly, before the overseas expansion was officially launched, the company's executives suffered misfortune overseas.

Chinese pharmaceutical companies go overseas to pan for gold

There are both opportunities and risks

According to the "2023 China Medical Device Industry Development Report", the overall operating income of the mainland medical device industry will reach 1.3 trillion yuan in 2022, of which the revenue of production enterprises above designated size will reach 757.7 billion yuan. It is estimated that by 2025, the operating income of medical device manufacturers will exceed 1.8 trillion yuan.

In the field of medical devices, surgical robots are one of the hottest fields at present.

According to Frost & Sullivan data, from 2015 to 2020, China's surgical robot market increased from US$90 million to US$430 million, with a compound annual growth rate of more than 35%.

However, many companies are currently facing profitability difficulties.

According to the 2023 performance report, the performance of some listed companies in the medical device industry has declined miserably, and even fallen into huge losses.

Source: Canned Gallery

On the other hand, at present, internationalization and high-end have become the consensus of the medical device industry, and the layout of high-end business lines and the promotion of the overseas strategy have become the key to breaking the situation in the field of medical devices. The pace of enterprises going overseas is accelerating, but it is not easy to go overseas.

Just like the two people in the industry who unfortunately died this time, medical practitioners will experience many difficulties and hardships in their overseas business.

Zhou Yi is the founder of WExAct, a medical device consulting company that goes overseas, and he was one of the earliest participants in Mindray's global layout 20 years ago. Like all foreign trade workers, Zhou Yi is all over the world, step by step, customer after customer. There are also domestic consumables equipment manufacturers who tell that their companies have also tried to innovate, but the channel advantage and low price advantage are the company's comfort zone, which is easier to realize. Around 2016, the company had deployed surgical robots internationally, and was anxious about the gap between itself and the world-class team. But one day he was suddenly relieved: "There is usually only one winner in this market, and there are enough orders. ”

Chen Zhaohui, the initiator of the Overseas Empowerment Platform, believes that on the one hand, Chinese enterprises rely on their own advantages in products, technology, and management, but on the other hand, they also face challenges such as cultural differences, overseas environment, value proposition, overseas model, organizational form, and management language. This not only requires enterprises to have the ability of cross-cultural communication, but also requires enterprises to maintain keen insight and rational judgment in the complex and changeable international environment. Before going overseas, enterprises can rehearse what problems will be encountered in the target country, and invite local experts and industry professionals to provide various possibilities, compile the plan into specific scenarios, and conduct rehearsals. With adequate rehearsals, companies are better equipped to meet unknown challenges.

Zhang Yi, CEO and chief analyst of iiMedia Consulting, said that it is already a direction and trend for Chinese medical companies to go overseas, but the risks and challenges encountered in it are also very obvious. First of all, the Philippine incident does show that security risks are a major challenge that Chinese medical companies have to face when they go overseas.

The Southeast Asian market is a very important destination for Chinese medical companies to go overseas, especially in the Southeast Asian economic center centered on Singapore, which has attracted a large number of Chinese pharmaceutical companies to settle in. In different countries, there are still many local, international and policy restrictions on the listing of drugs and machinery. The challenge of the Southeast Asian market is that its local pharmaceutical industry is very weak, mainly based on imported drugs and devices, mainly in Europe and the United States, and now there are more and more Chinese pharmaceutical companies.

From the early export of low-end products to the current high-end technology and brand output, the internationalization of China's medical devices is full of both opportunities and challenges.

As for the difference between Southeast Asia and the European and American markets, Zhang Yi believes that the European and American markets have the most stringent regulation and certification in the world, and the main risks still come from the government's regulatory system and regulatory risks. If Chinese pharmaceutical companies want to open up a world, product innovation is the most important, and if homogenization is basically useless. In Southeast Asian markets like the Philippines, security risks are still relatively prominent, especially for Chinese-funded enterprises. The second is from market competition, the Southeast Asian market is mainly dominated by multinational pharmaceutical companies, its market size is relatively small as a whole, and the level of economic development also determines the development of such a market. Relatively speaking, it is also relatively simple for Chinese companies, so Southeast Asia is also the first choice for Chinese pharmaceutical companies to go overseas.

Of course, there are also some first-mover advantages when going to sea. Zhang Yi said that the competition in R&D and market in the domestic market is very fierce, which means that Chinese companies have more high-quality products to go overseas and expand the market. Therefore, the ability and cost-effectiveness of Chinese products is an important opportunity to look overseas. In addition, from the perspective of national policy support, in 2015, Chinese medical enterprises have more external conditions to explore the international market, such as joining the International Technical Coordination Council for the Registration of Drugs for Human Use and other organizations. There is also a huge demand for growth in overseas markets, especially in countries along the Belt and Road.

Is the overseas murder of Runmaid and another medical device manager a new vicious fraud against Chinese businessmen? What do you think about the way for Chinese medical companies to go overseas? Leave a message and let's chat!

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