Reporter: Chen Xing, Xu Libo, Editor: Chen Junjie
Recently, two Chinese medical device industry veterans went to the Philippines to inspect the business, and the incident of being kidnapped and killed has attracted widespread attention.
On the morning of July 2, "Daily Economic News" came to Runmed Medical Technology Co., Ltd. (hereinafter referred to as Runmed Medical), where one of the victims, Xia Moumou, was located before his death, and saw that the employees were working normally, but there were not many employees visible in the office space. The reporter learned from a number of insiders in the medical equipment industry that the case had a considerable negative impact in the industry. The chairman of a listed pharmaceutical and medical device company said that the trip to Southeast Asia in mid-July had been scheduled, but now it has been canceled.
In recent years, domestic medical equipment companies have attached great importance to overseas markets. Southeast Asia has become a hot spot for gold due to its growing medical needs, lower entry thresholds, and a positive policy backdrop. However, a number of industry insiders admitted to reporters that the Southeast Asian market is more dependent on local partners than other overseas markets, which is why the above-mentioned industry veterans attach so much importance to this inspection trip.
Runmed Medical Suzhou Headquarters: There are twenty or thirty employees working normally
Runmed Medical's corporate headquarters in Suzhou was taken by reporter Xu Libo
On July 2, when the reporter came to the door of Runmed Medical, it was lunch time, but only a few employees entered and exited the company.
After the reporter came to the office area of Runmed Medical, he noticed that some employees were working normally. However, there were no staff working in the office area on the 5th floor of the office marked as Runmed Medical Marketing Center, and the office with the door number showing "Director" was closed.
The reporter came to the chairman's office on the third floor, but did not see the chairman, chief financial officer and other high-level officials of the company, and there were about twenty or thirty employees working in the five-story office building.
According to the report of the Chinese Embassy in the Philippines on July 2, the Chinese Embassy in the Philippines recently received a report of a Chinese citizen who had been kidnapped in the Philippines for help, and immediately activated the emergency mechanism to carry out rescue work. The embassy actively assisted the family members in reporting to the Anti-Kidnapping Bureau of the Philippine National Police, carried out law enforcement cooperation with the Philippine police under the guidance of the domestic public security department, and lodged representations with the Philippine side through diplomatic channels, demanding that the hostages be rescued as soon as possible and take practical measures to protect the safety and legitimate rights and interests of Chinese citizens in the Philippines. At the same time, the embassy also coordinated the provision of assistance and facilitation for the families of the abductees to come to the Philippines. Unfortunately, the Chinese citizen was eventually killed. It is understood that a Chinese American was also killed.
According to a number of media reports, one of the victims, Xia Moumou, was the marketing director of Runmed Medical International. The other victim, Sun, was a distributor of cardiovascular medical devices. According to an interview with a reporter from the "Daily Economic News", Xia Moumou worked in another medical device listed company, Lepu Medical, before joining Runmed Medical, and according to public information, Xia Moumou joined Runmed Medical in 2021 at the latest.
There is no trace of staff office in the 5F marketing center, taken by reporter Xu Libo
Executives of pharmaceutical and medical device companies have canceled trips to the Philippines
After the incident, Zhou Lei (pseudonym), who is engaged in market work in the pharmaceutical and medical device industry, told the "Daily Economic News" reporter that when developing new overseas markets, it is a normal work process for the company's middle and senior managers to explore the way first, and then let the grassroots staff follow up after setting the path. "This can happen with such a common process." Zhou Lei was puzzled.
On the 2nd, the chairman of another domestic pharmaceutical and medical device listed company told reporters, "I have already scheduled to go to Southeast Asia in mid-July to inspect the market, but now it must be canceled."
In the eyes of industry insiders, it is normal for middle and senior managers to meet potential partners at industry conferences or to negotiate overseas markets that the whole industry attaches importance to. For Runmed Medical, which has been losing money all year round, I am afraid it is even more so.
According to the company's information, Runmed Medical is a Hong Kong-listed medical device company headquartered in Suzhou, which currently focuses on the design, development and commercialization of the fractional flow reserve system (caFFR system) based on coronary angiography and the microvascular resistance index system (caIMR system) based on coronary angiography.
The caFFR system and caIMR system are mainly used to assess the severity of myocardial ischemia caused by coronary artery stenosis and microvascular dysfunction (related causes of CAD). According to the company's disclosure information, the FFR system has been approved by the European CE certification and the State Food and Drug Administration, and will be registered in the Australian Commonwealth in 2022. The IMR system was approved by the NMPA in April last year.
Runmed Medical said on its official website that the combined use of IMR and FFR can provide an assessment of coronary blood flow in CAD patients, and these two systems are expected to become the core and key modules of vascular interventional surgery robots in the future. In addition to the above businesses, Runmed Medical has increased its in vitro diagnostic business through the acquisition of the equity of Tianjin Yuehekang Biotechnology Co., Ltd.
However, it is worth noting that in the past five years, Runmed Medical has not achieved positive profitability and has shown a downward trend in performance. In 2023, the company's overall operating income will be 74.415 million yuan, a year-on-year decrease of 10.99%; The net profit loss was 116 million yuan, and the company's net profit loss in 2022 will even reach 1.346 billion yuan. At the same time, the company's marketing and development expenses (mainly including expenses related to sales and marketing activities) last year were 22.629 million yuan, accounting for 3% of the overall revenue.
Due to the change in product structure, Runmed Medical's gross profit margin also decreased from 83.5% in 2022 to 66.3% last year.
From the perspective of market distribution, the domestic market is still the main source of revenue for Runmed Medical. According to the annual report, last year, Chinese customers (determined by delivery destination) contributed 72.743 million yuan to the company, and other customers outside China contributed only 476,000 yuan, a decrease of more than 5% from 1.167 million yuan in 2022.
Under the pressure of continuous losses and declining performance, it can be said that Runmed Medical will set its sights on overseas markets. Runmed Medical specifically mentioned in its 2023 annual report that since 2019, the company has begun to commercialize the caFFR system in overseas markets such as the Czech Republic, France and Italy. Although the Southeast Asian market is not explicitly mentioned, the company also emphasized in its annual report that it will actively deploy overseas markets and strengthen the penetration rate of the domestic market, and strive to achieve healthy growth this year.
Nuggets Southeast Asia: "Finding the right person" is important here, but there is a lack of effective discernment
In recent years, "going overseas" has become a common choice for pharmaceutical and medical device companies. Southeast Asia is one of the hot gold nuggets. The reason why Southeast Asia has become a hot spot for domestic pharmaceutical and medical device companies to wield their fists is due to both market environment factors and policy factors
Wang Yan (pseudonym), who is responsible for marketing and brand promotion business in an interventional pharmaceutical and sales company, told reporters that the medical device industry attaches great importance to marketing channels, and if it can find suitable distributors and channels in Southeast Asia, a region with a large population and an underdeveloped local medical industry, it is indeed a sizable market.
Zhou Lei also told the "Daily Economic News" reporter that the scale of the medical market is related to the number of people, and the population density in Southeast Asia is relatively large. Indonesia has a population of more than 200 million, the Philippines has a population of more than 100 million, plus the population size of Vietnam and other places, the medical market in Southeast Asia is relatively large. With the increase in middle-income people and the amount of medical insurance, the demand for medical consumption in Southeast Asian countries is also increasing. On the other hand, the access to drugs and devices in the Southeast Asian market is simpler than that in Europe, North America and other regions, as long as you find agents to work together, there is basically no great difficulty in market access, so some pharmaceutical and device manufacturers, especially small and medium-sized manufacturers, will tend to go there to develop the market.
At the same time, in the context of the entry into force of the Regional Comprehensive Economic Partnership (RCEP) signed by the 10 ASEAN countries and China, the trade threshold, tariff costs, and raw material costs of enterprises among member countries have further decreased. More and more pharmaceutical and medical device companies are targeting Southeast Asia.
Mao Hua, partner and managing director of Frost & Sullivan, once said in an interview with the media, "As of the end of 2022, the Southeast Asian market has accounted for more than 30% of the mainland's medical device export share, and this proportion is expected to rise further in the future." According to medical device data cloud data, in 2023, in the distribution of trade volume between mainland medical devices and "RECP" members, the export value of medical devices to the Philippines will be 950 million US dollars, ranking ahead of Thailand, Indonesia and other countries.
But it's not easy to eat overseas cakes like Southeast Asia. A number of people in the pharmaceutical and medical device industry invariably mentioned that in Southeast Asia, it is important to find the "right person".
This is because registration is usually the first step for medical products that want to expand into overseas markets. However, the system of many countries stipulates that the application for medical device registration needs to be applied by a local agent. Under such rules, powerful companies usually set up their own subsidiaries overseas, while more companies choose to find local partners to become agents.
In addition, unlike mature markets such as Europe and the United States, Southeast Asian countries have different laws and policies, medical systems and market environments, and also involve human factors.
Wang Yan pointed out that the larger pharmaceutical and medical device companies have many years of deep cultivation in overseas sales channels, and basically have built a very strong own team in the local market. "It is indeed difficult for some small domestic companies to open up overseas markets with only some limited experience."
In this case, it is very important for pharmaceutical and medical device companies like Runmed Medical to find reliable overseas partners. This also explains from another perspective why Runmed Medical will treat this "field visit" so positively.
Zhou Lei also told reporters that according to his understanding, in the face of overseas partners who take the initiative to extend olive branches, domestic enterprises rarely have a special process to check the identity and qualifications of the other party, and generally judge through early communication and combined with their own experience.
National Business Daily