Source | Investor (ID:touzijias)
Author | Liu Ran
Cancer is becoming the number one killer of threats to human health.
In the past 20 years, there has been a global cancer outbreak, with the highest incidence in China, with an average of 7 people diagnosed with cancer every minute.
In this context, people pay far more attention to cancer treatment than before, and also promote the rapid development of related enterprises, and even reach the stage of listing.
Investors Network learned that recently, Baide Medical, which is deeply involved in cancer treatment, submitted a prospectus to the Hong Kong Stock Exchange, planning to be listed on the main board, with BOCI and Zhongtai International as joint sponsors.
If cancer is a health killer, then Bade Medical is a "cancer killer". What is the real color of this super unicorn that has come out of the field of cancer treatment?
One
Founded in 2012, Baide Medical is a developer and provider of microwave ablation medical devices for minimally invasive oncology treatment in China. The company's proprietary microwave ablation medical devices are used to treat benign and malignant tumors with rising incidence in China, including thyroid nodules, liver cancer, lung cancer and breast masses.
Microwave ablation is a minimally invasive therapeutic technique that uses the extremely high heat generated by microwave energy to alter the properties of tumor cell proteins and cause them to coagulate. Microwave ablation therapy can prevent cancer progression by inhibiting the development of benign tumors into malignant tumors, so early detection and treatment of benign tumors has an important role in preventing cancer.
It is worth mentioning that Baide Medical is a pioneer in the microwave ablation medical device market for the treatment of thyroid nodules in China, the company is the first proprietary microwave ablation medical device company in China specifically for the treatment of thyroid nodules, and has completed relevant clinical trials, and is currently receiving the final approval of the State Food and Drug Administration for the third class registration certificate of microwave ablation medical devices.
Baide Medical operates in the microwave ablation medical device market, which is currently underserved in China but has grown rapidly and has great growth potential.
In view of the increasing number of new cases of cancer patients in China and the promotion of ablation therapy in hospitals, more and more people are undergoing minimally invasive surgery, and ablation treatment has gradually become one of the common treatment methods for tumors.
According to Frost & Sullivan, the number of microwave ablation procedures in China increased from 60,100 units in 2015 to 141,600 units in 2020, and is expected to reach 582,700 units by 2025, with a compound annual growth rate of 32.7% from 2020 to 2025; the size of the oncology ablation medical market has increased from 1.63 billion yuan in 2015 to 3.28 billion yuan, with a compound annual growth rate of 15%, and is expected to reach 13.06 billion yuan by 2025.
Among them, microwave ablation is the largest medical market sector for tumor ablation in China, accounting for 55% of the entire ablation market, and the scale is expected to grow significantly from 1.8 billion yuan in 2020 to 8.1 billion yuan in 2025, with a compound annual growth rate of 35.0%.
Two
With the disclosure of the prospectus, the core operating data of Baide Medical can be seen at a glance.
Looking at the shareholding structure first, the prospectus shows that the executive directors of Baide Medical are Ms. Wu Haimei, Qiu Quan and Hou Wei; the non-executive directors are Ms. Liu Jiayi; and the independent non-executive directors are Professor Xing Michael Mingzhao, Zhu Junming and Professor Ma Jianguo.
As of the eve of the IPO, Ms. Wu Haimei held 59.95%, BOCI Investment held 8.32%, Courage Elite held 1.74%, CVC held 0.87%, IPE held 0.87%, and Weitian held 0.86%.
Looking at the product structure, The product supply and pipeline products of Baide Medical mainly include microwave ablation treatment instruments and microwave ablation needles used with the treatment instruments.
At present, Baide Medical has a total of 12 pipeline products, of which 3 have been approved for listing, namely microwave ablation therapy instruments and microwave ablation needles for the treatment of liver cancer, long microwave ablation needles and fine microwave ablation needles.
In addition, the microwave ablation therapy instrument and microwave ablation needle used to treat thyroid nodules in Baide Medical Pipeline products are under the approval of the State Food and Drug Administration and are expected to be listed this year.
The remaining microwave ablation therapy instruments and microwave ablation needles for the treatment of breast masses, bone tumors, uterine fibroids, and microwave ablation catheters are expected to be commercialized from 2023 to 2024, and there is still a long way to go.
Finally, looking at the customer group, all the revenue of Baide Medical comes from sales in China, and the company's products are finally sold to hospitals for patients' final consumption.
Most of The service targets of Baide Medical are second- and third-level hospitals, covering 22 provinces, municipalities directly under the central government and autonomous regions in China. In the first half of 2021, there were 230 hospitals in China purchasing products from companies, of which 131 were top three hospitals.
In recent years, the scale of Baide Medical's revenue has continued to increase, and it will turn a profit in 2020. According to the prospectus, from 2018 to 2020, the company's revenue was 52.321 million yuan, 85.029 million yuan and 118 million yuan, and the net profit was -60.013 million yuan, -49.661 million yuan and 46.692 million yuan, respectively.
Judging from the income statement data, the loss of Baide Medical in the early years was mainly related to the change in the fair value of the convertible bonds, and had nothing to do with the actual operation of the company. After 2020, the value of convertible bonds changed less and the company finally achieved profitability.
According to Frost & Sullivan, in terms of sales revenue in 2020, Baide Medical is the third largest supplier of microwave ablation medical devices in China, with a market share of 13.9%. In addition, the company ranked first in the field of treatment of thyroid nodules and breast masses, with a market share of 28.1%.
Entering 2021, on the basis of successful turnaround, the performance of Baide Medical has reached a new level. In the first half of 2021, the company's revenue was 74.671 million yuan, an increase of 57% year-on-year; net profit was 27.006 million yuan, an increase of 305% year-on-year.
Three
The earning power of Baide Medical should not be underestimated. From 2018 to the first half of 2021, the company's gross profit was 38.824 million yuan, 75.987 million yuan, 102 million yuan and 65.092 million yuan, respectively.
What is particularly striking is that from 2018 to the first half of 2021, the gross profit margin of Baide Medical was 87.4%, 91.9%, 92.8% and 92.8% respectively, and such a high gross profit margin was directly comparable to that of medical and aesthetic listed companies known for their huge profits.
On the surface, Baide Medical makes a lot of money, but there are also many places to spend money. In the sales expenses of Baide Medical, employee costs and conference expenses account for a relatively high proportion, accounting for nearly 70% of the total sales costs.
Among them, the conference expenditure is mainly the cost of participating in different levels of medical conferences to promote brands and products, which was reduced to 343,000 yuan in the first half of 2020 due to the epidemic.
It is worth noting that The R&D expenditure of Baide Medical has also decreased significantly from 8.048 million yuan in 2019 to 4.899 million yuan in 2020, a decrease of nearly 40%.
However, most of Baide Medical's income comes from microwave ablation needles. In 2020, the revenue from microwave ablation needles reached 88.04 million yuan, accounting for 74.4% of revenue; the revenue from microwave ablation therapy instruments was 10.86 million yuan, accounting for 9.2%.
The gross profit margin of Baide Medical Microwave Ablation Needle increased from 88.2% in 2018 to 93.1% in 2019, mainly due to the proportion of sales to hospitals from 8.5% to 51.4%.
It should be pointed out that the product structure of Baide Medical is relatively single, mainly microwave ablation needle, and its product structure is susceptible to external factors such as policies, technical iterations, and changes in market demand. For example, in the context of the procurement of medical consumables with quantity, it is not excluded that microwave ablation needles may be included in the collection list in the future.
At present, the collection of high-value medical consumables has been carried out to the second batch, which involves heart pulse stents, artificial joints and other products, with the continuous expansion of the scope of collection, for medical device companies has been normalized.
Once in the collection ranks, the price reduction is the most direct consequence, the average price reduction of the winning bid is more than 80%; if it cannot enter the collection and procurement ranks, it is likely to lose most of the market share in the relevant field and be squeezed out of the existing market.
Undoubtedly, whether it can enter the collective procurement ranks or not, it will have a certain impact on the future performance of Baide Medical, and even affect its current market position.
Four
epilogue
In fact, the current medical environment is still conducive to the growth of Baide Medical.
According to the World Cancer Report, the number of global cancer patients in 2020 is about 19.292 million, of which the number of patients in Asia is 9.2037 million, accounting for about one-half of the global incidence. It is followed by Europe, with 4.3984 million cases, accounting for about one-fifth of the global incidence.
China has become a high incidence of cancer, with 4.5687 million new cancer cases in China in 2020, accounting for about 23.68% of the global cancer incidence, 3.0029 million deaths, accounting for about 30.16% of the global cancer deaths.
In the past two years, the incidence and mortality of cancer in China have shown a continuous growth trend. For every 100 new cancer cases in the world, China accounts for 23, and more than 12,500 people are diagnosed with cancer every day in China, while 8,227 people die of cancer, and the data is shocking.
Under such a general environment, Baide Medical, which is deeply engaged in cancer treatment, still has a large room for growth. However, in the process of growth, it is possible to be included in the collection of medical consumables at any time. Developing a diversified product pipeline may be an effective strategy for Maintaining Performance and Maintaining Competitive Advantage.