Annual Analysis ｜ Why the Financing of China’s Medical Equipment Market Soaring by 39%?

Financing overview in 2021

The number of financing in the whole year increased by 7.2% year-on-year, slightly weak in the fourth quarter

In terms of financing times, 386 financing events occurred in 2021, with a year-on-year increase of 7.2%.The financing was the most concentrated in the third quarter, 123 times in total, and the least in the fourth quarter, 75 times in total; among them, the number of financing events (44 times) in August was the peak of the year, and only 15 times in December, a year-on-year decrease of 70.6% compared with 51 times in December 2020.

The number of RMB 100 million financing events increased by 39%, and the number of RMB 100 billion financing events decreased sharply

In terms of financing scale, the financing scale in 2021 was 48.93 billion yuan, a year-on-year decrease of 7.7%, mainly due to the reduction of super billion level financing events from 11 to 3, and the number of super billion level events reached 217, a year-on-year increase of 39%.In August, it ranked first with 5.89 billion yuan, and Yeju Medical obtained the largest financing amount of the whole year (200 million US dollars); it was followed by 5.6 billion yuan in November, and exceeded 4 billion yuan in April and May; since there were only 15 investment and financing events in December, the scale of RMB 1.92 billion was also the lowest in the whole year, and the financing scale in other months was relatively average.

Round A financing events increased by more than 20% year-on-year

In terms of financing rounds, in 2021, round C and above financing accounted for 15.5%, a certain decline compared with 18.3% last year, and round A(including pre-A and A +) financing increased by 22.4% year-on-year. The new round of financing shows that capital has a newer understanding and higher expectations for the medical equipment industry to a certain extent.

Segments of financing enterprises

Financing quantity

On the whole, in 2021, in-vitro diagnosis was still the most popular in the subdivided fields. Orthopedic instruments and dental instruments increased by 2 times year-on-year, and the popularity of AI auxiliary medical field slowed down, reducing about 10 financing events.

（i）High value consumables such as cardiovascular and orthopaedic instruments: with the continuous promotion of centralized procurement of coronary stents and orthopaedic joint consumables organized by the state, high-value consumables enterprises usher in a competitive environment full of opportunities and challenges. In the long run, the industry concentration will be further improved. For areas included in the scope of centralized procurement, it will benefit more from the gradual release of patient demand. For sub industries with high added value and high technology content, especially those with low degree of localization, the space for import substitution is still huge. According to the statistical results, 37 times of financing were obtained in the field of cardiovascular intervention in 2021, still ranking the second; The field of orthopaedic instruments was financed 18 times, a year-on-year increase of three times.

（ii）AI assisted medical care: according to China’s statistics in 2021, there were 23 financing events, with a year-on-year decrease of 30%, and the number of rounds C and above financing reached 8. The financing rounds moved backward, and there were few newly financed enterprises.

（iii）Minimally invasive surgery: in this field, the main business of the newly financed machinery enterprises in 2021 focused on endoscopes, of which Xinguangwei Medical won 400 million yuan in round A financing with the technical breakthrough of endoscopic optical imaging and image processing. In recent years, with the accelerated penetration of tumor early screening and minimally invasive treatment, the application of endoscopy in clinical diagnosis and treatment is gradually increasing, and the demand of medical institutions for gastroscope, enteroscope, endoscope and other endoscopes is increasing. According to the bidding statistics of Zhongcheng Medical Equipment Big Data Platform, the domestic endoscope market is dominated by Japanese and German enterprises such as Olympus, Carlstos and Fuji, and the market share of domestic brands such as Kaili Medical and Aohua endoscopes is less than 6%.

Financing scale

The overall financing scale of IVD decreased significantly, mainly due to several large-scale typical events in 2020, such as Huada Zhizao’s financing of US $1 billion in 2020. The largest increase in investment and financing in the field of cardiovascular intervention was about 2 billion yuan more than the previous year, a year-on-year increase of 28%; nearly 4 billion yuan of financing was obtained in the field of medical imaging, with a year-on-year increase of more than 80%.

Financing round

The vast majority of investment and financing still occured before round C, and nearly half of investment and financing in the field of in vitro diagnosis were in round A and before, indicating that investors in the primary market recognize the broad prospect of in vitro diagnosis; AI assisted medical financing rounds were relatively backward, and investors prefer to invest in enterprises with certain qualifications and scale.

Investment analysis of top ten capital institutions

From the perspective of the top ten head institutions (the top ten capital institutions in the number of IPOs of domestic invested enterprises in 2020), the ten investment institutions made 92 shots in 2021, covering 76 medical device enterprises, accounting for nearly 20%, with a year-on-year increase of 3%; in 2021, the cumulative investment and financing scale exceeded 17.7 billion yuan, accounting for more than 36%, with a year-on-year increase of 2%, and the top effect became more and more obvious.

In terms of subdivided fields, in vitro diagnosis and cardiovascular intervention accounted for more than half of the country, and there were five invested enterprises in medical robots, medical imaging and AI assisted medicine. The top institutions invested enterprises have a high IPO success rate, which represents the wind vane of the future development of the industry to a certain extent.

Regional distribution of financing favored by investors

In terms of financing quantity, Shanghai ranks first among cities in China, with Beijing and Suzhou ranking second and third respectively. Among them, Suzhou, Nanjing, Changzhou and Nantong in Jiangsu Province are among the top ten, with a total of 81 cases in the four cities. In terms of financing scale, Shanghai has exceeded 12.2 billion yuan, ranking first among cities. The top ten cities have exceeded 1 billion yuan, and are mainly concentrated in the coastal areas led by the Yangtze River Delta and the Pearl River Delta.

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