Image source @Visual China
Titanium Media Note: This article is the key sharing content of Yan Xiao, investment director of Proxima Venture Capital, in the 40th issue of "Qingtong Big Names Say", and he shared investment opportunities and new trends in medical devices.
I used to be in the medical device research and development industry, and then worked in the US department of Boston Science . Five years later, I returned to China and joined Proxima Venture Capital.
chose to return to China because I saw the huge market potential of domestic medical devices, and many favorable policies were introduced, among which the registrant system is very important for integrating with the international community and promoting the development of the domestic medical device market.
5 Current status of popular tracks
From the current situation, medical devices are relatively lagging behind in Europe and the United States. But in the long run, the domestic market growth trend is obvious. I have summarized the current situation and trends of 5 popular tracks:
1. Surgery robot. Domestic surgical robot companies have flourished in recent years, for example, 4-5 companies are already doing "Leonardo da Vinci". Some companies are also engaged in specialized robots, such as knee, knee joint, and nerve robots.
2. Artificial organ. The demand for artificial organ market in China is very large, but the supply is seriously insufficient. Therefore, there are many companies that develop artificial heart pumps and various insulin pumps.
3. Neurological regulation. neurocontrol is developing very fast in foreign markets, and the Chinese market is gradually awakening, and is mostly used in treatments such as epilepsy, Parkinson's . In fact, neuromodulation can be applied in a wider range of fields, such as headache management, inflammation management, etc.
4. Medical AI. is a topic that everyone is very concerned about. If AI medical treatment is now more serious, most of which are used in lung nodules, pathology, glasses, and cardiovascular diseases. In addition, it is also worth paying attention to where AI is implemented in medicine, whether it can make profits, whether it can truly solve pain points and improve efficiency.
5. Rapid minimally invasive heart surgery. Minimally invasive surgery has brought a lot of investment hotspots. The investment philosophy of Boston Science is that if we can replace it with minimally invasiveness, we will invest. For example, minimally invasive entry into the valve can treat heart failure, mitral valve and most structural heart diseases, or surgical instruments that can be subjected to microscope or endoscopy.
China has huge potential for medical equipment, and innovative enterprises are catching up with
There is still a huge gap in the medical equipment industry in China and the United States. In the US market, the proportion of devices and drugs is 1:1, with the total output value of enterprises reaching US$208.4 billion. The leading enterprises are very concentrated, with R&D investment exceeding US$10.4 billion. In China, the market size is 370 billion yuan, mainly small and medium-sized enterprises, and the proportion of devices and drugs is only 0.33:1, and the product update is relatively slow. Compared with new drugs, domestic investment in device research and development is relatively lagging behind. Because device talents are not concentrated in the medical field, doctors are more conservative in their treatment, clinicians are not innovated enough, and government investment is relatively lacking.
But in the long run, there are great opportunities in the Chinese market, innovative companies are catching up quickly, and the industrial foundation is maturing.
In terms of talents, a large number of overseas returnees have returned to China to start businesses, and there are also many forward-looking doctors, academicians and other talents. They have seen good technology and cooperated with enterprises.
In terms of technology, as China's precision processing technology matures and materials science is developing day by day, it is mainly because multinational companies have cultivated some processing and material quality control talents by looking for agents in China.
capital has also seen opportunities from it, and its attention to the medical industry is constantly increasing, especially in the medical device field.
In addition, policies are also very important driving factors, such as using major special projects, green channels, etc. to support accelerated review. Innovative device approval channels will save medical enterprises more than half a year. There is also the registration system for medical devices, which allows medical Class II devices to be built without having to build their own factories. This is a very big innovation, and enterprises can focus on R&D without burden.
During this period, we saw that industrial clusters were formed in various places, which were particularly prominent in Suzhou, Shanghai, Beijing, Hangzhou, Shenzhen and other places.As of December 31, 2018, the green channel system was introduced, and 197 products have been specially approved through innovative channels, and 54 innovative medical companies have been approved for listing, gradually breaking foreign monopoly, and leading companies have emerged in various fields such as cardiovascular, IVD, medical imaging, neuroregulation, neurostimulation, surgical robots, etc.
medical equipment can establish modular workshops. The registrant system promotes industrial transformation
Compared with drug research and development, the devices are relatively certain and easier to construct platforms around core technologies.
With more and more innovative enterprises, the equipment industry chain is relatively complete, and there are company research and development and production in each link.
has a R&D model that is "Expert + Enterprise" . When doctors are inspired, they will find related companies, such as the Tricuspid Valve project jointly established by Proxima Centauri and Changhai Hospital . This is the model. In turn, companies will also find excellent doctors, take the lead in KOLs, academicians, organizing committees, etc. to conduct animal or clinical trials, and then CRO companies provide services and make rapid progress.
has professional service agencies for the remaining registration, approval, production and promotion links. This greatly reduces detours and encourages talents with ideas and skills to innovate medical devices. At the policy level, the benefit of the device device machine note volume system is that it has activated a large number of CDMO platforms . Class II devices can better help enterprises reduce the burden through CDMO production, and "Foxconn" in the medical device field can better produce for enterprises. However, the disadvantage of this is that the investment threshold for equipment below Class II will be much lower.
I personally think that the two-vote system has no big impact on innovative medical companies , because it is mainly aimed at circulation and agents. The "4+7" in the pharmaceutical industry has arrived, and I personally think that consumables are not far away. In addition, I am more concerned about the holder system and some green channel systems, which will have an impact on innovative enterprises.
Overall, I think the Chinese medical device market is very good, especially for small businesses. In European and American countries, it is very difficult for small enterprises to compete with large enterprises because large enterprises have invested a lot of resources in the corresponding departments and have a lot of interest binding. The exit of small enterprises is mainly based on mergers and acquisitions.
In China, even the most active medical device institutions still lack innovation capabilities, and many products from innovation channels are not produced by these Chinese giants. Chinese innovative medical device manufacturers can be listed, such as Anhan, Qiming, etc., which is impossible in the United States.
China's medical device market is in a very good period of opportunity. When Chinese innovative enterprises truly grow, they will have a "big tree effect".
Proxima Venture Capital Investment Strategy and Layout
Proxima Venture Capital was established in 2016 and is an industrial capital focusing on medical and health care. We manage the RMB and US dollars, focusing on projects from angels to growth, mainly focusing on medical devices, IVD and biopharmaceuticals.
For medical device investment, Proxima Venture Capital has three major investment strategies and focus:
1. Focus on major and urgently needed unmet clinical needs, and abandon ordinary products
major clinical practice, such as valves, life support. There are also some brain nerves, lungs, urinary digestion, etc. We will invest in these areas where clinical needs are urgently needed and more patients, but there is no solution yet.
We focus on leading enterprises, such as obtaining innovation channels, or enterprise projects with major innovations and major national special projects.
2. has been verified in the European and American markets or is being verified in the principle
The theory or corresponding instrument principles have been verified in the European and American markets, or during the verification process. For example, it has obtained FDA certification or has large-scale clinical data, but it has not yet been found in China.
Traditional domestic substitution, we no longer dare to invest in it. I think domestic substitution is sometimes a false proposition.In fact, the junior and senior three are mainly imported equipment, and domestic brands rarely enter their procurement catalog. It is quite difficult and risky to enter a Grade A hospital with a large flow of people.
3. High-value consumables
High-value consumables, such as a valve of 200,000, or a neural regulation DBS of 300,000. In addition, China will have a "4+7" in the pharmaceutical industry, but I think the "4+7" of consumables are not far away, and high-value consumables still have certain risk aversion risks. I think the competition in low-price will be suppressed in the future, and there is still a huge possibility of investment in high-value consumables.
There are many key points worth paying attention to in 2019
medical device segmentation tracks. I personally think that in 2019, heart disease, nerve intervention, and lungs are worth paying attention to.
In terms of the heart, the cardiovascular valuation has always been very high, but there is not much that can be done by cardiovascular vasculature. focus on valves, especially mitral valve , and there will be many companies coming out because the market for mitral valve is large enough. I don’t think there is a good investment window for stents, especially metal stents and medicine balloons. biodegradable stent is still paying attention to it, because I have done a biodegradable stent in the United States, and the clinical trials in the United States are not good and doctors will not accept it. I'm not sure whether Chinese doctors will accept this.
In terms of neurointervention, I think it is not just about the coil and the truncated stent. There are better products for neurointervention abroad, and some people in China are starting to do it.
In terms of lungs, I think some better device companies will emerge. Because China is a major country with lung disease, there are a lot of patients, which is the difference between us and abroad. Combining medical and clinical practice, I think domestic innovation may be better than the United States.
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