Gaoshih Medical Technology Co., Ltd. (hereinafter referred to as 'Gaoshih Medical') successfully went public on December 12, 2022. The company plans to issue a total of 13,068,600 shares globally, including 11,761,600 shares for international sale, with an additional 15% over-allotment rights. The issue price per share is HK$51.40, and it is expected that the net proceeds will be approximately HK$283 million.
During the process of listing in Hong Kong this time, Frost & Sullivan mainly undertook the following tasks: helping the issuer accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the issuer's competitive advantages, assisting the issuer, investment banks, and other intermediaries in completing the relevant parts of the prospectus (such as overview, competitive advantages and strategy, industry overview, business, and other important chapters), helping the issuer complete communication with the Hong Kong Stock Exchange and investors, assisting investors in quickly understanding the market ecosystem and competitive landscape, and assisting the issuer in completing feedback on various industry-related issues from the Hong Kong Stock Exchange, etc.
Investment highlights
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The company is a market participant in the ophthalmic medical device industry, with a product portfolio covering diagnostic and therapeutic equipment and consumables for seven major sub-specialties of ophthalmology;
According to the Frost & Sullivan report, in 2021, the company:
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In terms of revenue, it is the largest local player and the fourth-largest player in the Chinese ophthalmic medical device market (excluding contact lenses and care solutions), with a market share of 6.7%;
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Ranked first in the Chinese ophthalmic medical diagnostic device market by revenue, with a market share of 18.2%;
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Ranked second in China in terms of technical service revenue and the number of technical service personnel, it is a major ophthalmic medical device technical service provider.
Overview of Ophthalmic Disease Diagnosis and Treatment
Ophthalmic diseases refer to any condition that affects any part of the eye, including the cornea and ocular surface, lens, vitreous body, retina, choroid, and optic nerve. Common ophthalmic diseases include refractive errors, dry eye syndrome, glaucoma, cataracts, and fundus diseases. Ophthalmic diseases usually require at least one type of ophthalmic equipment or consumables for diagnosis and treatment. Ophthalmic medical device providers form differentiated product portfolios based on their own R&D direction and business strategy to meet the targeted needs of patients with different ophthalmic subspecialties. A wide coverage of subspecialties and a comprehensive layout of equipment and consumables can help enterprises build brand reputation and, in turn, achieve broader hospital sales network coverage.
Schematic diagram of major ophthalmic diseases and diagnostic and therapeutic instruments
Data source: Analysis by Frost & Sullivan
Overview of the Ophthalmic Medical Device Market in China
The market for ophthalmic medical devices in China (excluding contact lenses and care solutions) grew from 92 billion yuan in 2017 to 163 billion yuan in 2021, with a compound annual growth rate of 15.5% during this period. Affected by the pandemic, the scale of the ophthalmic medical device market in China slightly declined in 2020. In 2021, as the impact of the pandemic weakened, the market rebounded. It is expected that the ophthalmic medical device market in China will continue to grow in the future, reaching 304 billion yuan by 2025 and 515 billion yuan by 2030.
China's Ophthalmic Medical Devices Market (excluding contact lenses and care solutions) is segmented by ophthalmic diagnostic devices/treatment devices/consumables/service technologies, 2017 - 2030E
Data source: Analysis by Frost & Sullivan
Market competition pattern of ophthalmic medical devices in China
In terms of revenue, GAVI Medical ranked fourth in the Chinese ophthalmic medical device market (excluding contact lenses and care solutions) in 2021, and first among domestic manufacturers.
China's Ophthalmic Medical Devices Market (excluding contact lenses and care solutions), by Manufacturer, 2021
Data source: Analysis by Frost & Sullivan
Market competition pattern of ophthalmic diagnostic instruments in China
The market for ophthalmic diagnostic instruments in China grew from 1.5 billion yuan in 2017 to 2.5 billion yuan in 2021, with a compound annual growth rate of 14.0% during this period. In 2021, HiVision Medical ranked first in the Chinese ophthalmic diagnostic instrument market by revenue, accounting for 18.2% of the market share.
The Chinese ophthalmic diagnostic instrument market, segmented by manufacturers, 2021
Data source: Analysis by Frost & Sullivan
Market competition pattern of ophthalmic treatment devices in China
The Chinese ophthalmic treatment device market grew from 3.8 billion yuan in 2017 to 5.8 billion yuan in 2021, with a compound annual growth rate of 11.6% during this period. In 2021, ranked by revenue, Haowei Medical ranked third in the Chinese ophthalmic treatment device market, accounting for 6.8% of the market share.
The Chinese ophthalmic treatment device market, by manufacturer, 2021
Data source: Analysis by Frost & Sullivan
Market competition pattern of functional intraocular lenses in China
Functional intraocular lenses include multifocal intraocular lenses, trifocal intraocular lenses, and extended depth of focus (EDoF) intraocular lenses. Compared to monofocal intraocular lenses, which can only achieve clear vision at a single distance, functional intraocular lenses provide clear vision at different distances, offering patients better postoperative vision and quality of life. Their market share in the overall intraocular lens market is expected to gradually increase. In 2021, ranked by revenue, Haowei Medical ranked fourth in China's functional intraocular lens market.
Competitive landscape of ophthalmic medical device technology services in China
Ophthalmic medical device technical services include daily maintenance and repair services for equipment, both of which require technicians with profound expertise in ophthalmic medical devices. Ophthalmic medical device maintenance provides necessary assurance for the efficiency of daily diagnosis and treatment of ophthalmic diseases at various end-users and the safety of patient care. With the continuous growth in the penetration rate of advanced ophthalmic diagnostic and therapeutic equipment into ophthalmic terminals, the demand for trained ophthalmic medical device technical service personnel at these terminals will continue to increase in the future. In 2021, Carl Zeiss and GAVI Medical accounted for more than half of the market share in China's ophthalmic medical device technical services market. Benefiting from a comprehensive product portfolio and a high-quality ophthalmic medical device technical service team, GAVI Medical ranked second in China's ophthalmic medical device technical services market and first among domestic manufacturers, based on technical service revenue and number of technical service personnel in 2021.
The Chinese ophthalmic medical device technical service market is segmented by manufacturers, 2021
Data source: Analysis by Frost & Sullivan
Analysis of the Development Drivers of the Ophthalmic Medical Device Market in China
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Government policy supports development
The Chinese government attaches great importance to eye health issues and has introduced a series of policies in recent years to strengthen the awareness of eye disease prevention and control among the nation, continuously improve the construction of the ophthalmic medical service system, optimize the allocation of high-quality ophthalmic medical resources, and thus accelerate the development of ophthalmic healthcare. In June 2018, the National Health Commission issued the "Myopia Prevention and Control Guidelines," pointing out that pathological myopia retinopathy has become one of the main causes of irreversible blindness in China, making myopia prevention and control urgent. In June 2019, the State Council issued the "Notice on Printing and Distributing Opinions on Promoting the Sustainable and Healthy Development of Socially Operated Medical Institutions," increasing government support for socially operated medical institutions and standardizing and guiding social forces to establish ophthalmic hospitals. With the support of this policy, the number of private hospitals has grown rapidly, reaching 24,766 in 2021, accounting for 67.7%, which is conducive to promoting the penetration of ophthalmic disease diagnosis and treatment at the grassroots level. In January 2022, the National Health Commission issued the "Notice of the National Health Commission on Printing and Distributing the '14th Five-Year Plan' National Eye Health Plan (2021-2025)," focusing on strengthening the construction of the ophthalmic medical service system, capacity building, and talent team development, continuously improving the ophthalmic medical quality control system, promoting the expansion of high-quality ophthalmic medical resources and gradually sinking them to the grassroots level.
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There is a huge clinical demand for ophthalmic diseases
Affected by the decline in China's neonatal birth rate and the expected increase in life expectancy, the aging process in China is gradually accelerating. In 2021, the number of people aged 65 and above in China reached as high as 200 million, with a compound annual growth rate of 6.1% from 2017 to 2021. The prevalence of fundus diseases such as cataracts, glaucoma, and diabetic retinopathy can increase with age, and these diseases can severely affect the quality of life of residents. Fundus diseases are the leading cause of blindness among Chinese patients, yet public awareness and screening for fundus diseases remain at a relatively low level. There is a huge clinical diagnosis and treatment demand for ophthalmic patients in China. To meet the growing needs for ophthalmic diagnosis and treatment, the state has successively issued policies to enhance domestic ophthalmic medical service capabilities, applying effective vision screening and fundus screening technologies at the grassroots level. This will promote the rapid development of the ophthalmic medical device market in China to a certain extent.
Analysis of the Development Trend of the Ophthalmic Medical Device Market in China
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Innovation and upgrading of ophthalmic medical devices
The Chinese government has been committed to promoting the innovative development of medical devices and has promulgated relevant regulations to simplify device approval procedures, shorten approval times, and improve evaluation and approval efficiency. Currently, the approval time for innovative medical devices has been greatly reduced. Domestic ophthalmic device manufacturers have continuously increased their investment in research and development to continuously enhance their innovation capabilities and maintain technological leadership. In addition, with the improvement of national awareness of eye diseases and payment capabilities, there are more diversified demands for the diagnosis and treatment of eye diseases. To meet the growing clinical needs for eye diseases, manufacturers have continuously innovated in technology and optimized product performance related to the diagnosis and treatment of eye diseases. At the same time, with the integration of big data technology and artificial intelligence technology, manufacturers will collaborate with ophthalmic terminals to provide patients with full-process, intelligent, and user-friendly services covering pre-diagnosis, in-clinic, and post-diagnosis.
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The demand for ophthalmic technical services is constantly increasing
Ophthalmic terminal regularly pays maintenance fees to ophthalmic equipment technology service providers for the repair and upkeep of ophthalmic diagnostic and treatment equipment. At the same time, with the continuous upgrading and innovation of ophthalmic equipment research and development technology, ophthalmic equipment has become increasingly advanced. Ophthalmic professionals need experienced technical service teams to assist them in the accurate and flexible use of advanced equipment when using it. Ophthalmic equipment providers with technical service teams can obtain sustainable income by providing technical services. In addition, high-quality technical services help establish long-term and stable cooperative relationships between ophthalmic equipment providers and ophthalmic professionals, which is conducive to the continuous sales of their supporting consumables.
Analysis of Industry Barriers in the Chinese Ophthalmic Medical Device Market
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Brand reputation accumulation
The establishment of brand reputation cannot be achieved overnight. Ophthalmic medical devices, especially those for ophthalmic treatment, require several years to gain the recognition of ophthalmic professionals for their product performance and effectiveness. During this period, manufacturers need to provide continuous clinical education to ophthalmic professionals to maintain a good cooperative relationship. Therefore, companies with a longer development history tend to have a better reputation among ophthalmic professionals and greater market influence. Pioneers in the industry can enjoy a first-mover advantage and gain a larger market share, while new entrants into the market need to launch products with superior performance on this basis, increase sales and promotion investments to capture market share.
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Rich product types and extensive sales network layout
The classification of ophthalmic diseases is complex, and a rich variety of product types can cover a wider range of diagnosis and treatment areas for ophthalmic diseases. In addition, a broader product portfolio helps companies establish relationships with KOLs in different professional fields, which is beneficial for enhancing the company's brand reputation. In terms of sales network layout, from product approval to gradual penetration into ophthalmic terminals, companies need time and cost investment in establishing a complete sales network. A wide coverage of the sales network helps ophthalmic device companies increase their brand awareness and recognition at the hospital level, thereby achieving broader coverage of hospital resources and maintaining their market share in a highly competitive market environment.
Frost & Sullivan, integrating 61 years of global consulting experience, has been serving the booming Chinese market with dedication for 24 years. With a global perspective, it demonstrates how clients accelerate their corporate growth and achieve benchmark positions in industry growth, innovation, and leadership. The healthcare industry is one of Frost & Sullivan's core areas of focus. Over the past 20-plus years, the Frost & Sullivan team has provided financing and financial advisory services, IPO industry advice, strategic consulting, management consulting, and other services for hundreds of outstanding domestic and international biopharmaceuticals, medical devices, healthcare services, and internet healthcare companies. Successful listings include: Leuprocare (2291.HK), Jian Shi Technology (9877.HK), Health Yuan (JCARE.SW), Leupro Medical (LEPU.SW), DingDang Health (9886.HK), Bio-Thera (2315.HK), Zhiyun Health (9955.HK), MeinGene (6667.HK), Prenetics (PRE.NASDAQ), Yunkang Group (2325.HK), Ruike Biotech (2179.HK), Leupro Biotech (2157.HK), Clear Medical (1406.HK), BaiXinAn (2185.HK), Yonghe Medical (2279.HK), KailaiYing (6821.HK), Beihai Kangcheng (1228.HK), Gusheng Tang (2273.HK), YingPong Technology (2251.HK), Clover Biotech (2197.HK), Minimally Invasive Robotics (2252.HK), Harmony Cayman (2256.HK), Kunbo Medical (2216.HK), Xianruida (6669.HK), KangSheng Global (9960.HK), Yimaitong (2192.HK), Tengsheng Bo Yao (2137.HK), CanSino (2162.HK), Chaopu Ophthalmology (2219.HK), Guichuang Tongqiao (2190.HK), Hua Huang Medicine (0013.HK), Codel Therapeutics (2171.HK), Zhaokew Eye Hospital (6622.HK), Nature Pharmaceuticals (UPC.NASDAQ), Sainfo Therapeutics (6600.HK), Zhaoyan New Drugs (6127.HK), Novogene Health (6606.HK), Tianyan Pharmaceuticals (ADAG.NASDAQ), Beikang Medical (2170.HK), JianBimiaoMiao (2161.HK), Minimally Invasive HeartTong (2160.HK), RuiLi Medical Beauty (2135.HK), Gaoke Pharmaceutical (1167.HK), Hepalink Pharma (2142.HK), JD Health (6618.HK), Deqi Pharma (6996.HK), Rongchang Biotech (9995.HK), WuXi AppTec (2126.HK), SonoPharmaceuticals (2096.HK), Yunding New Yao (1952.HK), Jiahe Biotech (6998.HK), ZaiDing Pharma (9688.HK), Ocular Oncology (1477.HK), Yongtai Biotech (6978.HK), Haipu Pharmaceutical (9989.HK), Kechuang Pharmaceutical (9939.HK), Peijia Medical (9996.HK), Kangfang Biotech (9926.HK), Nuocheng Jianhua (9969.HK), IMAB.NASDAQ, Kanglong Chemical (3759.HK), China Antibody (3681.HK), Dongyao Pharmaceutical (1875.HK), Yasheng Pharmaceutical (6855.HK), Fuhong Hanlin (2696.HK), Hansoh Pharmaceutical (3692.HK), Mabotech Pharma (2181.HK), Fangda Holdings (1521.HK), ViaBio (1873.HK), CStone Pharmaceuticals (2616.HK), Junshi Biosciences (1877.HK), WuXi AppTec (2359.HK), Innovent Biologics (1801.HK), Hualing Medicine (2552.HK), BeiGene (6160.HK), Gilead Sciences (1672.HK), WuXi AppTec (2269.HK), China Resources Medicine (3320.HK), Yakuten Scientific Research Pharmaceutical (2633.HK), Hualing China Medicine (HCM.NASDAQ), Biotechnology (1548.HK), BBI Life Sciences (1035.HK), and others. In terms of the number of filings, the Frost & Sullivan healthcare team maintains an absolute leading position in Hong Kong's healthcare IPO market, consistently ranking first in market share from 2018 to 2021.
Since the listing of the first batch of companies on the Sci-tech Innovation Board in July 2019, Frost & Sullivan reports have been widely cited in the prospectuses of leading Sci-tech Innovation Board listed companies in the industry, including: Kangwe Century (688426.SH), Jincan Protein (688137.SH), Nuo Cheng Jianhua (688428.SH), Aopu Mai Biotech (688293.SH), MicroPort Electrophysiology (688351.SH), Mengke Pharmaceutical (688373.SH), Yifang Biotech (688382.SH), Jicui Yaokang (688046.SH), Haichuang Pharmaceutical (688302.SH), Rongchang Biotech (688331.SH), Rendu Biotech (688193.SH), Shouyao Holdings (688197.SH), Heyuan Biotech (688238.SH), Yaxin Security (688225.SH), Xidi Micro (688173.SH), Mawei Biotech (688062.SH), Yahong Medicine (688176.SH), BeiGene (688235.SH), Jiahe Meikang (688246.SH), Dizhe Medicine (688192.SH), Novogene (688105.SH), Chengda Biotech (688739.SH), Geke Micro (688728.SH), Huaxi Biotech (688363.SH), Junshi Biotech (688180.SH), Zhejiang Oncology (688266.SH), BeiGene (688177.SH), Shenzhou Cells (688520.SH), etc., which are considered one of the most powerful, professional, and influential industry research institutions in the sector. We hope to work with enterprises to understand industry trends, seize development opportunities, jointly promote innovation and upgrading of China's healthcare industry, and build a healthy future.
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