Gushengtang Holdings Limited (hereinafter referred to as 'Gushengtang') was successfully listed on December 10, 2021, with a global issuance of 2,787.8 million shares at a pricing range of HK$25.8 to HK$29.0, raising approximately HK$808 million.
During the Hong Kong listing process, Frost & Sullivan mainly undertook the following tasks: helping the company accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the company's competitive advantages, assisting the company, investment banks, and other intermediaries in completing relevant parts of the prospectus (such as overview, competitive advantages and strategy, industry overview, business, and other important sections), facilitating communication with the Hong Kong Stock Exchange and investors, helping investors quickly understand the market ecosystem and competitive landscape, and assisting the company in completing feedback on various industry-related issues from the Hong Kong Stock Exchange, etc.
Overview of the Chinese Medical Service Industry Market
The scale of China's healthcare market is huge and growing steadily. According to statistics from the National Health Commission, total healthcare expenditure in China increased from RMB 4635 billion in 2016 to RMB 7231 billion in 2020, with an annual compound growth rate of 11.8%. According to a Frost & Sullivan report, it is estimated that total healthcare expenditure in China will reach RMB 1761.6 billion by 2030, with an annual compound growth rate of 9.3% from 2020 to 2030. At the same time, per capita healthcare expenditure in China increased by 11.4% annually to reach RMB 5,163 in 2020 from RMB 3,352 in 2016, and is expected to reach RMB 12,191 by 2030, with an annual compound growth rate of 9.0% from 2020 to 2030.
As an important part of China's healthcare industry, the Chinese medical services sector accounted for 57.1% of the market share in the healthcare industry in 2019. According to a Frost & Sullivan report, the market scale of China's medical services sector increased significantly from 2954 billion yuan in 2015 to 4644 billion yuan in 2019, with a compound annual growth rate of 12.0%. It is expected to grow to 1006.2 billion yuan by 2030 at a compound annual growth rate of 7.3%.
Traditional Chinese medicine (TCM) healthcare services are an important part of China's healthcare system. According to a Frost & Sullivan report, TCM healthcare service providers mainly include traditional Chinese medicine hospitals, clinics, temples, and other institutions offering TCM healthcare services. In the entire healthcare market, TCM healthcare services complement other types of healthcare services.
In recent years, the government has introduced a number of policies favorable to traditional Chinese medicine (TCM) healthcare service providers, which has led to an expansion in the customer base for TCM healthcare services. Compared with other healthcare service providers, TCM healthcare service providers offer medical services that cover the entire life cycle of healthcare management, from disease prevention to treatment, and finally to rehabilitation, which demonstrates the unique advantages of TCM healthcare services in chronic disease management and health care.
Overview of the Market Scale of Traditional Chinese Medicine Big Health Industry in China
The Chinese traditional medicine (TCM) big health industry has become an important part of China's healthcare sector. According to a Frost & Sullivan report, the TCM big health industry consists of six parts: (i) TCM diagnosis and treatment services; (ii) traditional Chinese medicine; (iii) TCM health products; (iv) TCM information technology infrastructure; (v) TCM health testing equipment; (vi) TCM diagnosis and treatment equipment. Among them, TCM diagnosis and treatment services are the main component, while the TCM information technology infrastructure part focuses on supplying software and hardware for TCM medical service providers. The remaining components are mainly related to R&D, production, and sales of traditional Chinese medicine, health products, and TCM-related medical equipment.
Compared with Western medicine, traditional Chinese medicine (TCM) has unique advantages in health management throughout the life cycle, especially in chronic disease management. TCM comprehensive health management can provide patients with continuous and comprehensive TCM conditioning at a controllable cost of medical expenses. By closely monitoring relevant physiological indicators such as blood pressure and blood sugar in patients with chronic diseases or sub-healthy individuals, TCM comprehensive health management can provide personalized health care plans, preventive treatment, promote long-term recovery, and improve lifestyle according to the specific conditions of patients.
Benefiting from the continuous encouragement of favorable national policies, the market scale of China's traditional Chinese medicine (TCM) big health industry has grown rapidly in recent years. According to a Frost & Sullivan report, the market scale of TCM big health in China increased by 12.2% annually, from 578.7 billion yuan in 2015 to 917.4 billion yuan in 2019. The growth rate is faster than that of the overall Chinese healthcare industry during the same period, and it is expected to grow to 2973.4 billion yuan by 2030 at a compound annual growth rate of 11.3%.
Market scale of traditional Chinese medicine for big health in China, 2015 - 2030E
Data source: Analysis by Frost & Sullivan
Among them, in the TCM diagnosis and treatment service sector, the market share of private TCM medical service providers has been growing rapidly. According to a Frost & Sullivan report, the market scale of private TCM medical service providers in the TCM diagnosis and treatment service sector increased from 29.0% in 2015 to 41.2% in 2019, and is expected to grow to 51.2% by 2030.
Private Chinese traditional Chinese medicine (TCM) service providers mainly operate outpatient departments and clinics focusing on basic care, while public TCM service providers are primarily found in comprehensive state-owned hospitals. They hold a dominant position in the field of TCM diagnosis and treatment services, with a long history and high reputation. They possess rich doctor resources, advanced medical facilities, and receive strong support from local governments. Therefore, Gushengtang mainly competes with private TCM service providers in its main business. According to a Frost & Sullivan report, in the highly fragmented private TCM diagnosis and treatment service market, Gushengtang ranked eighth among private Chinese TCM service providers in terms of total revenue generated from providing healthcare solutions in 2020.
China has participants in the traditional Chinese medicine industry across online and offline medical service networks
Recently, more and more traditional Chinese medicine (TCM) healthcare providers are establishing and developing online medical service networks while improving their existing offline stores. They use internet technology to provide patients with digital, standardized TCM healthcare services (including but not limited to medical services and online appointments), integrating online and offline TCM resources with Western medicine. As a result, TCM healthcare providers can more effectively provide patients with services from disease diagnosis to health management.
Traditional Chinese medicine (TCM) healthcare service providers integrate online and offline services, aiming to address the following pain points of traditional TCM diagnosis and treatment methods:
1. The supply of medical resources across the country is unevenly distributed: Most experienced traditional Chinese medicine (TCM) practitioners are located in first- and second-tier cities, making it difficult for patients in smaller cities to receive high-quality TCM services. However, online services can effectively expand the service scope of TCM medical service providers;
2. Lack of integration between online and offline resources: Unlike traditional TCM market participants who only provide offline diagnosis and treatment services, or those who only offer follow-up consultations on online platforms, TCM healthcare providers with an online and offline service network can fully utilize the interaction between online and offline platforms to provide comprehensive TCM healthcare services for patients;
3. The public lacks professional knowledge about traditional Chinese medicine: Nowadays, many people still do not have a full understanding of traditional Chinese medicine. Traditional Chinese medicine service providers with online and offline medical service networks can promote traditional Chinese medicine concepts and knowledge to a wider audience through internet platforms and applications, thereby increasing public acceptance and awareness of traditional Chinese medicine.
As early as before 2018, some public traditional Chinese medicine (TCM) hospitals and clinics in the TCM big health industry began exploring online TCM medical services. Gradually, more and more TCM medical service providers with offline stores have also started developing online businesses, including providing follow-ups, renewing prescriptions, and selling products online. According to a Frost & Sullivan report, the market size of TCM medical service providers with both online and offline medical service networks has increased significantly from RMB 5.1 billion in 2015 to RMB 692 billion in 2019, with an annual compound growth rate of 91.8%. It is expected to grow at a compound annual growth rate of 34.5% to reach RMB 1.8 trillion by 2030.
The market scale of traditional Chinese medicine service providers with online and offline medical service networks2015-2030E
Data source: Analysis by Frost & Sullivan
Frost & Sullivan integrates 60 years of global consulting experience, dedicated to serving the booming Chinese market for 23 years. With a global perspective, it demonstrates how clients accelerate their corporate growth, achieving industry-leading benchmarks in terms of growth, innovation, and technology. The healthcare industry is one of Frost & Sullivan's core areas of focused research. Over the past sixteen years, the Frost & Sullivan healthcare team has provided financing and financial advisory, IPO industry advisory, strategic consulting, management consulting, and other services to hundreds of outstanding domestic and international biopharmaceutical, medical device, healthcare service, and internet healthcare companies. Successful listings include: Eagle Eye Technology (2251.HK), Clover Biotech (2197.HK), MicroPort Robotics (2252.HK), Harmony Capital (2256.HK), Kunbo Medical (2216.HK), Xianruida (6669.HK), Kangsheng Global (9960.HK), Medlive (2192.HK), Tengsheng Bopharm (2137.HK), Canopy (2162.HK), Chaopu Ophthalmology (2219.HK), Guichuang Tongqiao (2190.HK), Hua Huang Medicine (0013.HK), Koi Pharmaceuticals (2171.HK), Zhaokew Pharmaceutical (6622.HK), Nature Medicine (UPC.NASDAQ), Saisun Pharmaceutical (6600.HK), Zhaoyan New Drugs (6127.HK), Novogene Health (6606.HK), Tianyan Pharmaceuticals (ADAG.NASDAQ), Beikang Medical (2170.HK), Jianbimiao Miao Miao (2161.HK), MicroPort Heart Link (2160.HK), Rui Li Medical Beauty (2135.HK), Gaoke Pharmaceutical (1167.HK), Hepcon Pharma (2142.HK), JD Health (6618.HK), Deqi Pharma (6996.HK), Rongchang Biotech (9995.HK), WuXi AppTec (2126.HK), Simcere Biotech (2096.HK), Yunding Newray (1952.HK), Jiahe Biotech (6998.HK), Zai Ding Pharma (9688.HK), Ocular Biotech (1477.HK), Yongtai Biotech (6978.HK), Haipure Pharma (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 Medicine (6855.HK), Fuhong Hanlin (2696.HK), Hansoh Pharmaceutical (3692.HK), Mabtech Pharmaceuticals (2181.HK), Fangda Holdings (1521.HK), Via Biotech (1873.HK), CStone Pharmaceuticals (2616.HK), Junshi Biosciences (1877.HK), WuXi AppTec (2359.HK), Innovent Biologics (1801.HK), Hailun Medicine (2552.HK), BeiGene (6160.HK), Gilead Sciences (1672.HK), WuXi AppTec (2269.HK), China Resources Pharmaceutical (3320.HK), Jacobus Pharmaceutica (2633.HK), HCM.NASDAQ, Kingsbridge Biotechnology (1548.HK), BBI Life Sciences (1035.HK), etc. In terms of the number of listed projects, the Frost & Sullivan healthcare team maintains an absolute leading position in Hong Kong's healthcare IPO market, continuously occupying more than 90% of the market share from 2018 to 2020.
Since the first batch of companies on the Sci-tech Innovation Board (STAR Market) were listed in July 2019, Frost & Sullivan reports have also been widely cited in the prospectuses of leading STAR Market-listed companies, including: Novogene (688105.SH), Chengda Biology (688739.SH), Gecko Microelectronics (688728.SH), Huaxi Biotechnology (688363.SH), Junshi Biosciences (688180.SH), Zhejiang Genomics & Bioinformatics Co., Ltd. (688266.SH), BeiGene (688177.SH), and Shenzhou Cells (688520.SH). It is 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 in China's healthcare industry, and build a healthy future.
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