Good News on Listing | Frost & Sullivan Assists Xianruida Medical Technology Co., Ltd. to Successfully List on the Hong Kong Stock Exchange (6669.HK)

Xianruida Medical Technology Co., Ltd. successfully went public on August 24, 2021 (hereinafter referred to as 'Xianruida'), issuing a total of 68,633,000 shares at a price of HK$23.80 per share. Frost & Sullivan (Frost & Sullivan, hereinafter referred to as 'Frost & Sullivan') provided exclusive industry advisory services for Xianruida Medical Technology Co., Ltd.'s listing and hereby extends its warmest congratulations on its successful listing.

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 the 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.

Overview of Vascular Diseases

Vascular diseases are conditions that affect arteries and/or veins, which can be classified into arterial diseases, venous diseases, and arteriovenous access diseases. Depending on the location of the affected artery, arterial diseases can be further divided into intracardiac arterial diseases, aortic diseases, intracranial and vertebral artery diseases, and peripheral arterial diseases. Venous diseases mainly include varicose veins and deep vein thrombosis.

Treatment of arterial diseases

The treatment methods for atherosclerosis mainly include lifestyle changes, medication, traditional open surgery, and minimally invasive interventional surgery. Lifestyle changes and medication help control diabetes, hypertension, hyperlipidemia, and hypercholesterolemia, but these methods alone are not sufficient to cure the disease. Minimally invasive interventional surgery has fewer complications, allows patients to recover faster, and is cheaper compared to open surgery, making it gradually becoming the preferred choice for both patients and doctors. During interventional surgery, compared to PTA balloons, the medication applied to DCB can effectively inhibit neointimal hyperplasia, thereby reducing late lumen loss and restenosis; compared to stent implantation, DCB treatment can significantly reduce the risk of thrombosis, avoid stent fracture and in-stent restenosis (ISR), reflecting the unique concept of 'no implantation with intervention'.

China DCB Product Market

The Chinese DCB product market is in its initial development stage and has tremendous growth potential. After DCB was first approved in China for the treatment of coronary artery disease (CAD), its market share increased from 26.93 million yuan in 2015 to 1 billion yuan in 2019, with a compound annual growth rate of 150.5%. As the indications for DCB products expand to more vascular diseases, the compound annual growth rate of Chinese DCB products from 2019 to 2024 is expected to be 41.5%, reaching 6 billion yuan by 2024. From 2024 to 2030, the compound annual growth rate of Chinese DCB products is expected to be 15.5%, and the market size will reach 14.27 billion yuan in 2030.

Overview of Lower Extremity Arterial Disease (LEAD)

In peripheral arterial disease (PAD) caused by atherosclerosis, LEAD is the most common condition. LEAD occurs when plaques form in the leg arteries, leading to poor blood circulation, which can cause leg pain and increase the risk of open wounds on the skin. If not treated early, LEAD can lead to leg tissue necrosis and even amputation. The main risk factors for LEAD include smoking, diabetes, obesity, hypercholesterolemia, hypertension, family history, and age. The number of people with LEAD in China increased from 35.82 million in 2015 to 39.57 million in 2019, with a compound annual growth rate of 2.5%. From 2019 to 2030, the compound annual growth rate of the number of people with LEAD in China was 2.1%, which will increase to 49.84 million by 2030. Diabetes is the main cause of lower limb atherosclerotic lesions, and its most common lower limb symptom is diabetic foot. The number of patients with diabetic foot in China is large and increasing. The number of people with diabetic foot in China increased from 6.54 million in 2015 to 7.37 million in 2019, with a compound annual growth rate of 3.1%. From 2019 to 2030, the compound annual growth rate of the number of people with diabetic foot in China was 2.5%, which will increase to 9.71 million by 2030.

Lower limb interventional therapy in China

In the early stages of LEAD, the main treatment options for patients included behavioral changes and medication. In recent years, lower limb interventional therapy has developed rapidly, resulting in fewer complications and faster recovery times, making it more popular among doctors and patients than bypass surgery. Compared to other interventional therapies (such as PTA balloons and drug-coated stents), DCB therapy has many advantages, and therefore, DCB surgery is expected to account for a significant portion of lower limb interventional procedures. Lower limb DCB treatment includes supracondylar (above-knee) and infracondylar (below-knee) DCB treatment. The number of lower limb arterial DCB surgeries in China increased from zero in 2015 to 12,000 in 2019, and is expected to increase by a compound annual growth rate of 53.9% from 2019 to 2024 to reach 105,000 cases (including 25,000 infracondylar DCB treatments) by 2024, and by a compound annual growth rate of 23.9% from 2024 to 2030 to reach 381,000 cases (including 154,000 infracondylar DCB treatments) by 2030.

Market scale of lower limb DCB products in China

The market scale of lower limb DCB products in China increased from zero in 2015 to 140 million RMB in 2019. From 2019 to 2024, the compound annual growth rate of the lower limb DCB product market in China is expected to be 55.1%, with an anticipated increase to 1270 million RMB (including 360 million RMB for lower limb products) by 2024. From 2024 to 2030, the compound annual growth rate of the lower limb DCB product market in China is expected to be 14.6%, with an increase to 2890 million RMB (including 1470 million RMB for lower limb products) by 2030.

Xianruida is the leader in China's lower limb DCD market. In 2020, Xianruida accounted for approximately 86.9% of the Chinese lower limb DCD market share, with revenue reaching 140 million RMB.

End-stage renal disease (ESRD) and hemodialysis (HD)

End-stage renal failure, also known as end-stage kidney disease (ESRD), is the final stage of chronic kidney disease where a patient's kidney function has declined to an extent that it can no longer operate on its own. Patients with end-stage renal failure must receive dialysis or kidney transplantation to survive.

The number of HD patients in China increased from 385,000 in 2015 to 633,000 in 2019 at a compound annual growth rate (CAGR) of 13.2%. It is expected to increase by a CAGR of 16.2% from 2019 to 2024 to reach 1.341 million in 2024, and by a CAGR of 18.8% from 2024 to 2030 to reach 3.776 million in 2030.

The treatment methods for HD AVF stenosis include surgery and endovascular intervention. Surgery is the traditional treatment method for HD AVF stenosis, but it can lead to infections and other complications, and not all patients can afford (or are willing to undergo) open surgery. Endovascular intervention is currently the recommended method for treating HD AVF stenosis. Among all endovascular interventions, stent implants are more effective in preventing restenosis than PTA balloons, high-pressure balloons, and cutting balloons, but they may lead to ISR. DCB can effectively prevent restenosis while avoiding the occurrence of ISR.

The number of interventional HD AVF surgeries in China increased from about 7,700 cases in 2015 to 39,000 cases in 2019, at a compound annual growth rate of 50.1%. It is expected that from 2019 to 2024, the number will increase at a compound annual growth rate of 43.8% to reach 240,000 cases in 2024, and from 2024 to 2030, it will increase at a compound annual growth rate of 26.7% to reach 995,000 cases in 2030.

The DCB market for HD AVF stenosis treatment in China is expected to reach 220 million RMB in 2024, further increasing to 2.38 billion RMB by 2030, with a compound annual growth rate of 48.7% from 2024 to 2030.

Coronary artery disease (CAD)

Coronary artery disease (CAD), also known as ischemic heart disease, is a cardiovascular disease caused by the narrowing or blockage of the coronary arteries (usually due to atherosclerosis). The main behavioral risk factors for CAD include advanced age, poor diet, lack of exercise, smoking, and excessive alcohol consumption. CAD is considered one of the most serious diseases due to its high incidence and mortality rates, posing a serious threat to human health (especially in rural areas). Due to factors such as population aging, obesity, and sedentary lifestyles, the number of CAD patients in China is expected to increase from 24.59 million in 2019 to 31.67 million by 2030 at a compound annual growth rate of 2.3%.

Currently, the treatment of CAD can generally be divided into four categories: medications, coronary artery bypass grafting (CABG), percutaneous coronary intervention (PCI), and stem cell transplantation. As of the latest practicable date, a total of eight intracoronary DCDB products have been approved for marketing in China, including seven suitable for treating ISR and one for treating bifurcation lesions. As of the latest probable date, Xianruida is conducting clinical trials for intracoronary DCDB products indicated for small vessel disease (SVD).

Expansion of indications for DCB products

DCB has been proven to be a safe and effective method for treating intracardiac stenosis, lower limb arterial stenosis, and HD AVF stenosis. In addition, Xianruida is also actively researching the application of DCB in other peripheral arterial diseases, such as intracranial arteries, vertebral arteries, and internal iliac arteries.

Stroke is the second leading cause of death and the third leading cause of disability globally. A stroke occurs when an intracranial artery is blocked or ruptured, leading to insufficient blood supply and sudden death of brain cells due to lack of oxygen.

The number of stroke cases in China increased from 4.179 million in 2015 to 4.832 million in 2019, with a compound annual growth rate of 3.7%. It is expected to increase to 5.665 million by 2024, with a compound annual growth rate of 3.2% from 2019 to 2024, and further increase to 6.186 million by 2030 with a compound annual growth rate of 1.5% from 2024 to 2030. Acute ischemic stroke is the most common type of stroke, accounting for about 70% of stroke cases in China. Intracranial atherosclerotic stenosis is one of the main causes of ischemic stroke, accounting for 47.6% of cases. The number of ischemic strokes caused by intracranial atherosclerotic stenosis increased from 1.373 million in 2015 to 1.615 million in 2019, with a compound annual growth rate of 4.1%. It is expected to increase to 1.933 million by 2024, with a compound annual growth rate of 3.7% from 2019 to 2024, and further increase to 2.162 million by 2024 with a compound annual growth rate of 1.9% from 2024 to 2030.

The methods for treating intracranial atherosclerotic stenosis (ICAS) and extracranial vertebral artery stenosis (VAS) include lifestyle changes, medication, open surgery, and endovascular intervention. In the past, most interventional surgeries used PTA balloons or stents. However, due to the high likelihood of restenosis with PTA balloons and potential complications such as ISR with stents, DCB (Directional Coiling Balloon) is expected to become the main treatment method for ICAS and VAS.

Erectile dysfunction (ED)

Erectile dysfunction (ED) is defined as a persistent or recurrent inability to achieve or maintain an erection, with risk factors including male aging, unhealthy lifestyles, metabolic diseases, and adverse drug reactions.

The number of ED patients in China increased from 130 million in 2015 to 150 million in 2019, with a compound annual growth rate of 2.9%. It is estimated that the number will rise from 170 million in 2024 to 2030 at a compound annual growth rate of 3.1%, and then to 2.0 billion in 2035, with a compound annual growth rate of 2.4%.

Treatment of vascular erectile dysfunction

Currently, the treatment methods for vascular erectile dysfunction (ED) include medications, non-invasive medical devices, open surgery, and endovascular intervention. Among them, PDE5 inhibitor drugs remain the main treatment method for patients with vascular ED. However, the non-response rate of PDE5 inhibitor drugs can be as high as 50%, and the drugs can also lead to many complications. Non-invasive medical devices and open surgery can cause pain, bruising, and difficulty in ejaculation in patients, and there are also issues such as high costs. DCB (direct-compression balloon angioplasty) can reduce the risk of restenosis and avoid complications related to stents, therefore interventional surgery, especially DCB, will become the main therapy in the future.

Overview of Varicose Veins (VV)

Varicose veins (VV) are one of the most common chronic venous diseases (CVD), a degenerative condition of the venous system characterized by defects in the strength of the venous walls, accompanied by related valve dysfunction, leading to impaired blood return. The number of VV patients in China increased from 370 million in 2015 to 400 million in 2019, with a compound annual growth rate of 1.8%. It is expected that the number will rise to 430 million by 2024 at a compound annual growth rate of 1.6%, and to 480 million by 2030 at a compound annual growth rate of 1.6%, from 2019 to 2024.

Treatment of varicose veins and energy platform surgery

For superficial varicose veins (VV), self-care, over-the-counter anti-inflammatory drugs, and compression stockings are commonly used for treatment. However, for severe VV, open surgery, foam sclerotherapy, and radiofrequency ablation are usually recommended. Radiofrequency ablation is an emerging interventional technique that uses thermal energy along with lasers, microwaves, or radiofrequency waves to destroy and close diseased veins without leaving an incision or scar. The number of radiofrequency ablation (RFA) surgeries for varicose veins in China increased from about 2,700 cases in 2015 to 26,000 cases in 2019, with a compound annual growth rate of 76.9%. It is expected that the number will increase by a compound annual growth rate of 40.2% from 2019 to 2024 to reach 143,000 cases by 2024, and by a compound annual growth rate of 18.0% from 2024 to 2030 to reach 384,000 cases by 2030.

Overview of Deep Vein Thrombosis (DVT)

Deep vein thrombosis refers to a clinical syndrome where blood in the deep veins clots to form emboli, leading to obstruction of blood return to the corresponding vessels, commonly occurring in the legs. The number of new cases of DVT in China increased from 1.121 million in 2015 to 1.54 million in 2019, with a compound annual growth rate of 8.3%. It is estimated that the number will increase by 7.8% per annum to reach 2.236 million by 2024, from 2019 to 2024, and by 6.9% per annum to reach 3.342 million by 2030, from 2024 to 2030, according to the compound annual growth rate of 7.8%.

DVT treatment

The treatment of DVT aims to prevent the enlargement, rupture of blood clots, and the occurrence of pulmonary thromboembolism (PTE). Treatment methods for DVT include anticoagulation therapy, interventional surgery, surgical treatment, and other supportive therapies. Among them, interventional surgery has become the preferred method for DVT treatment in China. The number of thrombectomy surgeries in China increased from 29,000 cases in 2015 to 61,000 cases in 2019, with a compound annual growth rate of 19.9%. It is expected to increase to 143,000 cases by 2024, with a compound annual growth rate of 18.7% from 2019 to 2024, and to 528,000 cases by 2030, with a compound annual growth rate of 24.4% from 2024 to 2030.