Kunbo Medical Holdings Limited (Stock Code: 2216.HK) successfully listed on the main board of the Hong Kong capital market on September 24, 2021. Kunbo Medical is a medical device company focusing on the development of interventional respiratory products. Established in 2012, Kunbo Medical has been a pioneer in the field of interventional respiratory medicine, providing innovative solutions for lung diseases nationwide and globally. Utilizing its proprietary full-lung navigation technology, Kunbo Medical has developed a comprehensive interventional respiratory platform that includes navigation and diagnosis and treatment, addressing the pain points of existing diagnostic and treatment models and a large number of unmet medical needs for lung diseases by improving the treatment outcomes for lung cancer and chronic obstructive pulmonary disease. Frost & Sullivan provided exclusive industry advisory services for Kunbo Medical's listing in Hong Kong and hereby warmly congratulate it on its successful listing.
Kunbo Healthcare Holdings Limited (hereinafter referred to as 'Kunbo Healthcare') successfully listed on September 24, 2021, with a global offering of 89,355,000 shares at a price of HK$18.70 per share. The net proceeds from the global offering were approximately HK$1.552 billion. Frost & Sullivan (Frost & Sullivan, hereinafter referred to as 'Frost & Sullivan') provided exclusive industry advisory services for Kunbo Healthcare's listing, and we hereby extend our 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 Interventional Respiratory Medicine
The main diagnostic and therapeutic procedures in interventional pulmonology include endoscopic procedures and percutaneous procedures. These procedures usually involve different requirements for medical staff, medical devices, and the use of anesthetic agents. The diagnostic procedures on which the therapeutic procedures in interventional pulmonology are based often include additional techniques specific to particular disease conditions. Diseases suitable for interventional pulmonology include chronic obstructive pulmonary disease (COPD), lung cancer, and pleural diseases. Compared to traditional surgery, interventional pulmonology offers patients the benefits of low cost and minimal risk. In fact, interventional pulmonology procedures can be performed before any surgery, making it the preferred choice for the diagnosis and treatment of almost any lung disease.
Classification of Interventional Respiratory Medicine
Data source: Frost & Sullivan analysis
Minimally invasive interventional respiratory medicine has increasingly been used to treat lung diseases such as chronic obstructive pulmonary disease (COPD) and lung cancer. In 2020, the number of bronchoscopy procedures conducted globally reached 7.1 million times, increasing at a compound annual growth rate of 3.2% from 2016 to 2020. It is estimated that by 2025 and 2030, this number will reach 9.6 million times and 11.7 million times respectively. In 2020, the number of bronchoscopy procedures performed in China reached 3.8 million times, increasing at a compound annual growth rate of 3.4% from 2016 to 2020, and are expected to reach 5.4 million times and 6.7 million times respectively by 2025 and 2030.
Breakdown of bronchoscopy procedures by region, 2016 to 2030 (estimated)
Data source: Frost & Sullivan analysis
lung navigation
Overview
The Interventional Respiratory Medicine Navigation Platform refers to the navigation technology used by doctors for diagnosing and treating lung diseases. The Interventional Respiratory Medicine Navigation Platform includes ultrasonic, electromagnetic, and optical navigation systems. The electromagnetic navigation system, known as 'lung GPS', uses electromagnetic fields to track instruments passing through the respiratory tract or skin. Electromagnetic navigation bronchoscopy relies on a preoperative chest CT scan to create a three-dimensional (3D) virtual airway map for real-time tracking of related lesions. Optical navigation is based on X-ray fluoroscopy or CT to guide percutaneous and transbronchial lung biopsies. Virtual bronchoscope navigation ('VBN') is an optical navigation method that uses CT images obtained before VBN to generate virtual images of the bronchial path leading to the lesion, and uses these virtual images to guide the bronchoscope, improving the diagnostic rate of peripheral lung diseases. The successful application of electromagnetic navigation bronchoscopy has promoted the development of many new bronchoscope navigation systems, such as VBN systems and robotic-assisted systems. International well-known companies in the Interventional Respiratory Medicine medical device industry have been committed to developing innovative lung navigation systems, as shown in the following figure.
Data source: Frost & Sullivan analysis
The following table lists the global commercial navigation platforms for respiratory medicine. The Archimedes system developed by Broncus is also known as LungPro in Mainland China. According to Frost & Sullivan, it is the only navigation system in the world capable of providing real-time augmented reality image navigation for full lung coverage. The Archimedes system can provide real-time navigation support both inside and outside the airway, while other navigation systems can only navigate within the airway. Illumisite and superDimension developed by Medtronic rely on supplementary consumables to puncture a hole in the tracheobronchial wall and create a passage to enter the lesion outside the airway (where it does not have navigation support capabilities). In addition, the location of the lesion can be inside or near the airway. The Archimedes system is currently the only navigation system that is not limited by lung anatomical structures and can reach the entire lung for diagnosis and treatment of lung diseases. The navigation functions of other systems can only cover lesions located inside or near the airway. Furthermore, the Archimedes system can virtually display the blood vessels throughout the lungs, guiding doctors to avoid blood vessels during navigation to ensure the safety of airway external diagnostic or treatment procedures. Other navigation systems may damage the blood vessels near the trachea, leading to pulmonary hemorrhage.
Data source: Frost & Sullivan analysis
Note:
(1) BTPNA is a new imaging-guided technique. After calculating the straight-line path from the airway wall entry point to the lesion, an access sheath passes through lung tissue under fluoroscopic guidance to reach the lesion.
The design purpose of the CrossCountry tool is to puncture a hole in the tracheobronchial wall so that an endoscope can be inserted through it later to dilate the passage and enter a lesion without bronchial signs (outside the airway).
(3) TTNA involves injecting local anesthetic before inserting a long needle into the chest wall between the patient's ribs to extract lung tissue samples for biopsy.
In the past few years, the average ex-factory price of lung navigation systems sold in China has remained relatively stable, and the main raw materials used to manufacture these systems have also been relatively stable, with expectations for this situation to continue in the future. As the market's acceptance of advanced navigation technology increases, it may lead to an increase in the unit price of lung navigation products in the future.
Market scale of navigation equipment for interventional respiratory medicine in China
In 2020, the market scale of China's interventional respiratory navigation platforms reached $6.9 million, growing at a compound annual rate of 68.9% from 2016 to 2020, and is expected to reach $1.887 billion by 2025. In 2020, the sales volume of China's interventional respiratory navigation platforms was 27 devices, increasing at a compound annual rate of 73.2% from 2016 to 2020, and is expected to reach 1,200 devices by 2025. The Chinese interventional respiratory navigation equipment market is dominated by four major players including Broncus, which accounts for the entire interventional respiratory navigation market in China. As of 2018, 2019, and 2020, Broncus ranked first in the Chinese interventional respiratory navigation equipment market by sales volume, with a market share of 43.2%; it ranked second by sales revenue, with a market share of 37.5%. As of 2018, 2019, and 2020, Company A ranked second by sales volume, with a market share of 35.8%; it ranked first by sales revenue, with a market share of 45.1%. As of 2018, 2019, and 2020, Company B ranked third by sales volume, with a market share of 18.5%; its market share by sales revenue was 15.1%. As of 2018, 2019, and 2020, Company C ranked last, with a market share of 2.5% by sales volume and 2.3% by sales revenue, as shown in the following chart.
Sales revenue breakdown of Chinese interventional respiratory medicine navigation platforms by manufacturer from 2018 to 2020
Data source: Frost & Sullivan analysis
Sales breakdown of Chinese respiratory intervention navigation platforms by manufacturer from 2018 to 2020
Data source: Frost & Sullivan analysis
Note:
(1) Company A is an American multinational medical device company registered in Ireland, covering four major business segments: Cardiac and Vascular, Minimally Invasive Treatment, Repairive Treatment, and Diabetes.
(2) Company B is a domestic navigation technology company in China, focusing on the early detection, accurate and minimally invasive diagnosis, and treatment of lung diseases.
(3) Company C is a multinational corporation registered in Japan, specializing in optics and imaging. Its products include microscopes, endoscopes, and other medical equipment. Its sales include those of Company D, which was acquired by Company C (a medical device company headquartered in St. Louis, Missouri, focusing on assisting doctors with early diagnosis and treatment of lung cancer).
Diagnosis of lung disease
Overview
The diagnosis of lung diseases includes open lung biopsy, interventional pulmonology diagnosis, and traditional radiographic scanning methods. Traditional scanning methods include X-rays, CT scans, ET-CT scans, and magnetic resonance imaging (MRI), whose accuracy is often questioned. In addition, the radiation used in these methods is harmful to patients. Open lung biopsy, on the other hand, involves a surgeon making a small incision on the left or right side of the patient's chest, then inserting an endoscope through a small hole between the ribs to examine the area that needs to be biopsied. Interventional pulmonology diagnosis uses tools such as endoscopes to diagnose and treat lung and chest diseases. Open lung biopsy has always been considered the last resort because it carries significant risks to the patient undergoing the biopsy, especially for patients with chronic obstructive pulmonary disease and heart failure. Among all available lung cancer diagnostic options (including radiographic scanning, interventional pulmonology, percutaneous diagnosis, and open lung biopsy), interventional pulmonology has unique advantages such as precise localization, minimal side effects, and a high diagnostic rate. The following figure compares different diagnostic methods for lung cancer.
Source:Literature review, Frost & Sullivan analysis
According to Frost & Sullivan analysis, in 2020, the number of bronchoscopy procedures conducted in China under navigation platform guidance reached 6,400, growing at a compound annual rate of 151.7% from 2016 to 2020. It is expected to reach 130,100 procedures by 2025, with a compound annual growth rate of 82.7% from 2020 to 2025, accounting for 2.4% of the total number of bronchoscopy surgeries in China. By 2030, it is estimated that the market penetration rate of bronchoscopy procedures under navigation platform guidance will eventually approach 50% of the total number of bronchoscopy surgeries in China. Due to the increasing number of low-level hospitals, which dominate the Chinese healthcare system, using navigation systems and requiring more mature navigation technology to improve their diagnostic capabilities, there is great market potential for the sales growth of lung navigation systems. In addition, in 2020, the market scale of interventional respiratory diagnostic consumables in China reached $26.3 million, growing at a compound annual rate of 25.6% from 2016 to 2020, and is expected to reach $1.377 billion by 2025.
Number of bronchoscopy procedures conducted by China under the guidance of navigation platforms from 2016 to 2030 (estimated)
Data source: Frost & Sullivan analysis
Competitive benchmark for diagnosing medical consumables manufacturers
The following table lists the medical consumables for interventional respiratory medicine diagnosis and market participants of navigation platforms in China.
Data source: Frost & Sullivan analysis
Treatment of lung diseases
Interventional respiratory therapy for lung cancer
The treatment procedures for interventional respiratory medicine in lung cancer are mainly divided into two categories: vascular and non-vascular approaches. Vascular approaches include vasoconstrictive therapy and chemotherapy. Vasoconstrictive therapy can alleviate hypotension, and chemotherapy helps kill cancer cells. Non-vascular approaches include radiofrequency ablation ('RFA'), thermal vapor ablation, microwave ablation, and video-assisted thoracoscopic surgery ('VATS'). Energy ablation systems heat the tumor, thereby killing cancer cells. Common energy ablation techniques include RFA, microwave ablation, cryoablation, and laser ablation. According to Frost & Sullivan's data, RFA is the most widely used ablation technique for treating malignant lung tumors. VATS is an alternative method to energy ablation surgery, a minimally invasive surgical technique used for lung disease diagnosis and treatment. During a VATS procedure, a miniature camera (thoracoscope) and surgical instruments are inserted into the chest through one or more tiny incisions on the chest wall.
According to Frost & Sullivan analysis, radiofrequency ablation is the first commercially viable ablative device and has been widely adopted. It has the following advantages:
• High cost-effectiveness: Compared to other new devices such as microwave ablation and high-intensity focused ultrasound scanning, it offers a relatively higher cost-performance ratio.
• Safety: The use of small-sized electrodes (specifications 14-17) provides better safety compared to gentle combustion, microwave ablation, and cryoablation.
• Incidence of adverse events: The incidence of adverse events is generally lower than that of microwave ablation, ranging from 23.9% to 39.5%, while the average incidence of adverse events for microwave ablation is 43.5%.
• Compatibility: Compatible with imaging equipment such as magnetic resonance imaging and computed tomography.
Interventional respiratory therapy for chronic obstructive pulmonary disease
The treatment procedure types for interventional pulmonology in chronic obstructive pulmonary disease include thermal vapor ablation, valvular therapy, and coil therapy. Thermal vapor ablation uses heated water vapor to generate a thermal reaction that causes an initial local inflammatory response, which can subsequently lead to permanent fibrosis and atelectasis. Valvular therapy is a lung volume reduction surgery that renders the lung lobe ineffective without removing any lung tissue. For patients with interlobular collateral ventilation, coil therapy is a potential treatment option because the coil device can reduce overventilation by compressing the lung parenchyma and better transmit elastic recoil pressure. However, there is currently no commercially viable coil therapy. Among these methods, thermal vapor ablation systems have the following competitive advantages, including (i) a wider target population: Thermal vapor ablation has been proven effective for most patients with heterogeneous emphysema because BTVA is not affected by collateral ventilation, while valvular therapy is only effective for patients without collateral ventilation; and (ii) enhanced efficacy and safety: Thermal vapor ablation targets the most diseased lung segments (each lung lobe of the human body consists of several segments), while protecting healthy lung segments and allowing for multiple treatments.
Competitive benchmarks for radiofrequency ablation and thermal vapor ablation
The main global commercialized radiofrequency ablation systems used for interventional respiratory medicine treatment include:
Not applicable * As clinical trials are still underway, there is currently no publicly available clinical data.
Data source: Frost & Sullivan analysis
The main global commercialised products for interventional respiratory therapy methods related to chronic obstructive pulmonary disease include:
Data source: Frost & Sullivan analysis
Frost & Sullivan, integrating 60 years of global consulting experience, has dedicated 23 years to serving the booming Chinese market. With a global perspective, it helps clients accelerate their business growth and achieve industry-leading benchmarks in terms of growth, innovation, and technology. The health industry is one of the core areas of focus for Frost & Sullivan. Over the past sixteen years, the Frost & Sullivan healthcare team has provided financing and financial advisory services, IPO industry advice, strategic consulting, management consulting, and other services to hundreds of outstanding domestic and international biopharmaceuticals, medical devices, healthcare services, and internet healthcare companies. Successful listings include: Xianruida (6669.HK), Kangsheng Global (9960.HK), Yimaitong (2192.HK), Tengsheng Bopharm (2137.HK), Canora (2162.HK), Chaoyu Eye Hospital (2219.HK), Guichuang Tongqiao (2190.HK), Hua Huang Medicine (0013.HK), Koi Pharmaceutical (2171.HK), Zhaoke Eye Hospital (6622.HK), Nature Medicine (UPC.NASDAQ), Saiseng Pharmaceutical (6600.HK), Zhaoyan New Drugs (6127.HK), Novogene Health (6606.HK), Tianyan Pharmaceutical (ADAG.NASDAQ), Beikang Medical (2170.HK), Jianbimiao Miao (2161.HK), Minimally Invasive Heart Center (2160.HK), Rui Li Medical Beauty (2135.HK), Jiake Pharmaceutical (1167.HK), Hepcon Pharma (2142.HK), JD Health (6618.HK), Deqi Pharma (6996.HK), Rongchang Biotech (9995.HK), WuXi AppTec (2126.HK), Sono Pharma (2096.HK), Yunding Newray (1952.HK), Jiahe Biotech (6998.HK), Zai Ding Pharma (9688.HK), Ocular Therapeutics (1477.HK), Yongtai Biotech (6978.HK), Hapre Pharmaceutical (9989.HK), Kechuang Pharmaceutical (9939.HK), Peijia Medical (9996.HK), Kangfang Biotech (9926.HK), Novogene Health (9969.HK), Tianjing Biotech (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 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), Hailun Medicine (2552.HK), BeiGene (6160.HK), Gilead Sciences (1672.HK), WuXi AppTec (2269.HK), China Resources Medicine (3320.HK), Janssen Research & Pharmaceutical (2633.HK), Hua Huang China Medicine (HCM.NASDAQ), 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 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: Huaxi Biotech (688363.SH), Junshi Biosciences (688180.SH), Zhejiang Genomics & Therapeutics Co., Ltd. (688266.SH), Beiogen Pharmaceuticals (688177.SH), Shenzhou Cells (688520.SH), etc. 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 of China's healthcare industry, and build a healthy future.
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