The concept of “new quality productivity” was emphasized many times during the two sessions. In particular, the medical device industry, the high-end medical device sector, which is driven by scientific and technological innovation as the core driving force, is undoubtedly also moving towards a rapid development path as an important indicator for measuring the country's level of high-tech development.

Long before that, many deputies and members of the committee had put forward a number of proposals and proposals for the medical device industry. Among them, terms such as rare medical devices and implantable medical devices appeared frequently, reflecting the importance and expectations that society attached to the industry. At the same time, with the implementation of relevant policies such as the “Guiding Catalogue for Industrial Structure Adjustment (2024 edition)”, the innovation and development of the high-end medical device industry has received more incentives and support.

The introduction of these policies not only provided solid support for the advancement of the medical device industry, but also provided an important opportunity for domestic high-end medical devices in 2024.

From an investment perspective, national policy trends and guidance clearly reveal the huge development potential of the high-end medical device industry, or at the same time point out a direction of concern for investors.

With the current Hong Kong stock companies announcing their 2023 results, some domestic high-end innovative medical device manufacturers are speeding up. Xinwei Medical is one of them.

Continue to reduce costs and increase efficiency, and revenue from therapeutic devices has increased dramatically

Looking intuitively at financial data, Xinwei Healthcare's revenue grew steadily in 2023, and profitability continued to be unleashed, generating revenue of about 232 million yuan, up 26.9% year on year; gross profit was 164 million yuan, up 31.7% year on year, and gross margin was 70.5%, up 2.6 percentage points year on year.

There are two main reasons behind this achievement:

First, reduce costs and increase efficiency, continuously optimize the operating structure, and greatly improve management efficiency.

Financial reports show that in 2023, Xinwei Medical's sales expenses, management expenses, and R&D costs all fell year-on-year, to 34.1%, 32.1%, and 53.3%, respectively, achieving pre-tax losses of 103 million yuan, a sharp reduction of 48.9%.

Second, in an environment where collection in the field of high-value consumables has become normalized, this has not only had a significant impact on the production and operation models of major high-end medical device manufacturers, but also brought significant adjustments to the supply and demand relationship, price system, and market competition environment of the entire medical industry chain.

Xinwei Medical continues to promote the upgrading of the neurological intervention business to focus on therapeutic devices, upgrade the product structure, and quickly adapt to the changing market environment.

Among them, neurointerventional treatment devices such as embolization stents and suction catheters, expansion balloons and embolization protection systems, and spring rings received revenue of 98.2 million yuan, an increase of 62.9% over the previous year, accounting for 42.3% of revenue; neurointerventional access devices and other products received revenue of 134.1 million yuan, an increase of 9.3% over the previous year.

As a leading neurointerventional medical device company, Xinwei Medical continued to grow during industry changes, achieving continuous optimization of the financial structure, and its development strategy cannot be ignored.

Over the past year, Xinwei Medical has not only met market needs by continuously launching innovative and differentiated products, but has also achieved remarkable results in expanding the global market. Together, these efforts contributed to the growth of the company's performance and showed positive marginal improvements.

Strengthen endogenous growth based on innovation and a global perspective

First, innovation is a key factor driving the development of the high-end medical device industry. It can not only improve the technical content and quality of products, but also an important guarantee for enterprises to stay invincible in fierce market competition.

In terms of innovation, Xinwei Medical's strength cannot be underestimated. It has pioneered a one-stop solution for stroke treatment and prevention in China, and has a full product pipeline from acute ischemic stroke and neurovascular stenosis treatment, ischemic stroke prevention, hemorrhagic stroke treatment to interventional access devices.

At present, the company has 28 equipment products approved by the NMPA. The rich and diverse pipeline combination not only meets the treatment needs of patients with different types of stroke, but also provides doctors with richer and more accurate treatment methods.

According to reports, Xinwei Medical expects that in the next two years, at least 5 major neurointerventional treatment devices will be launched one after another, including drug balloons for stenosis treatment, self-inflating drug stents, and carotid artery stents, aneurysm embolization support stents for hemorrhagic stroke treatment, and blood flow guidance devices, continuously increasing the company's market share in the field of interventional neurological treatment.

Among them, drug balloons for stenosis treatment and aneurysm embolization stents for hemorrhagic stroke have all obtained the NMPA green channel qualification. This is not only a reflection of the company's innovative strength, but its commercial marketing process will also be further accelerated.

In addition, Xinwei Medical is also actively improving the competitiveness of key embolization products (suction catheters and embolization stents) and one-stop medical device solutions to meet the growing demand for stroke treatment in the context of aging in China.

Second, by drawing on the development experience of US equipment giants and the Japanese market, there is no doubt that going overseas is the only way for leading high-end medical device companies to develop.

This can be seen from the development history of American device giant Medtronic.

Since its launch in 1980, Medtronic's share of overseas market revenue has remained at a high level, and this ratio has continued to increase over time. In emerging markets in particular, data shows that Medtronic's revenue share increased from 11.2% in FY2013 to 17.4% in FY2023. The significant data growth not only brought considerable benefits to the company, but also provided solid support for the company's long-term development.

Similarly, in the Japanese medical device market, in the face of the double pressure of domestic medical insurance fee control and slowing demand growth, Japanese medical device companies have successfully diversified their business and achieved steady revenue growth by actively exploring overseas markets. Currently, Chinese medical device companies are at a stage of development similar to Japan's past. The implementation of domestic medical insurance fee control policies and the gradual maturity of market demand have all made going overseas an inevitable choice for enterprise development.

Furthermore, in the context of domestic medical insurance fee control, the price of overseas medical devices is relatively stable, and with technological progress and product innovation, the unit price of high-end innovative medical devices is showing an upward trend. Therefore, if domestic high-end medical device companies want to seek greater profit margins, they will definitely focus on expanding overseas markets.

In the past year, Xinwei Healthcare has also made positive progress in the strategic layout of globalization.

For example, Star-Catcher's intracranial embolization stent obtained MDR certification, first filling the MDR certification gap for three types of interventional neuroembolization products in the EU market (non-legacy devices), and embolization stents, balloon catheters, distal channel catheters, and microcatheters have obtained CE or FDA certification, and have completed registration and commercialization in countries or regions such as Thailand.

It can be said that these innovative products are Xinwei Medical's “passport” to enter the international market. While bringing the company many performance growth points around the world, they also provide more high-quality medical options for patients around the world.

According to reports, at present, the company is still actively promoting product registration in 10 other countries or regions to expand sales channels and establish long-term goals for overseas sales. The implementation of this strategic layout will help Xinwei Medical to further optimize global resource allocation, diversify single market risks, and also lay a solid foundation for the company's continuous development and enhancement of international competitiveness.

Overall, the dual strategy of self-research innovation and global development has provided Xinwei Medical with strong growth momentum and high certainty in future market competition.

The market pattern is focused on the head, and the leader's advantage accelerates the release of value

Lengthening the perspective, the medical device industry's dual attributes of “protecting people's livelihood” and “high technology” have laid the foundation for its long-term steady development.

At the policy level, in recent years, policies such as the “Special Examination Procedure for Innovative Medical Devices” and the “Priority Approval Procedure for Medical Devices” have been introduced to facilitate the rapid approval and listing of innovative products and urgently needed products. This not only supports the innovation and development of the medical device industry, but also accelerates the pace of domestic substitution.

Changes at the market level also cannot be ignored. The acceleration of domestic aging that exceeds expectations has brought about a continuous increase in demand for medical devices, especially demand for high-value consumables, which indicates a further expansion in the size of various medical device market segments.

As a result, many brokerage institutions have given positive expectations for subsequent developments in the field of high-end medical devices. For example, Zheshang Securities pointed out that in the field of high-value consumables, the procurement and supply of large categories will basically be completed in 2023, and 2024 is expected to enter an upward cycle of revenue and profit margins. 2024Q1-Q2 routine elective surgery may still be in the upward recovery cycle, while rigid surgeries such as coronary intervention may be less affected by external influences. It is recommended to focus on areas requiring rigidity such as stents, balloons, and electrophysiology.

The author believes that in an environment of major procurement trends, leading companies are more likely to be favored because of their advantages in technological innovation, product quality control, and cost management. This is particularly evident in the field of high-value consumables such as neurointerventional medical devices, where the market pattern is gradually being concentrated. This concentration has not only enhanced the overall competitiveness and efficiency of the industry, but also brought more development opportunities to leading companies such as Xinwei Healthcare.

Returning to the capital market, although the innovative medical device sector has faced many challenges in the capital market in recent years and its performance has been slightly fatigued, the market has begun to undergo some positive changes. The emergence of signs such as expectations of US interest rate cuts and increased expectations of lower interest rates in the domestic market has provided favorable conditions for industry recovery, and the market has shown a downward trend. I believe that as the value of Xinwei Healthcare continues to be realized, this growth will eventually be reflected in the capital market, which is worth looking forward to.