China’s medical device industry is currently facing a crisis, with the newly established Huaxia Zhongzheng Medical Equipment ETF (fund code: 562600) reporting a negative return rate of -12.47% after being in operation for over a year. Additionally, in the first half of the year, the total amount of national medical equipment procurement was only 52 billion yuan, marking a significant 35% decrease compared to the previous year, with half of the listed companies experiencing a decline in their performance.
As of November 27th, the return rate of the Huaxia Zhongzheng Medical Equipment ETF (562600) stood at -12.47%, having dropped by 3.76% in the past month alone, indicating a prevailing sense of market pessimism. On that day, the leading Chinese medical equipment companies, Mindray Medical and United Imaging Healthcare, saw their stocks decline by 1.00% and 0.95% respectively. The Huaxia Zhongzheng Medical Equipment ETF was established on November 23, 2023.
Artery Network, which focuses on the medical and health industry, reported on November 30th that a recent research report by Guoxin Securities revealed that in the first half of 2024, the total amount of national medical equipment procurement was only 52 billion yuan, marking a 35% decrease compared to the previous year.
Among various categories, the situation appears particularly severe for MRI, CT, ultrasound, endoscope, and monitoring equipment. The procurement amounts for these categories were 6.5 billion, 6.5 billion, 6 billion, 4.5 billion, and 1 billion yuan respectively, with corresponding declines of -40%, -40%, -40%, -50%, and -50%. The sales volume for each type of equipment has nearly halved.
On November 28th, the WeChat public account “MedTech Sapling” stated that in the first half of 2024, over 50% of listed medical device companies experienced a decrease in performance. For the medical device industry, the winter of 2024 seems particularly harsh.
The leading gene sequencing equipment company, BGI Genomics, reported a revenue of 1.869 billion yuan in the first three quarters of 2023, a 15.19% decrease compared to the previous year. The net profit attributable to shareholders of the listed company was -463 million yuan, indicating a loss. Its main business focuses on genetic testing and IVD equipment.
Yihe Jiaye reported an operating income of 602 million yuan in the first three quarters of 2024, marking a 36.31% decrease year-on-year. The net profit attributable to shareholders of the listed company was 125 million yuan, a 53.74% drop compared to the previous year. Its core business includes medical breathing machines, oxygen concentrators, and nebulizers.
Kaishi Medical’s third-quarter report for 2024 showed an operating income of 1.398 billion yuan, a 4.74% decrease year-on-year, with a net profit attributable to the parent company of 109 million yuan, down by 66.01%.
Yuyue Medical recorded a revenue of 6.03 billion yuan in the first three quarters of 2024, a decrease of 9.53% compared to the same period last year. The non-net profit reached 1.27 billion yuan, a drop of 23.74%.
Sannuo Biosensor reported a total operating income of 3.182 billion yuan from January to September 2024, showing a 4.83% increase compared to the same period last year. However, the net profit decreased by 19.71% to 255 million yuan.
Anjubo Bio’s revenue for the second quarter of 2024 was 1.1 billion yuan, with a net profit declining to 295 million yuan.
Leading cardiovascular device company Lepu Medical reported an operating income of 4.785 billion yuan in the first three quarters of 2024, down by 23.55% year-on-year. The net profit was approximately 803 million yuan, a 40.7% decrease. Its core businesses include cardiovascular devices and in vitro diagnostic equipment.
Analysts point out that the significant decline in performance is mainly seen in companies related to pandemic-related demands, particularly in in vitro diagnostic products (IVD), diagnostic reagents, respiratory machines, oxygen concentrators, monitoring devices, CT scanners, and other related products.
Furthermore, the surge in medical demands driven by the pandemic led to short-term rapid growth in the entire medical device industry, but this type of growth is inherently unsustainable and short-lived in nature.