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MicroPort Scientific Corporation, 00853.HK - Company Profile
Chairman	Zhaohua Chang
Share Issued (share)	1,813,000,000
Par Currency	U.S. Dollar
Par Value	1.0E-5
Industry	Medical Equipment & Services
Corporate Profile	Business Summary: The Group derives revenue principally from the sales of medical devices through appointed distributors and direct force sales, as well as rendering of post-sales services primarily for cardiac rhythm management business (“CRM business”) acquired in April 2018. Performance for the year: The Group’s revenue for the year ended 31 December 2019 was US$793.5 million, representing a growth of 18.5% compared to US$669.5 million for the year ended 31 December 2018. Business Review In 2019, demand for medical device products and services remained strong with the increasingly obvious trend of an ageing population and the continuing improvements to overall income and living standards. The global medical device industry maintained steady growth as a whole. In the domestic market, the government further implemented healthcare system reform and introduced a number of major policies and measures for medical consumables, which included unification of classification and coding of high-value medical consumables for national medical insurance by establishing identification system rules for medical devices, further improvement of high-value medical consumables pricing system and enhancement of whole process supervision and management for high-value medical consumables by optimizing systems, polices and innovating methods. In addition, the National Healthcare Security Administration promoted diagnosis related groups (DRGs) pilot program. Initial design of such program was basically completed with the pilot cities identified. The National Health Commission also identified the pilot cities for integrated health care system which aimed to form synergy of medical insurance and medical reform. Under the guidance of the above reform plans, major provinces and cities have successively introduced centralized high-value medical consumables procurement policies, resulting in the downward prices in end markets. However, a series of innovative supporting measures will help reduce operating costs and in the long-run, industrial integration will be accelerated by establishing reasonable pricing mechanism to eliminate less competitive counterparties, which will provide greater market opportunities and a healthier development environment for industry leaders engaged in innovative and large-scale production and thus leading to high-quality development of the industry. In the international market, registration threshold in certain countries is increasing and the international trading environment is getting increasingly complicated. These challenges required globalized resources allocation and managerial experience of the Company to cope with the business environment and regulatory changes in the international market. As of 31 December 2019, the Group has eight major business segments, being cardiovascular devices, orthopedics devices, CRM business, endovascular devices, neurovascular devices, heart valve business, surgical devices and surgical robot business, offering more than 300 varieties of medical devices. In 2019, in terms of sales, the Group continued to intensively cultivate the domestic market, expand its market coverage while enriching overseas product portfolio to stably implement globalized strategies. In terms of research and development, a number of key products in each segment have been approved for launching which accelerated the progress of domestic manufacturing and thus creating new opportunities for growth. For the year ended 31 December 2019, the Group recorded revenue of US$793.5 million, representing an increase of 18.5% in US$ or 22.0% (excluding foreign exchange impact) as compared to previous year. Net profit amounted to US$29.0 million (profit attributable to equity shareholders of the Company: US$46.3 million). For the year ended 31 December 2019, the Group derived 33.4% of its revenue from the cardiovascular devices, 29.3% from the orthopedics devices, 26.3% from the CRM business, 6.1% from the endovascular devices, 3.5% from the neurovascular devices, 0.6% from the surgical devices and 0.4% from the heart valve business. In 2019, the Group’s various businesses – including cardiovascular, endovascular and neurovascular – continued to maintain leading market positions with substantial growth rate. The heart valve business recorded revenue for the first year after obtaining approval in July 2019. Cardiovascular Devices Business The Group’s cardiovascular devices business offers products and services for the treatment of coronary artery-related diseases. The Group is committed to developing, manufacturing and commercialising market-leading coronary stents and the related delivery systems, along with balloon catheters and accessories. With the increasingly obvious trend of an ageing population in the PRC, the overall cardiovascular diseases incidence increased continuously. With the significant leap in income level, the society’s affordability to medical expenses strengthened as well. The quantity and quality of interventional therapy for coronary artery disease enhanced with stable development in recent years. In terms of product consumption, the PRC is now one of the countries with the most cases of PCI. In terms of the number of stents inserted, interventional therapy indications and devices use are deemed reasonable. In addition, along with the implementation of the national hierarchical diagnosis and treatment system, the capabilities of PCI gradually improved in hospitals at county level which are playing an increasingly important role in coronary heart disease treatment, which greatly increased patient accessibility. The Group has cultivated its cardiovascular devices business for over two decades. With high-quality products, the Group has occupied the leading position in the PRC market since the products were launched and has reached nearly 30 countries and regions around the globe. Currently, fourdrug eluting stents (“DES”) and four balloon products are in sale. New sustainable development drivers were brought with continuous addition of new products which gradually structured a multiple layered product mix. For the year ended 31 December 2019, the Group’s cardiovascular devices business recorded revenue of US$264.6 million, representing a 35.5% increase (excluding the foreign exchange impact) as compared to the previous year. Domestically, revenue of the Group’s DES increased by 32.8% (excluding the foreign exchange impact) as compared to the previous year, in which, revenue from the Firehawk™ Rapamycin Target Eluting Coronary Stent System (“Firehawk™”) increased by 51.6% (excluding the foreign exchange impact) as compared to the previous year and revenue from the Firebird2™ Coronary Rapamycin-Eluting CoCr Coronary Stent (“Firebird2™”) increased by 22.9% (excluding the foreign exchange impact) as compared to the previous year. In addition to the rapid growth of the domestic market and the market recognition of the world-class Firebird2™ stent and the cost-effective Firebird™ stent, the centralized bidding also promoted sales growth. The number of hospitals covered with DES exceeded 2,000 for the first time in 2019, among which, the hospitals covered by Firehawk™ increased by 41% as compared to the previous year and that by Firebird2™ increased by 18% as compared to the previous year. Furthermore, the Group has newly developed 256 county-level hospitals during the year. In terms of products, the FireCondor™ Rapamycin Target Eluting Coronary Stent System (renamed as FireCondor™ from Firehawk Nova™) with improved delivery system has been approved for launch and was applied for implantation in 2019, which will be the new growth momentum for such segment. In 2019, the overseas result for DES was remarkable, with sales in 25 countries or regions, and registration certificates obtained in 13 countries or regions. For the year ended 31 December 2019, overseas DES revenue amounted to US$16.6 million, representing an increase of 72.4% (excluding the foreign exchange impact) as compared to the previous year and a record high. In which, overseas revenue of Firebird2™ increased by 186.9% (excluding the foreign exchange impact) as compared to the previous year while that of Firehawk™ increased by 54.6% (excluding the foreign exchange impact) as compared to the previous year. Firehawk™ was included in the national medical insurance of France and Belgium. European business was further expanded as Firehawk™ has been sold in various major European countries. Moreover, the Group has submitted registration application for Firehawk™ stent to Pharmaceuticals and Medical Devices Agency of Japan as an active move of expansion in global mainstream markets The balloon products business of the Group maintained high growth rate as its global revenue increased by 54.5% (excluding the foreign exchange impact) as compared to the previous year, which marked 2019 as the fourth consecutive year with a growth rate of over 40%. In the domestic market, three balloon products covered more than 600 hospitals, with a year-on-year revenue increase of 50.6% as compared to the previous year. The Firefighter™ PTCA Balloon Catheter was highly appraised by industry experts for its outstanding performance after its launch. Over 70 hospitals were newly developed during the year. Furthermore, the centralized bidding of Pioneer™ PTCA Balloon Catheter will promote clinical application in relevant regions. In overseas market, four balloon products have obtained registration approval in 21 countries and regions, with 12 new countries and regions added this year. Orthopedics Devices Business The orthopedics devices business offers an extensive product range that includes reconstructive joints, spine and trauma, and other professional implants and equipment. Additionally, the orthopedics Global Supply Center (“GSC”) established in 2015 provides centralized purchasing and logistics distribution services of surgical instruments for joints, spine and trauma, in order to optimize the management of surgical instruments and consumables used in the implantation of The Group’s products. In 2019, the Group improved its global portfolio of orthopedics implants and instruments by effective integration of global research and development teams and resources. Meanwhile, the Group strengthened its brand-building and marketing of product concept, and accelerated its domestic manufacturing processes to provide more product options for physicians and patients. For the year ended 31 December 2019, the Group’s orthopedics devices business recorded revenue of US$232.4 million, representing a slight year-on-year decline of 0.2% (excluding the foreign exchange impact). The international (non-China) orthopedics business recorded revenue of US$206.0 million for the year ended 31 December 2019, representing a 4.7% decrease (excluding the foreign exchange impact) as compared to the previous year. Such decrease was mainly due to the prolonged impact of the global downward prices and the loss of a major US distributor in 2018. Regionally, despite the fact that revenue from the US decreased by 7.1% as compared to the previous year, the business resumed to stability in the second half of the year as sales team initiated cooperation with new distributors and actively expanded customers. Compared to the significant drop of revenue in the first half of the year, the revenue in the second half of the year was basically flat year-on-year and recorded an increase of 5.4% compared to the first half of the year. Revenue from Japan achieved a slight increase in 2019. In 2019, the Group organised and participated in a range of well-known international academic events, improved physician training, and worked with industry experts and key opinion leaders to conduct multiple clinical trial projects which will further verify the effectiveness of SuperPATH™ surgery and medial-pivot knee technology under the concept of accelerated recovery. In 2019, the Group also obtained approval to launch a number of products in overseas regions. The new generation Evolution™ NitrX™ Medial-Pivot Knee applicable for patients with allergies to certain metallic ions was approved for launching in the US and Canada. The registration application of such product was submitted in Europe to imbue new momentum to the development of the segment. For the year ended 31 December 2019, the PRC orthopedics business of the Group recorded a revenue of US$26.5 million, representing 57.1% growth (excluding the foreign exchange impact) as compared to the previous year. This was mainly due to the rapid sales growth in the imported joint business of 37.8%, which greatly exceeded the market average growth rate. With the superiority of the product concept, the PRC sales team implemented high-frequency marketing strategy as well as product training which aimed to expand brand influence. The imported joint products gained recognition from various hospitals with steady increase in hospital coverage rate and rapid growth of implant volume. Two domestic Aspiration™ Medial Stability Total Knee Replacement Systems and the SoSuperior™ Medial Stability Total Knee Replacement System successively obtained approvals for launch in 2019. Diversified product portfolio enhanced comprehensive competitiveness and become a new momentum for segment growth. In addition, the expansion of sales platforms, strengthening of clinical promotion, acceleration of hospital access, continuous upgrades of existing products and successive launches of new product led to continued rapid increase in revenue from the spine and trauma business, as well as an improved gross profit margin in 2019. The orthopedics instruments business effectively promoted the sales of domestic orthopedics implants by providing high quality and useful instruments. Instruments costs were greatly saved by accelerating the manufacturing localization of overseas orthopedics tools. The Global Supply Center (GSC) continued to operate steadily, supporting the development of an international orthopedics business through the global allocation of instruments and reduction of procurement costs. Cardiac Rhythm Management Business The CRM business principally develops, manufactures and markets products including defibrillators, cardiac resynchronisation therapy devices and pacemakers for the diagnosis, treatment and management of heart rhythm disorders and heart failure. 2019 is the first full financial year after the Group’s acquisition of the CRM business. In 2019, the Group adjusted its overseas marketing strategies, improved the global market planning and cooperated with domestic and overseas R&D teams to advance product development. In the domestic market, Rega™, the Group’s self-developed pacemaker, continued to drive robust business development. For the year ended 31 December 2019, the CRM business realized revenue of US$209.0 million. In 2019, the international (non-China) CRM business adjusted its market strategy and continued to invest in R&D to optimize its product portfolio and achieve products upgrade. For the year ended 31 December 2019, revenue from the international (non-China) CRM business was US$201.1 million. In the Japan market, the Group has basically completed the strategic transformation from its original distributor model to a direct managed sales network. The 1.5T and 3T magnetic resonance compatible pacemaker ENO™ was launched in Japan and completed the first local implantation, and the Japan business steadily advanced. In the European market, the new generation of the world’s smallest 1.5T and 3T magnetic resonance compatible pacemakers – OTO™, ENO™ and TEO™ – were widely used by hospitals due to its excellent quality and customer satisfaction further enhanced. Such products contributed more than half of the sales revenue of the pacemaker business in the European market for the first launch year. Through long-term cooperation with distributors, the Group expanded into some Asia-Pacific countries and African regions to further establish its global presence. MicroPort Sorin CRM (Shanghai) Co., Ltd. (“MSC”) manages the R&D, production and marketing of the Company’s CRM business in China. Since its establishment, the business has operated within the guidelines of “Serving China”, “Made in China” and “Created in China”. For the year ended 31 December 2019, MSC realized revenue of US$8.0 million, and achieved fast growth driven by the higher-than-expected growth rate of domestic pacemakers. As the manufacturer of the first Chinese domestic market pacemaker of world-class quality, it further enhanced its brand recognition. The Group’s growing cooperation with new hospitals has led to an increase in implantation volume and accelerated the manufacturing localization of pacemakers. The Beflex™ active pacing lead, which obtained launch approval in China in 2018, commenced clinical applications throughout the country. Its maneuverability, positioning and passability have reached or even surpassed those of similar products. The domestic launch accelerated the conversion of existing lead implants and helped to earn wide recognition from doctors. Last but not least, the Group’s selfdeveloped CompassAnalyzer™ Pacing System Analyzer (PSA) also began sales. Endovascular Devices Business The endovascular devices business provides a range of products and services for the interventional treatment of thoracic and abdominal aortic aneurysm, peripheral vascular disease, aortic dissection, and other endovascular related diseases. For the year ended 31 December 2019, the endovascular devices business recorded revenue of US$48.5 million, representing a rapid 44.5% increase (excluding the impact of foreign exchange) which significantly exceeded the average market growth. This was mainly driven by the sales growth of all major products. In particular, the Castor™ Branched Aortic Stent-Graft System (“Castor™”) – the world’s first thoracic branch stent – has been applied by over 300 hospitals in China. The Minos™ Abdominal Aortic Aneurysm and Delivery System (“Minos™”), which was approved for launch in 2019, enriched the existing product portfolio and also brought new momentum to the growth of this segment. In the domestic market, the Group continued its sales strategy of “Development of the Second-, Third- and Fourth-Tier Hospitals with Intensive Effort”, newly developed more than 60 hospitals and maintained its competitive market advantage. The Group has also gradually explored overseas markets. In 2019, the Minos™ obtained European Union CE certification and commenced its international business product line. Neurovascular Devices Business The neurovascular devices business segment specializes in products and services for the treatment of neurovascular diseases, including cerebral aneurysms, intracranial atherosclerotic diseases (“ICAD”), carotid artery diseases (“CAD”), and other neurovasculature-related diseases. For the year ended 31 December 2019, neurovascular devices business maintained rapid growth and recorded revenue of US$27.6 million, representing an increase of 55.6% (excluding the foreign exchange impact) compared to the previous year. In particular, the APOLLO™ stent (has been launched for 15 years) recorded a year-on-year revenue increase of 31.7% (excluding the foreign exchange impact), mainly due to the expansion of surgical applications and increased hospital coverage. Since the launch of the Group’s self-developed Tubridge™ vascular reconstruction device, clinical application has doubled as the Group actively promoted education and training by experts, promotion in the academic circle, and implemented tiered sales management in the market. The clinical effect of such product has been recognized by experts. Proportion of revenue contribution has been further increased. The Fastrack™ Microcatheter System approved for launch in 2019 has also brought new growth to this segment. Heart Valve Business The heart valve business focuses on the research and development, manufacturing and sales of complete solutions of medical devices for treating valvular heart diseases. The product in sales of this segment is the Group’s self-developed VitaFlow™ Transcatheter Aortic Valve and Delivery System (“VitaFlow™ Valve System”). For the year ended 31 December 2019, the heart valve business recorded revenue of US$3.1 million. The VitaFlow™ Valve System was launched in 2019. The Group implemented targeted pricing and sales strategies focused on core hospitals and large and medium-sized hospitals, and carried out promotion in the academic circle and doctors training. As the first approved domestic transcatheter aortic valve product that adopts bovine pericardial leaflets, the VitaFlow™ Valve System is equipped with the Group’s selfdeveloped and approved AlwideTM balloon catheter and AlpassTM catheter Sheath, which provides doctors with a comprehensive treatment plan. The clinical data proved it has effectively improved the safety and effectiveness of surgery, thus gaining recognition from industry experts and doctors through application. Surgical Robot Business The surgical robot business is committed to cutting-edge research and technology integration in the fields of robot, intelligent control and information to provide innovative medical products. In 2019, the Group’s self-developed DFVision™ 3D Electronic Laparoscope began the special approval procedure for innovative medical devices (“Green Path”) and completed the first domestic 3D electronic laparoscopic surgery, which marked the official start of domestic clinical trial. The Toumai™ Laparoscopic Surgical Robot (“Toumai™ Laparoscopic Robot”) also entered the Green Path. In 2019, the first clinical study of radical prostatectomy with the aid of robot was completed, and it became the first domestic laparoscopic robot to complete a difficult urological surgery. The first-in-man (“FIM”) clinical trial was officially launched. Presently, there are no domestic 3D laparoscope and domestic laparoscopic surgical robot products available on the market. After entering the Green Path, it will accelerate the domestic launch process and spur the development of internationally-advanced technologies and related domestic industries, thus benefiting more patients. Prospects: The continuing improvement in income and living standards and the year-by-year increase in proportion of the global ageing population are driving steady growth in global demand for medical devices. In the PRC, with the continued economic development, increased government expenditure in social medical insurance, policy benefits from medical system reform and a gradual improvement in public health awareness, the medical devices market experienced rapid growth, providing opportunities for an equally rapid development of the Group’s business. Such rapid development has also attracted more multinational corporations to the market, resulting in fierce competition. The Group will further implement proactive strategies which include but are not limited to the followings, to compete in the market: 1. Strengthening The Group’s leading position in the domestic medical devices market. The Group will fully leverage on its brand recognition and sales distribution network to further expand its market shares, and strengthen and maintain its leading position in the PRC medical devices market. 2. Integration of the MicroPort brand with global operations. The Group will pursue a global brand and operational strategy based on localisation, implement an operational model of “global strategy, localised execution, diversified planning and unified positioning”. The Group will effectively integrate global resThe Group’sces with the market to complete its global planning and introduce products to more countries and regions and benefit patients around the world. 3. Developing and improving existing products, achieving product diversification by innovation. The Group will further develop and improve the performance and manufacturing technology of existing products, foster research and development toward products of next generation. The Group will further progress on the clinical trials and obtaining approvals for new products to diversify the Group’s product mix and provide a comprehensive portfolio of medical devices to patients and physicians. 4. Reforming management system. The Group will carry out management system reforms with the aims of integrating resThe Group’sces, streamlining processes and optimising management structures, and eventually enhancing the Group’s competitiveness and risk resistance. The outbreak of the COVID-19 since the beginning of 2020 is a challenging situation faced by the society on a global basis. The Group has been assessing the overall impact of the situation on the operation of the Group and endeavThe Group’sed all efforts to manage the impact. The Group will continuously monitor the changing situations and make timely responses and adjustments as they arise.

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Public company info - MicroPort Scientific Corporation , 00853.HK