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Public company info - AK Medical Holdings Limited , 01789.HK

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AK Medical Holdings Limited, 01789.HK - Company Profile
Chairman Li Zhijiang
Share Issued (share) 1,116,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Medical Equipment & Services
Corporate Profile Business Summary: The Group are principally engaged in design, develop, produce and market orthopedic joint implants and related products. Performance for the year: For the year ended 31 December 2020, the Group achieved revenue of RMB1,035.4 million, representing an increase of 11.7% as compared to 2019. The net profit of the Group for the year ended 31 December 2020 also increased by 17.6% as compared to 2019. The net profit of the Group for the year ended 31 December 2020 increased significantly by 27.0% as compared to 2019. Business Review: The year of 2020 was filled with extraordinary external change. The COVID-19 pandemic affected both daily life and global economic development. In China, the pandemic was effectively brought under control during the second half of the year, enabling economic activity and hospital operations to gradually recover to normal levels. Through implementing precise strategic plan that responded to industry trends, the Group could control the pandemic’s impact and maintain a steady pace of growth. In 2020, the National Healthcare Security Administration (the “NHSA”) enhanced the medical insurance system’s top-level design as part of its continuing reforms. Among these, a series of policies concerning volume-based procurement made a significant impact on the pharmaceuticals and medical devices industries. On 5 November 2020, the NHSA initiated the centralised procurement of high-value medical consumables, including coronary stents. The terminal price of selected products subsequently dropped by more than 90%. Meanwhile, the orthopedics industry was affected by the gradual implementation of provincial volume-based procurement of joint products in Jiangsu, Fujian, Zhejiang, Anhui and other provinces in 2020. This similarly resulted in a decline of the terminal price of products. It is expected that volume-based procurement will continue to be promoted at provincial or national levels in 2021. Despite the impact of the COVID-19 pandemic and the uncertain external environment, the Group remained dealing with the changes positively and flexibly, leveraging on its rich product portfolio and R&D advantages. As of 31 December 2020, the Group recorded sales revenue of RMB1,035.4 million and a net profit of RMB314.0 million, representing increases of 11.7% and 17.6% respectively compared to the same period of the previous year. Profit for the year, excluding certain non-recurring items was RMB322.9 million, representing an increase of 27.0% as compared to the same period of last year. 3D-printed Products 3D-printed products are the products produced using 3D-printing technologies. As of 31 December 2020, the Group held a total of three Class III medical device registration certificates for 3D printed standardized products, namely for 3D-printed hip replacement implants, 3D-printed artificial vertebral bodies and 3D-printed interbody cages. The Group also held two Class III medical device registration certificates for 3D printed customized products, namely 3D-printed pelvis implants and 3D-printed customized cervical fusion. In total, the Group has filed 20 3D-printed customized products with local drug regulatory departments. In 2020, the Group’s 3D-printed products achieved sales revenue of RMB126.2 million, slightly higher than 2019. This performance was mainly due to the fact that the 3D spinal business was affected by the COVID-19 pandemic, which during the first half of 2020 saw a sharp drop in operations at high-end Class III Level A hospitals. As restrictions eased, these hospitals gradually began to resume operations in the second half of the year. However, restrictions on middle- and low-end hospitals were relatively limited, and these began to resume operations in the second quarter. As the Group’s 3D printing products, especially the 3D-printed spinal products, are targeted mainly at Class III Level A hospitals, their sales were more deeply impacted by the pandemic than were traditional products. Excluding the impact of the 3D-printed spinal products and other business, 3D-printed hip still maintained a rapid growth of 21.8%. In 2020, the Group officially launched 3D printed customized products for complex customized multiple joint surgeries, and especially the complex customized surgery on the half pelvis and even the whole sacrum through pelvic customization. The latter operations can help patients with bone tumors recover function and greatly improve their quality of life. The combination of conventional surgery and customized products helps doctors to operate more simply and conveniently, shorten the operation time, reduce bleeding and control the infection. 3D-printed customised products have also further enhanced the impact of the AK brand in the end market. In 2020, the Group continued to promote 3D Accurate Construction Technology (“3D ACT”) to provide personalised customer services. For the year ended 31 December 2020, the platform covered 1,032 hospitals, 68 more than in 2019. The platform has assisted doctors in designing 6,157 surgical solutions, 1,415 cases more than in 2019. The platform’s accumulation of surgical solutions will help the Group better understand various diseases and develop suitable prosthesis. Meanwhile, the platform also aided the Group in entering the high-end medical market, and especially Class III Level A hospitals in firstand second-tier cities. Hip and Knee Products The business under this section does not include 3D-printed products. In 2020, the Group continued to provide customers and patients with a full range of orthopedic joint products, including hip and knee implants and tools for primary, complex, revision and reconstruction surgeries. In 2020, the Group’s hip and knee products delivered RMB829.0 million in revenue, representing a yearon-year increase of 7.1%. The slower growth of revenue from the hip and knee products business was mainly attributable to a decreased number of operations in hospitals caused by the COVID-19 pandemic. Despite the decline in revenue growth, the market share of the Group’s joint products in Chinese market further improved, leveraging on a rich product line and good market reputation. Spinal and Trauma Implants With the completion of the acquisition of Beijing Libeier Bio-engineering Institute Co., Ltd.* (北京理貝爾生物工程研究所有限公司) (“Libeier”) on 24 April 2020, the Group further replenished its orthopedic portfolio with spinal and trauma implants products. Libeier had a complete spinal and trauma implants product line and 15 Class III registration certificates approved by the National Medical Products Administration (the “NMPA”). After its acquisition, the Group made technical improvements based on its original registration certificates and quickly launched five new spinal products and four new trauma products, enriching the Libeier product portfolio and improving the product price system. Further, the Group leveraged on the brand’s good reputation and product features to expand Libeier market channels. As of 31 December 2020, spinal and trauma implant products under the Libeier brand covered more than 1,000 hospitals, one-third of which were Class III Level A hospitals. In 2020, the Group’s spinal and trauma implants products delivered RMB51.8 million in revenue. Prospects: Against a backdrop of a rapidly developing medical devices industry, and as a leader in China’s orthopedic joint industry, the Group will continue to strengthen its leadership through a series of proactive development strategies, including but not limited to: 1. Continuously enhancing core competitiveness and committing to becoming a global orthopedic innovator As a leading brand in China’s orthopedic industry, the Company believes that R&D and innovation are at the core of its competitiveness. The Group will continue to strengthen the application of 3D printing technology in its joint, spine and trauma product pipelines, and introduce 3D printed standardized and customized products to provide personalised solutions for patients. The Group will gradually extend the application of 3D ACT assistant technology for preoperative planning to the field of intelligent devices and surgical robots, further consolidating the Company’s leading position in the field of orthopedics. 2. Closely follow orthopedic industry policy and respond by adjusting corporate strategy In 2019, the PRC government commenced a new round of medical and pharmaceutical system reform. In 2020, this led the NHSA to introduce a series of policies concerning high-value medical consumables which will have a profound influence on the industry landscape and its future development. The next few years may see the NHSA introduce yet more reform policies. To these changes, the Company will respond proactively on the basis of its advantages and characteristics, including but not limited to adjusting the direction of R&D, changing its business model and strengthening cost control, in order to seize the opportunities presented by industry reform. 3. Keep abreast of innovative technologies and products in the field of orthopedics, expand overseas markets The acquisition of Libeier enabled the Company to further enrich its spinal and trauma product portfolios and become an orthopedic platform. In the future, the Group will seek further opportunities in other segments of orthopedics, explore new technologies and products, and constantly enrich its product offerings. At present, the scale of the Company’s overseas sales is small. In light of the potential of overseas markets, and especially the orthopedics industry in emerging market countries with rapid growth, the Company intend to leverage on its products’ high cost performance advantage to expand its presence and spread the uncertainty risk brought by domestic policies.

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