Have China’s neurointerventional devices failed en masse? Domestic companies have only about 10% market share

Before the local neurointerventional device companies in China have been able to grow up, there has been a divergence in the development path.

After more than ten years of development, the market share of domestic neurointerventional companies in China is only about 10%. Harsh critics argue that they have collectively failed because the companies prioritized more product launches and short-term financial returns rather than achieving breakthroughs in product quality.

And some companies believe that China is on the eve of a breakthrough in the level of neurointerventional devices as companies accumulate technology and techniques. “We have passed the initial stage of knowledge accumulation, from being ignorant to now knowing where the doorway is.” An interviewed company executive told the reporter.

What path is the right one is left to time and practice to test. As China’s neural intervention market is growing, will the Chinese enterprises converge in the next decade?

The ceiling for Chinese neurointerventional devices companies

Acheva’s spring coil product still has room for improvement, a person familiar with Chinese neurointerventional products made these comments about Acheva’s spring coil product in an interview.

Acheva Bio is the neurointerventional business segment of listed company Peijia Medical Limited (09996.HK), and its Presgo mechanical release spring coils were launched in 2018. The spring coils are made of metal and are placed into the aneurysm to prevent and treat brain hemorrhage by entering the intracranial vessels through the leg arteries.

One aspect of the spring coil placement into the aneurysm that tests its performance is the release of the coil itself and the handle. In a narrow brain vessel, a spring coil that uncouples prematurely, or fails to uncouple, can easily cause life-threatening injuries to the patient.

Acheva’s spring coils are considered to be a complicated way of relief, which tests the surgeon’s surgical skills. This, in the opinion of the aforementioned sources, limits the clinical acceptance of its products.

Such an assessment was refuted by Wang Chen, the general manager of Acheva Biotech. She said in an interview that spring coils are the mainstay of Acheva’s neurointerventional field, and its neurointerventional devices achieved rapid growth last year despite the epidemic affecting sales in the first half of the year.

MicroPort Medical (00853.HK) is another representative neurointerventional device company in China, and its spring coil products have been listed in October last year.

“MicroPort’s listed clinical (trial) program is mixed with spring coils,” said the above-mentioned industry insider, adding that several spring coils are often placed inside large aneurysms, and that China’s clinical phase trials allow the company’s products to be mixed with spring coils from other companies.

“So which (spring) ring worked after this aneurysm embolization? It can’t be identified.” The reporter contacted MicroPort Medical, which did not comment on the topic.

Passing clinical trials and going to market does not mean that doctors can be convinced to use their products. Although several companies in China, such as MicroPort Medical and Acheva Medical, have launched spring-ring products, the overall market share is still low. As far as the reality is concerned, Chinese doctors prefer products from multinational companies when choosing.

A research report by CICC shows that the localization rate of spring coils in neurointerventional devices in China was only 6.1% in 2018. The above-mentioned industry insiders said that the market share of domestic spring coils is still less than 10%, and multinational companies such as Medtronic and Stryker occupy nearly 90% of the Chinese market share.

Collective failure of Chinese neurointerventional devices?

Spring ring is a category of Chinese neurointerventional devices. Neurointerventional devices are mainly used for the prevention and treatment of stroke, the latter mainly caused by cerebrovascular obstruction or rupture bleeding, thus divided into ischemic (taking the embolus stent, suction catheter and expansion stent, etc. that is used for such) and hemorrhagic stroke (spring ring that is used for such).

At present, the Chinese neurointerventional device market is dominated by multinational companies, and the overall size of the Chinese companies accounts for only a small percentage.

Acheva Medical’s financial report shows that in the first half of 2020, the company’s neurointerventional business generated revenue of 14.24 million yuan, but its loss reached 30 million yuan; HeartCare Medical has listed four neurointerventional products, although its sales revenue in the first three quarters of 2020 was only 7.29 million yuan, while its loss in the same period reached 67.74 million yuan.

Among several Chinese companies involved in neurointervention, MicroPort Medical has a relatively prominent scale. in 2019, MicroPort Medical’s overall revenue reached 5.1 billion yuan, but its neurointervention products accounted for only 3.5%.

Multinational companies are the pioneers of neurointerventional devices, and their entry into the Chinese market also initiated the development of domestic neurointerventional procedures. Multinational companies such as Medtronic have helped the development of stroke centers in China by conducting related technical training in the country earlier, and their products have been recognized by Chinese clinicians earlier.

But this may not be the root cause of China’s neurointerventional devices companies’ difficulties in achieving share breakthroughs.

CEO of a neurointervention company believes that Chinese companies have taken the wrong path in development: the neurointervention field in China has been developing for nearly a decade, and some domestic companies, even those that have gone public, have followed an “almost” strategy when developing their products. This strategy is to develop products that are barely usable and do not technically and technologically surpass the established products in the market. This model is more likely to achieve financial returns in the short term, but it also means lower ceilings.

Today, there is still a gap in quality between some of the products of Chinese companies and their counterparts from foreign companies. Low-quality products will eventually discourage physicians. Unlike other medical device products, the quality of products in the field of neurointervention is often a matter of life and death.

Different paths of the Chinese companies

“Product development, clinical trials and registration all take time. Your products must come out one after another.” This is how Wang Chen sees the slow progress of Chinese neurointerventional devices companies in the past decade.

In the early stages of development, the limited product categories of Chinese companies partially affected the willingness of downstream hospitals to purchase. Wang Chen believes that Chinese companies should first make up their product configurations and take a dry-learning approach to catch up with the multinational companies in front of them.

“Compared with Medtronic and Stryker’s dozens of products, we have initially completed the bleeding category, but we still have a shortage of products in the field of ischemia,” said Wang Chen, “A single product is definitely not competitive. (Hospital procurement) is like you will concentrate on one supermarket when you buy something, and not willing to go too many places.”

The gap between the number of products of Chinese companies and multinational companies is indeed obvious. For its part, Medtronic replied to an interview that the company has marketed 32 neurointerventional products in China. Medtronic has the largest share of the neurointerventional devices market in China, and China is also the second largest global market for Medtronic’s neurointervention business.

Therefore, it is easy to understand that several Chinese neurointerventional devices companies have taken a similar development path to Acheva Bio, with a primary focus on product line expansion.

In the case of HeartCare Medical, for example, the company seeking to go public currently has only four ischemic stroke therapeutic devices on the market in the neurointerventional space, although it has 23 commercialized products overall as well as a portfolio layout of products in development, and expects to commercialize nine products in development this year.

Coronary stents were also born in Europe and the United States and were initially imported into the Chinese healthcare system. European and American coronary stent companies, such as Boston Scientific, Medtronic and Abbott (ABT.NYSE), dominated the Chinese market for a long time. By 2020, when China starts to carry out volume purchasing in the field of coronary stents, most of the relevant products sold in the market will come from Chinese companies such as Lepu Medical and MicroPort Medical.

However, the above CEO believes that the vision of neurointerventional companies replicating the successful model of coronary stents is too taken for granted. He believes that the right growth path should be to achieve quality breakthroughs first, and then seek market share and capital market returns.

“If you make ten product lines, but they are all ‘pretty much’ the same products, you can only play in 10% of the market. You make a lot of products, and if doctors are afraid to use them, it doesn’t make sense.” He said, “The key in the field of neurointervention is quality, and you can’t compete if you can’t do international standards.”

He doesn’t have optimistic expectations for listed Chinese neurointerventional devices companies, because it’s hard to change once a company becomes dependent on the way it develops products. He believes that companies that already have a certain market size, even those that are already listed, will find it difficult to change their company culture and behavior. The hope for technological progress and development in China’s neurointerventional devices field lies with those newly created companies that do not have path dependencies and are able to put quality first from the initial stages.

These two development paths represent the choice of two types of companies in China. Which is right or wrong can only be tested by time and practice. However, both types of Chinese companies have a common advantage over multinational companies. Since the golden time for acute ischemic stroke is limited, local treatment becomes the obvious choice. According to a research report by CICC, the demand for primary care is opening up, which provides room for neurointerventional devices companies to grow, and local companies in China have a natural advantage in the primary market.

China’s neurointerventional devices market is growing, and it is large enough to accommodate a wide range of possibilities. In the next decade, will the Chinese companies on different paths go the same way?

Source: First Finance (Original link not found)

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