Founded in 2011, we have been focused on diabetes management, providing both diabetes treatment and diabetes monitoring medical devices to improve the diabetes management in China and globally. Equil Patch Insulin Pump System (“Equil”), our Core Product, is a semi-disposable patch insulin pump. Equil received CE marking in Europe in June 2017 and the marketing approval by the NMPA, for adult use, in China in September 2017. Equil is categorized as a Class III medical device in China. We started to commercialize Equil in China and Europe in 2018. In addition, we seek to expand the indication of Equil to use by children and adolescents. During the Track Record Period, the retail price of our Equil was RMB28,800 per unit in China and EUR2,500-3,000 per unit in Europe. In addition to Equil, we have also commercialized BGMS and CGMS products. In 2019, 2020 and the four months ended April 30, 2020 and 2021, we generated 52.0%, 52.2%, 52.4% and 41.5% of our revenue from our BGMS products. Any decrease in the market share of our BGMS, a traditional approach in monitoring blood glucose levels by way of finger pricking, due to the development of more advanced products in the market may have a material adverse impact on our business and results of operations.
WE MAY NOT BE ABLE TO SUCCESSFULLY DEVELOP AND/OR MARKET EQUIL, INCLUDING THE EXPANSION OF THE INDICATION OF EQUIL FOR CHILDREN AND ADOLESCENTS’ USE SUCCESSFULLY.
The diabetic market is well established with existing treatments. For example, for patients with Type 2 diabetes, there are multiple medications for the control of hyperglycemia, including metformin, the first-line medication and basic medication, as well as other combination drugs. Patients with diabetes are inclined to choose traditional treatment options in the first place before the use of insulin. No superior clinical data on patch insulin pump has been shown over other traditional insulin treatment options, including insulin pen and syringes. In addition, the entire diabetic market is intensely competitive and the insulin pump market is only a small subset of the entire diabetic market. In 2020, Equil, our Core Product, accounted for approximately 3% of market share of insulin pump market in China, according to the CIC Report. Conventional diabetes treatment medical devices, such as insulin syringes, are cost efficient and still occupying a majority of the market share. In China, the average price per day for patient of Equil is approximately RMB32 to RMB36 and the average price per day for patient of conventional insulin syringes and insulin pens is approximately RMB7 to RMB10 and RMB8, respectively.
The diabetic market is patient- and physician-oriented. Above all, we will increase the penetration of Equil by leveraging the advantages of Equil, such as portability, safety and higher patient compliance level, and we plan to carry out post-market studies in the United States and Europe to collect more clinical evidence on the efficacy and safety profile of our patch insulin pump system, for the purposes of enhancing our global brand awareness and ramping up the market share of Equil. Patient compliance level is one of the crucial factors for our patch insulin pump system to gain wide market acceptance. Compared to tubed pumps, patch insulin pumps improve patient compliance by providing freedom from long-tubing, being more portable and being manipulated discreetly. In addition, we will continue diversifying our commercialization channel by garnering appropriate reimbursement and insurance coverage of our products. On the one hand, we intend to seek the inclusion of our products under the public medical insurance program, if available. Although we may face downward pricing pressure, nevertheless, it will also increase the patient affordability and therefore further promote the market growth of our products. On the other hand, we seek to collaborate with Taikang and other commercial insurance partners, which may allow us to implement a more flexible pricing strategy and avail ourselves of an improved competitive position. Furthermore, we will enhance our sales and marketing efforts to increase the awareness and acceptance of Equil and other products among patient group and physicians. In particular, we will continue to provide trainings and education to physicians and patients, and collaborate with KOLs through academic marketing activities, at national, provincial or regional levels. Through joint efforts with diabetes society and other institutes, we intend to further improve the recognition of insulin pumps in treatment guidelines. We have also been implementing, and will continue to launch, various marketing initiatives to promote the adoption of insulin pumps in short-term intensive insulin therapy. For instance, since the fourth quarter of 2019, we launched a pilot program in which we sell Equil to our distributors, who, may allow patients that are recommended or required to receive short-term intensive insulin therapy with insulin pump to rent Equil for a specified period a time. Such initiatives are expected to enlarge the user group of our patch insulin pump system.
In addition to Equil, we have two other categories of commercialized products, namely BGMS and CGMS, and six other product candidates at various development stages. According to the CIC Report, BGMS is a traditional method to monitor blood glucose levels and a well-established device, which has been on the market for approximately 40 years. In 2019, 2020 and the four months ended April 30, 2020 and 2021, we generated 52.0%, 52.2%, 52.4% and 41.5% of our revenue from our BGMS products, and 47.6%, 46.2%, 46.8% and 50.4% of our revenue from Equil, respectively. Despite the rapid growth in revenue generated from Equil, we cannot assure you that demand for Equil will continue to grow as anticipated. Any decrease in the market share of our BGMS, a traditional approach in monitoring blood glucose levels by way of finger pricking, due to the development of more advanced products in the market may have a material adverse impact on our business and results of operations.
Equil, our Core Product, features a tubeless and lightweight design, compared to traditional tubed pumps. Equil is a tubeless patch pump worn directly on the body that combines the pumping mechanism and infusion set in a small wearable package, enabling users to manage diabetes discreetly and safely. Other innovative attributes include a vibration alert that users can feel underneath their clothing and a dedicated bolus button that can initiate insulin delivery without the remote control. During the Track Record Period, we did not experience any material fluctuations in the retail price of Equil in China and Europe. For factors affecting the retail price of Equil, see “Business—Pricing”. The average selling price of our Equil fluctuated during the Track Record Period primarily due to the marketing efforts we conducted in the relevant periods. See “Financial Information—Revenue.” As of the Latest Practicable Date, we had successfully marketed Equil in over 20 countries across Asia Pacific, Europe, Middle East, Africa and Latin America. In February 2021, we submitted a 510(k) premarket notification to the FDA and we expect to receive FDA clearance for Equil in the first half of 2022.
AiDEX G7, our CGMS, has demonstrated various advantages over traditional BGMS, featuring real-time monitoring, reduced risk of hyper/hypoglycemia, and increased compliance to treatment regimen without taking routine finger prick blood glucose measurements. AiDEX G7 primarily focuses on the clinical needs of patients with Type 1 diabetes and severe Type 2 diabetes who need to closely monitor their blood glucose levels. AiDEX G7 received CE marking in the EU in September 2020. We completed a clinical trial for AiDEX G7 in China in May 2020. AiDEX G7 has been certified by the NMPA in the same month to be eligible for the Special Approval Procedures of Innovative Medical Devices promulgated by the NMPA. AiDEX G7 is categorized a Class III medical device in China. We submitted and the NMPA accepted our registration application of AiDEX G7 in the first quarter of 2021. When approved, AiDEX G7 is expected to be the first calibration-free real-time CGMS approved for commercialization in China.
Besides Equil and AiDEX G7, we have a diverse pipeline of self-developed product candidates with improved features, including our closed loop artificial pancreas, second- generation patch insulin pump system, AiDEX X and IVD devices. We are in the development of the second-generation patch insulin pump system, as well as PanCares, our artificial pancreas, which works in a similar way as the real human pancreas by tracking blood glucose levels using a continuous glucose monitor and automatically delivers the insulin when needed using an insulin pump according to its control algorithm.
As we build up our product pipeline, we have developed a synergistic platform by integrating our R&D, manufacturing and commercialization capabilities.
‧ R&D. We had a proven record of R&D experience. We were designated as the Key Diabetes Research Center in Zhejiang Province, China, and we had also established a R&D center in Silicon Valley. Equil, our Core Product, was designated as an Innovative Medical Device Product by the PRC Ministry of Science and Technology. Led by Dr. Zheng Pan, our Chief Executive Officer, who has nearly 20 years of experience in the healthcare industry, we have an in-house R&D team of nearly 100 staff with extensive industry experience and multidisciplinary capabilities. We remain at the forefront of innovation by maintaining close contact with leading medical professionals and key opinion leaders (“KOLs”) and develop products that specifically address the unmet clinical needs. We leverage our R&D capabilities to develop high-quality closed loop solutions, patch insulin pump systems and CGMS products in a cost-effective manner.
‧ Manufacturing. We conduct all the key manufacturing procedures in-house. Over the years, we have accumulated extensive expertise and know-how in manufacturing diabetes management medical devices, which sets a solid foundation for our long-term growth. We own manufacturing facilities with an aggregate area of approximately 15,000 sq.m. in Hangzhou, China, including a 1,500 sq.m. ISO Class 7 clean-room space and an 80 sq.m. ISO Class 8 clean-room space. We uphold manufacturing quality management, and have received major international certifications. Our emphasis on the automatic and continuous control of manufacturing processes also significantly contributes to the improvement of our overall production quality and efficiency.
‧ Commercialization. We strategically use a combination of our in-house sales and marketing team and a broad network of independent distributors to sell our products in China and overseas. We had 382 distributors as of April 30, 2021 and over 130 in-house sales and marketing personnel as of the Latest Practicable Date, covering the sales of our products across 30 provinces, municipalities and autonomous regions in China, and expanding the sales of our products to overseas markets.
We believe that our product portfolio, our advanced positioning in the development of closed loop artificial pancreas, our synergistic platform created by integrating our R&D, manufacturing and commercialization capabilities, together with our visionary management team, significantly differentiate us from our peers.
Our large portfolio of marketed products and diversified product offerings encompassing diabetes treatment and diabetes monitoring medical devices have enabled us to achieve rapid growth. We expect our business will continue to grow, as we ramp up the sales of our patch insulin pump system and CGMS, and commence the marketing of our closed loop solutions, in particular, our artificial pancreas.
As our product portfolio diversifies, we are making efforts in the design and training of control algorithms for our closed loop solutions. We are also seeking to synthesize advanced analytical tools to gain in-depth insights into diabetes management.
We aspire to significantly improve treatment outcomes and improve the diabetes monitoring, treatment and management in China and globally. To achieve such aspiration, we will keep improving the features and quality of our products, developing our R&D capabilities, expanding our global footprint and building a cloud-based diabetes management platform to bring clinical and commercial benefits to diabetes patients all over the world.
Source: MicroTech Medical-B (02235) Prospectus (IPO Date : 2021/10/06) |