In the past two years, the new crown reagent order has been the largest cash flow of domestic IVD enterprises, creating countless myths of wealth creation, new crown reagent orders have allowed domestic enterprises to earn money for 7 years in half a year, and have also made some domestic enterprises from dying to overnight wealth.
But no one could have predicted that among the hundreds of IVD companies, Jiuan Medical, which makes electronic blood pressure monitors, will become the biggest winner in the US market.
On January 14, Jiuan Medical announced that its US subsidiary, iHealthLabs.Inc, had received a US$1.275 billion order for COVID-19 kits from the US government, or about RMB8.1 billion, exceeding 50% (RMB1.004 billion) of the company's audited main business revenue in 2020.
After winning the big order of the US government, the share price of Jiuan Medical soared again, gaining 27 up and down boards, and its stock price rose by more than 1154% in the past 49 trading days. The current total market value reached 36 billion yuan, and the market value increased by more than 30 billion yuan in 2 months.
Jiuan Medical has harvested 27 up and down boards from the Oriental Fortune Network
Covid-19 test reagents have exploded in both domestic and foreign markets, but there are different winners at different stages. In the first half of 2020, the early entrants basically became winners, Daan Gene, BGI Gene, Shengxiang Biology, Oriental Biology, Shuoshi Biology, etc. all began to develop testing reagents at the first time of the outbreak of the new crown epidemic, and with the spread of the epidemic, took the lead in winning various market access. With the increase of participants, the early first-mover advantage was weakened, the collection of new crown reagents began, and the price control ability became the core competitiveness of domestic new crown reagents. With the control of the domestic epidemic situation, overseas markets have begun to explode, products are in short supply, and enterprises such as Jiuan Medical and Oriental Biologics that have received orders from the US government have become popular concept stocks.
Jiuan Medical's previous main business was the production of temperature guns, sphygmomanometers, blood glucose meters and other household medical devices, why can it surpass a number of local IVD leaders to win the US government's big orders? What enlightenment does the successful flanking battle of Jiuan Medical give to domestic IVD companies? The arterial network was combed.
Why can Jiuan Medical do the new crown home self-test products?
Jiuan Medical iHealth's new crown home self-test products and our domestic large-scale nucleic acid testing products are different, the domestic use of PCR molecular detection, high accuracy, but there are instruments and professional laboratory requirements, the price is more expensive. iHealth's products are antigen tests that can be done at home and have results in 15 minutes, convenient and inexpensive, making them quick to get results. PCR test product 2B is for hospitals, antigen detection product 2C is for families.
Unlike the domestic IVD leader, which has been rooted in the industry for decades, the large-scale production time of Jiuan Medical's kit products is only two months.
Before the new crown epidemic, The most well-known business of Jiuan Medical is vital signs monitoring (body temperature, blood pressure, blood sugar, blood oxygen, body fat, ECG, etc.) products, Jiuan Medical has been doing in the field of blood pressure for 35 years, blood pressure products are divided into traditional hardware brands in the Chinese market, ODM, OEM in the United States, Europe, and iHealth independent brands in the world.
The technical barriers to the traditional sphygmomanometer and blood glucose meter market are not high, there are many industry enterprises and products, the homogenization is serious, the competition is fierce, and the market space is close to the ceiling. And Jiuan Medical is not the leader in it. Taking the blood glucose meter as an example, according to the relevant reports, the foreign blood glucose meter market will account for about 40% in 2020, the market share of Sannuo has reached 36%, Yicheng, Aikang and Yuyue occupy 7%, 6% and 5% of the market share respectively, while the market share of Jiuan Medical and other brands of blood glucose meters is only 5%.
In the market competition, Jiuan Medical has suffered long-term losses. From 2013 to 2019, Jiuan Medical's non-attributable net profit was -11.28 million yuan, -81.54 million yuan, -155 million yuan, -146 million yuan, -182 million yuan, -139 million yuan and -242 million yuan, respectively.
In 2020, Jiuan Medical turned a loss into a profit, and the net profit after deducting non-recurring gains and losses reached 240 million yuan. The reason behind it is mainly that Jiuan Medical stepped on the outlet of anti-epidemic materials for the first time.
During the domestic epidemic in 2020, the sales volume of epidemic prevention-related products such as iHealth forehead thermometer and oximeter in the global market increased significantly, the thermometer products became explosive, the revenue industry turned a loss into a profit, and the company achieved a net profit attributable to the owners of the parent company of 242.3293 million yuan, up 264.68% year-on-year.
Jiuan Medical's forehead thermometer became a hit, as early as 2014, when Jiuan Medical and Xiaomi cooperated on mobile medical treatment, it had laid the groundwork. In 2014, Xiaomi laid out mobile medical and invested $25 million in Jiuan Medical. In September 2017, Xiaomi released the iHealth forehead thermometer product, which it called "born for fever".
The subsidiary iHealthLabs.Inc. that Jiuan Medical won the big order of the US government is also jointly established by Jiuan and Xiaomi, jiuan medical holds 80% of its equity, and Xiaomi investment holds 20% of the equity of iHealth Inc.
With the cooperation with Xiaomi, Jiuan has obtained new retail channels, and from the perspective of the revenue composition of Jiuan Medical in the first half of 2021, the revenue of iHealth and Xiaomi authorized stores accounts for more than 60%.
But more importantly, Jiuan Medical has learned Xiaomi's ultimate cost-effective concept. Therefore, the launch of the ultimate cost-effective explosive products on the new retail platform has become the core strategy of Jiuan Medical, and strives to achieve the ultimate product, the price to the extreme, and the user experience to the extreme. Jiuan Medical believes that the success of the Pinduoduoduo and Xiaomi models means that the ultimate cost performance has become a "universal" consumption concept.
As early as ten years ago, Jiuan Medical has been laying out overseas markets, but it is more in the form of OEM. After the establishment of iHealth, Jiuan Medical aimed at the new retail platform, and continuously launched the iHealth brand's extreme cost-effective home appliance products on amazon platform and other channels in the United States.
At the end of 2021, Jiuan Medical's household new crown antigen testing products once again stepped on the concept of anti-epidemic, and the NEW crown home antigen testing market in the United States broke out, and the household medical device channel is the advantage track of Jiuan Medical. Why did Jiuan Medical suddenly enter the new crown testing market?
In the 2020 annual report of Jiuan Medical and the semi-annual report of 2021, there is no mention of the new crown home testing products, and the diagnosis business is more related to diabetes management. Jiuan Medical's launch of covid-19 home testing products may be related to the changes in the epidemic in the United States.
In the environment of the lack of effective data evaluation of the fatality rate and spread of Aomi Kerong, schools and other institutions require students or employees to provide negative test reports to go to school and work normally, which makes the demand for new crown test kits in the United States expand rapidly in the short term, and the sales channels are very diverse, from offline pharmacies, supermarkets, extended to online takeaway platforms, and even businesses that did not sell medical supplies have begun to launch new crown testing products. In such a situation, the supply side of the new crown testing in the United States began to have a significant gap, and many places in turn went out of stock.
Sensing the changes in the market, Jiuan Medical quickly laid out the new crown home self-test products and became the first batch of Chinese enterprises to obtain FDA EUA authorization.
Immediately after that, Jiuan Medical received purchase orders from the US government one after another, pushing the stock price of Jiuan Medical to a climax. On January 12, Jiuan Medical said that the US subsidiary received two iHealth kit purchase orders from the New York State Department of Health on December 21, 2021 local time, with a total order amount of about 416 million yuan; on January 10, 2022, local time, it signed an order with the New York State Department of Health to sell iHealth kit products, with a total contract price and tax of about 764 million yuan.
At the same time, the U.S. subsidiary received an order for iHealth kits from the Executive Office of the U.S. Department of the Federal and Health and Human Services of Massachusetts from December 3, 2021 to January 5, 2022 local time, with a total contract price of about $944 million. The cumulative order amount reached RMB2.124 billion.
Jiuan Medical is expected to become a major supplier of the new crown family self-test in the United States, igniting the expectations of the capital market for Jiuan Medical. On the 14th, Jiuan Medical announced that it had obtained a large order of 8 billion yuan from the U.S. ACC (U.S. Army ContractingCommand), the U.S. Army Contract Management Command. Jiuan Medical has accumulated more than 10 billion yuan of purchase orders from the US government.
At the same time, the United States from January 15, will launch the new crown home testing program, when the public can buy household test products can be reimbursed, there are analysis predictions, this initiative to digest nearly 2.5 billion doses of antigen reagents per month (per capita monthly 8 doses). The demand for new crown home testing in the US market will be expected to increase, and the market space for Jiuan medical products will be further opened, once again pushing Jiuan Medical to a high point.
Tribute to Xiaomi's cost-effective model won a large order from the US government
Back to the original question, why among the many IVD companies in China, it was Jiuan Medical that took over the big order of the US government. Although Jiuan Medical has not accumulated as much time as domestic IVD companies in product technology research and development, Jiuan Medical has been preparing for this day for a long time in terms of overseas channel layout, market perception and business strategy.
In terms of overseas channel layout, the success of Jiuan Medical is not only in obtaining the authorization of the FDA EUA, but also in entering the terminal retail market and establishing its own brand. When Jiuan Medical sold the temperature gun, it was already optimistic about grasping the outlet of the new retail industry in the US market, and implemented the development strategy of launching the ultimate cost-effective explosive product on the new retail platform. This laid the foundation for iHealth's COVID-19 antigen test products to obtain FDA EAU licenses, allowing its own brand iHealth to enter the terminal market.
Jiuan Medical's new crown antigen testing products are sold at the C-end and B-end at the same time, and the sales channels at the C-end are the official website of Jiuan iHealth and the Amazon US e-commerce platform.
Establishing their own brands in the developed markets is the dream of many IVD companies, and having a brand provides a possibility for a more diversified and in-depth layout of overseas markets. Although domestic IVD companies have been laying out overseas markets for a long time, most of them have entered in the OEM/ODM OEM model.
Taking Oriental Biologics as an example, Oriental Biologics has also obtained FDA EUA approval, but Oriental Biotech is jointly declared with Siemens. In the European market, the Oriental Bio Home Self-Test Edition is also exclusively licensed to Siemens for sale to the end market.
Domestic IVD companies to take the road of OEM is also a last resort, once an industry insider told the arterial network: "The United States has set a high barrier to entry for foreign companies, through the ODM foundry way can help domestic enterprises to enter the mature market faster." But entering in the OEM model also means losing the core pricing power. ”
The "luck" of Jiuan Medical is that it has bypassed the barriers of entry by selling blood pressure meters, blood glucose meters, temperature guns and other products, established its own platform, and opened up retail channels.
From the perspective of business strategy, Jiuan Medical has embarked on a unique extreme cost-effective route and won US orders with the advantages of China's supply chain.
The U.S. government has also purchased new crown antigen reagents in 2020, but only for domestic manufacturers in the United States, Jiuan Medical uses the logic of xiaomi selling consumer electronics to sell testing products, and the general IVD manufacturer strategy is very different, making the price a very competitive factor.
In the United States, the new crown kit of 2 doses of quick screening usually sells for 14-24 US dollars / box, and now because of the shortage of supply, the price has doubled several times in some markets, reaching 75 US dollars / box, and even has a list price of 80 US dollars / box. The comparison shows the advantage of the price of 6.99 US dollars for Jiuan Medical.
Price comparison of iHealth COVID-19 antigen self-test products on Amazon's platform
In addition to price, the stability of China's supply chain is also the advantage behind Jiuan Medical. At present, Jiuan Medical has a monthly production capacity of 100 million copies, and it is planned to increase its production capacity to 200 million copies per month by the beginning of 2022.
The shortcomings of the US domestic enterprises lie in the production capacity, the secretary of the board of directors of Oriental Biotech mentioned in the answer to the investor's question: "The US government purchased 150 million copies of the new crown antigen detection reagent from Abbott from Abbott in September 2020, but by October 2021, it took a whole year, but it was still not as good as the European antigen, and the reason behind it is that due to the local protectionism of the US government, the production capacity of several enterprises approved at that time was not enough and the technical indicators were not ideal." ”
Exploring overseas markets puts forward high requirements for the production and operation, marketing, quality control, compliance management, refined management capabilities and digital operation capabilities of enterprises. Whether Jiuan Medical can achieve performance, it is also necessary to strictly control the quality and master the supply of core raw materials.
Opportunities always leave those who are prepared, and the companies that have obtained the FDA's home version of the new crown antigen testing FDA EUA authorization: Jiuan Medical, Anxu Biological, and Oriental Biologics are all enterprises that have long been deeply involved in overseas markets. Before the epidemic, Anxu Bio mainly sold drug POCT testing products in the United States, and Dongfang Bio mainly sold infectious diseases, drug testing, eugenics and other testing products.
Orient Bio expects to achieve a net profit of 4.72 billion yuan to 5.12 billion yuan in 2021, an increase of 3.043 billion yuan to 3.443 billion yuan compared with the same period of the previous year, an increase of 181.45% to 205.31% year-on-year; deduction of non-net profit of 4.7 billion yuan to 5.1 billion yuan, compared with the same period of the previous year, an increase of 3.041 billion yuan to 3.441 billion yuan, an increase of 183.30% to 207.41%. The results were announced, and Oriental Bio also reaped the upper limit board, and the biggest increase since January 5 also exceeded 75%.
At a time when overseas kits are in short supply, they can obtain market passes, which are closely related to their familiarity and insight into overseas market access rules, laws and regulations, and cultural differences in the past.
Since the outbreak of the new crown epidemic, there has been no shortage of successful overseas gold digging, but more than 90% of companies have not been able to successfully seize overseas markets due to untimely decision-making or insufficient clinical resources. An industry insider once said: "The overseas COVID-19 testing market is much larger than in China, but the market is mainly dominated by Korean companies. There are very few Chinese companies that have achieved dominance. ”
The boom of overseas "new crown" testing concept stocks will eventually return to the essence, but from the high heat of Jiuan Medical, we can see that the capital market is highly recognized by enterprises with internationalization capabilities, and the degree of internationalization in the future is an important criterion for measuring the growth of enterprises, and it will also become a compulsory course for domestic medical enterprises.
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The new crown testing sector continues to track and recommend: the global monthly test volume has grown rapidly month-on-month, and the surge in demand in the United States has brought considerable market increments - Essence Securities