The possibility of being affected by national or provincial collection within 3 years is low, and electrophysiology is one of the only remaining blue oceans in the entire medical and health industry.
CICC expects the mainland electrophysiology market to grow sixfold in the decade from 2020 to 2030, and by 2030, the market size will reach 30.3 billion yuan, with a compound growth rate of 19.3%.
According to statistics, as of 2020, there are 30 million patients with tachyarrhythmias in China. Among them, there are two indications of atrial fibrillation and supraventricular tachycardia. In electrophysiological surgery, the two accounted for 42% and 33% respectively, but the proportion of atrial fibrillation surgery in the future may increase.
Compared with traditional drugs, the clinical treatment effect of electrophysiological surgery is more obvious. Studies have shown that it will reduce the recurrence of the first symptomatic atrial fibrillation by half.
The guidelines and consensus of national academic associations are the most influential on doctors and are widely accepted, recognized and applied by doctors. In 2006, the American College of Cardiology listed catheter ablation as the first-line choice for paroxysmal atrial fibrillation and persistent atrial fibrillation after ineffective drug therapy. In 2015, the American Heart Association, the American College of Cardiology, and the Heart Rhythm Society listed electrophysiological surgery as a first-line option for treatment room speed.
CICC believes that the recommended level of catheter ablation versus paroxysmal and persistent atrial fibrillation is expected to continue to increase, and may even become a first-line therapy.
How much does a surgery cost?
For 30 million people with tachyarrhythmias, how much does an operation cost? Depending on the type of surgery, the three most common types of electrophysiological surgery are atrial fibrillation, superior ventricular tachycardia, and preventricular proration.
Although the annual surgical volume of supraventricular tachycardia is higher than that of atrial fibrillation, from the price point of view, the surgical cost of atrial fibrillation is more than double that of supraventricular tachycardia, atrial fibrillation is 90,000, supraventricular velocity is 35,000, and ventricular early is 45,000.
The market size of atrial fibrillation accounts for 55% of the electrophysiological market. The high cost of atrial fibrillation stems from the use of high-value products (high-density calibration, magnetic localization pressure sensing ablation).
Due to the immature technology of the three-dimensional system and the lack of pressure sensing products, the domestic system cannot enter the atrial fibrillation market within 3 years.
Atrial fibrillation surgery cost breakdown Source: Guohai Securities Research Report
The prevalence of atrial fibrillation has a strong correlation with age, guohai securities believes that after 10 years of aging will lead to an increase of 4.5 million people with atrial fibrillation, the proportion of atrial fibrillation in the volume of ablation surgery will be further increased in the future.
Interestingly, due to the high rate of radical treatment of supraventricular tachych surgery and the lack of recurrence, the increase in the amount of surgery is relatively flat. Guohai Securities believes that the proportion of intraventricular surgery may decline in the future.
The high proportion of domestic production is the root cause of the lower cost of supraventricular tachycardia than atrial fibrillation. At present, the volume of Huitai Medical and minimally invasive electrophysiological surgery accounts for 12% and 10% respectively.
Breakdown of costs of ventricular speed surgery Source: Guohai Securities Research Report
Domestic production ratio is less than 15%
Three-dimensional ablation will become the mainstream of electrophysiological surgery
Electrophysiological surgery is divided into two-dimensional and three-dimensional techniques, including two steps: standardization and ablation.
Compared with two-dimensional technology, three-dimensional can reduce the time of surgery, improve the success rate and reduce the exposure time of X-rays, while reducing the length of time doctors learn.
As a result, three-dimensional technology is gradually replacing two-dimensional technology, and by 2020, the proportion of surgeries has increased to 77%. CICC believes that in the future, the proportion of three-dimensional surgery used to treat rapid arrhythmias will be further improved, and even enter the era of green electrophysiology with zero X-rays.
"Three-dimensional systems are necessary to compete in the electrophysiology market." CICC stressed.
The flow prototype of the three-dimensional calibration system is equivalent to a box, and where there is surgery, the box is dragged over. Domestically produced large central hospitals have installed capacity, and surrounding county and prefecture-level city hospitals use mobile prototype sex rooms.
Source: Guohai Securities Research Report
According to the statistics of Guohai Securities, the installed capacity of the three-dimensional standard measurement system is nearly 2,000 units nationwide, the average installed capacity of the top three hospitals is 1, and only 200-300 units are made in China. At present, it is mainly in the form of dealers or platform vendors leasing, donation, trial, etc. to enter the hospital, and the proportion of pure sales is not high.
The import price of the three-dimensional standard measurement system is generally between 2.5 million and 3.5 million yuan, and the domestic price is between 1.5 million and 3 million.
From the price point of view, in the low-end products, the gap between domestic equipment and imports is about 50%, high-end products currently have no domestic products to match, high-end equipment full configuration, the price of more than 5 million.
In the future, the three-dimensional electrophysiological system of electromagnetic fusion may gradually become a trend.
At present, Johnson & Johnson has the largest market share in China. Although domestic enterprises such as Huitai Medical also have three-dimensional systems, there is still a certain gap with imports in multi-electrode calibration technology and algorithm technology.
Product strength + engineers, resulting in monopoly in the market.
Magnetic localization (closed source) and pressure sensing techniques are key to the treatment of atrial fibrillation. Magnetic positioning technology and consumables closed-loop, can only use their own equipment with their own products, but there is still a large gap between domestic and imported products, so the atrial fibrillation market is still controlled by foreign capital.
Doing electrophysiological surgery requires engineers, high technical content, mostly provided by manufacturers, with an annual salary of 400,000-500,000. When engineers do surgery, they are generally reluctant to use another catheter, low-value products can be used interspersed, and high-value products generally do not accept other products.
In summary, domestic production to break through, the strategy is different. Minimally invasive electrophysiology companies have their own equipment and engineers, most of which are their own equipment with their own consumables.
97% of Huitai Medical's consumables are matched with the systems of other manufacturers. Hospitals that specialize in large surgical volumes, engineers are resident, doctors have a large voice, and engineers can use some domestic products; hospitals with small surgical volumes, engineers deliberately come to do surgery, and generally do not accept products from other companies.
The market share of high-value consumables imports is high
At this stage, ablation technology is mainly divided into three ways: radiofrequency ablation, cryoablation and pulse ablation.
RF ablation accounts for up to 88%, pulse ablation is in the exploratory stage, and has not been applied on a large scale.
Cold brine perfusion is a key technique for ablative catheters, which can wash the front end of the catheter with low-temperature saline during the ablation process to achieve the effect of reducing temperature, so as to improve surgical safety and reduce complications.
The greater the number of perfusion catheter holes, the better the effect on temperature control. However, at present, most of the domestic products are 6 holes, while the import can reach up to 56 holes.
Ablation catheters are evolving to integrated, high-precision catheters, especially pressure-sensing brine perfusion catheters. The principle is to add a very miniature three-dimensional pressure sensor to the head of the catheter to determine whether there is contact with the lesion and the depth of contact.
The price of the ablation catheter that can sense the pressure is much higher than that of the cold brine perfusion catheter, and the price of imported products can be as high as 28,000 yuan, but the products are not listed domestically.
At present, the market share of pressure-sensing catheters is monopolized by foreign brands such as Johnson & Johnson and Abbott. The related products of domestic companies such as Huitai Medical are expected to be approved for listing in 2023.
Can freeze ablation overtake in curves?
Cryoablation does not require magnetic positioning, pressure sensing, etc. Therefore, Guohai Securities believes that domestic manufacturers are expected to take advantage of this curve to overtake.
The price of cryoablation surgery is 80,000-90,000 yuan, of which 45,000 yuan is used for cryocatal catheters and about 2 million yuan for cryogenic energy equipment.
According to statistics, as of 2020, cryoablation accounts for 12% of the surgical volume of atrial fibrillation, and from 2015 to 2020, the compound growth rate is 69.8%, higher than radiofrequency ablation.
At present, domestic manufacturers such as Kangfeng Biological and Jinjiang Electronics are developing frozen ablation products.
90% of China's electrophysiological market is divided up by three giants such as Johnson & Johnson, Abbott and Medtronic. Among them, Johnson & Johnson monopolized 58.8%, and in 2020 alone, the company earned 3.03 billion yuan from China.
However, in recent years, domestic enterprises have also significantly accelerated the pace of catching up and have successfully attracted the attention of capital.
Following Huitai Medical's successful listing on the capital market in January 2021, another subsidiary of the Minimally Invasive Department, Minimally Invasive Electrophysiology, has submitted an IPO application to the Shanghai Stock Exchange.
In addition, following the CXO (pharmaceutical outsourcing) field, Hillhouse Ventures has once again invested heavily in electrophysiology.
On December 29, 2021, Jin Jiang Electronics, which is mainly based on pulsed electric field ablation technology, announced the completion of a series A financing of hundreds of millions of yuan, and the investor behind it is Hillhouse.
On January 12, 2022, Kangfeng Biologics, a refrigeration and ablation technology company previously invested by Hillhouse, submitted a listing prospectus to the Hong Kong Stock Exchange.
Domestic production is not to be outdone
To break through the imported "card neck technology"
In recent years, domestic enterprises are rapidly making up for the gap in the industry with the help of the power of capital, and have also made certain breakthroughs.
In January 2021, Huitai Medical obtained the domestic registration certificate of the three-dimensional cardiac electrophysiology standard measurement system and the magnetic positioning cold saline irrigation injection frequency ablation electrode catheter, which marked the company's official entry into the main battlefield of the electrophysiology field.
In addition, the magnetic positioning pressure catheter independently developed by Huitai Medical has been in clinical trials and is expected to be approved in 2023, when it is expected to compete directly with international giants.
Jin Jiang Electronics' LEAD-PFA pulsed electric field ablation system integrates 3D modeling, standardization and ablation, and the system was also registered for clinical trials in 2021. It is expected to become the first pulsed electric field ablation system approved for listing in China with independent intellectual property rights.
An investment banker told the health community that China's cardiac electrophysiology industry is still in the early stage of development, but the demand is increasing year by year. Previously, it was almost monopolized by international giants, but at present, domestic companies are also strengthening research and development efforts, and have made breakthroughs in the "card neck" link.
"Domestic companies are gradually seizing the market for chamber-high tachycardia, and are hopeful that from 2023 onwards, they will challenge multinational manufacturers in the more critical areas of atrial fibrillation and other complex tachyarrhythmias, and gradually start the process of domestic replacement of electrophysiology." According to CICC's forecast, "In 2030, the proportion of domestic production in the electrophysiology market is expected to reach 30%."
Within 3 years or no need to worry about collection pressure
In China, the electrophysiology industry is actually playing out the plot of "pain and happiness".
Although there is still a need for a big leap forward to catch up, in the short term, there is no need to worry about the impact of collection, which means that leading companies will enjoy the "industry dividend" for many years.
At present, industries with high patient costs such as ophthalmology and stomatology have been included in the scope of collection, but Guohai Securities expects that the time window for the electrophysiology industry or after 3 to 6 years, the short-term possibility is low.
At present, foreign brands occupy an absolute market share in the electrophysiological market, and in the short term, it is irreplaceable, and once it is collected, foreign capital has strong bargaining power in negotiations.
Referring to the pacemaker market, which is also dominated by foreign capital, Guohai Securities expects that after electrophysiology collection, the price reduction range may be between 40% and 60%.
In addition, Guohai Securities predicts that even if the collection time window is opened, the electrophysiology industry will continue to classify the collection. Standard catheters, ordinary ablation catheters, two-dimensional, products without magnetic positioning may be prioritized for collection, and then gradually penetrate into high-end products such as magnetic positioning and pressure induction.
The above-mentioned investment bankers said that the collection is not the core of capital's real attention, as an institutional investor, the first task is to find truly innovative technologies and companies, so as to truly have the ability to resist risks.
"From the perspective of penetration rate, the penetration rate of electrophysiological surgery in the mainland is less than 1%, which is 1/7 of that in the United States. Assuming a compound growth rate of 28 percent over the past five years, China could reach the current level of the United States in eight years." Guohai Securities pointed out.
Sources | the health community
Written by | Old Zhao next door