China's 'King of Hemodialysis' Weigao Blood Purification Advances IPO with Comprehensive Product Portfolio

Recently, Shandong WEGO Blood Purification Products Co., Ltd. (hereinafter referred to as "WEGO Blood Purification") has made new progress after officially launching its IPO on December 30, 2023. According to the Shanghai Stock Exchange, the IPO progress of WEGO Blood Purification was updated on August 2, with the review status changed to "Under Inquiry."

Source of the image: SSE

The pharmaceutical industry is still in a winter period in 2024, with the capital market also showing signs of desolation, making the IPO path naturally extremely difficult. According to publicly available data, on March 31 alone, the Shanghai Stock Exchange saw the suspension of IPOs for 237 companies, including several popular domestic medical device enterprises. As the king of blood purification in China, WEGO Blood Purification's move towards an IPO has drawn significant attention. Following the successful listing of WEGO Orthopedics, can WEGO Blood Purification achieve its desired IPO outcome?

Strike While the Iron Is Hot
The King of Hemodialysis Keeps Making Efforts

WEGO Blood Purification was established in 2004, focusing on the field of blood purification. Its controlling shareholder is WEGO Group, making it another key player within the WEGO family. Centered around the two strategic directions of hemodialysis and peritoneal dialysis, the company has completed a full industrial chain layout for blood purification, including dialyzers, dialysis machines, blood tubing, and peritoneal dialysis solutions, committing itself to serving kidney patients worldwide. Notably, if WEGO Blood Purification successfully goes public this time, WEGO Group will own four listed companies (WEGO Medical, WEGO Orthopaedics, East CNC controlled by Chen Xueli, the actual controller of WEGO Group, through Weihai WEGO International Medical Investment Holdings).

A Review of WEGO's Blood Purification Annual Reports Shows That the Title of China's Hemodialysis King Is Well-Deserved. As can be seen from the table below, despite the sweeping cold winds in the pharmaceuticals industry, WEGO's blood purification revenue and net profit have still been able to grow steadily year by year, highlighting its impressive strength.

Data Source: Collated from public data

From the perspective of product segments, they are divided into Hemodialysis (HD) and Peritoneal Dialysis (PD), with the hemodialysis segment leading revenue growth. In mid-2020, dialyzers (F series, MF series, HF series, EH series, HDF series) accounted for a staggering 60.14% of revenue. However, subsequent data shows that WEGO's blood purification division is not overly reliant on a single product. The share of hemodialysis machines (DBB-EXA series, DBB-EXA ESS series, DBB-27C series) and accompanying dialysis products has been increasing year by year, potentially becoming the second major pillar supporting WEGO’s blood purification revenue.

Source of the image: WEGO Blood Purification Prospectus

For future planning, WEGO Blood Purification also has a very clear vision. According to the prospectus, WEGO Blood Purification plans to issue no more than 41,139,407 shares, accounting for no less than 10% of the total share capital after the issuance. The company intends to raise 1.351 billion yuan in funds, which will continue to be used for supplementing, innovating, and building its own business segments.

• WEGO Blood Purification Intelligent Production and Construction Project 342 million yuan;
  

• Dialyzer (Ganzhou) Production and Construction Project 226 million yuan;
  

• WEGO New Type Blood Purification High-Performance Consumables Products and Equipment R&D Center Construction Project 285 Million Yuan;
  

• WEGO Blood Purification Digital Information Technology Platform Construction Project 98 million yuan;
  

• Project to supplement working capital of 400 million yuan.
  
  

Moreover, it is worth mentioning that before this IPO attempt, WEGO Blood Purification had submitted a prospectus to the Hong Kong Stock Exchange on June 27, 2022, planning to list on the Hong Kong Stock Exchange. However, the current listing application of WEGO Blood Purification on the Hong Kong Stock Exchange has expired. Whether the strategy of abandoning Hong Kong for the A-share market will succeed remains to be seen.

WEGO Blood Purification Leads the Way for Local Medical Device Companies
The Mission of Domestic Substitution Still in Progress

For a long time, China's hemodialysis market has been dominated by foreign enterprises. However, with the policy红利 of domestic substitution and the continuous efforts of companies, local dark horses such as WEGO Blood Purification and Mountain Outside Mountain have emerged. According to Frost & Sullivan data, in 2022, WEGO Blood Purification accounted for 32.5% of the market share in China's hemodialyzer sector, ranking first in the industry; it accounted for 32.8% of the market share in China's hemodialysis tubing set sector, also ranking first in the industry. The company, which has been authorized to exclusively sell WEGO Nikkiso and Nikkiso brand hemodialysis machines, held a 23.7% market share in China's hemodialysis machine sector, ranking second in the industry, just behind Fresenius Medical Care.

Despite WEGO's impressive achievements in blood purification, the mission of replacing imported products with domestically produced ones remains urgent. According to data from the Pharmaceutical Economy News, the domestic hemodialysis market is still dominated by foreign enterprises. The traditional top five foreign manufacturers—Fresenius Medical Care, B. Braun, Nikkiso, Baxter, and Nipro—already account for over 80% of the blood dialysis equipment market in China.

Moreover, foreign enterprises are still gradually expanding their layout in China. Take Fresenius Medical Care as an example, known as the global leader in hemodialysis, its strength is quite formidable, ranking sixth among the top 100 global medical device companies in 2023. In 2023, Fresenius Medical Care signed a strategic cooperation agreement with the Hainan Provincial Department of Industry and Information Technology and the Management Committee of Haikou National High-Tech Industrial Development Zone. By the end of the year, it officially announced a strategic investment in Kunshan Weirui Medical, and its high-end system—the 6008 CAREsystem for hemodiafiltration—was formally introduced into the Chinese market.

From the perspective of local hemodialysis device companies, enterprises such as Mountain-Outside-Mountain, Sanxin Medical, and Tianyi Medical are also continuously expanding their advantages and experiencing rapid growth.

• SWS (Mountain-Outside-Mountain) took the lead over WEGO in terms of going public. As early as December 2022, SWS was officially listed on the STAR Market of the Shanghai Stock Exchange, becoming the first A-share chain company specializing in blood purification and dialysis. According to financial reports, in 2023, SWS achieved a revenue of 690 million yuan, representing a year-on-year increase of 80.65%, with a net profit of 192 million yuan, surging by 237.77% year-on-year, showing rapid growth.
  

• Sanxin Medical has also performed well in recent years, with revenue of 1.3 billion yuan and a net profit of 223 million yuan, representing a year-on-year increase of 12.12%. In the first quarter of 2024, revenue reached 331 million yuan, a year-on-year increase of 21.34%. Moreover, Sanxin Medical continues to expand into areas such as diabetes and vascular intervention. Going forward, these new businesses are expected to raise the company's profitability ceiling.
  

• As the holder of the first CRRT registration certificate in China, Tianyi Medical has a clear plan for the future. It is expected to launch a major strategic restructuring in the first half of 2026, gradually expanding its advantages in both domestic and overseas markets.
  

Conclusion

In the future, the "cake" of China's hemodialysis market will become increasingly attractive. According to statistics and forecasts by Global Info Research, the scale of China's hemodialysis market reached US$2.249 billion in 2022 and is expected to reach US$4.185 billion by 2029. From 2023 to 2029, the compound annual growth rate of the Chinese market will be approximately 9.22%, the fastest growth, which is about three percentage points higher than the global rate.

Moreover, the demand for hemodialysis treatment continues to grow, driving a rapid increase in the market size of the blood purification industry and also boosting the growing demand for hemodialysis consumables. Facing challenges and opportunities, local medical device companies are continuously making efforts and accelerating their progress, opening a new chapter in the competitive landscape of China's dialysis industry.

References:
1. "Another WEGO-affiliated Company Officially Launches IPO" Medical Device News
2. "Major Changes in WEGO's 'Blood Purification' IPO" - Medical Device Research Society
3. WEGO Blood Purification Prospectus, Official Website, Annual Reports

Editor: Muyan

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