Lepu Medical's Cardiac Intervention Product Approved; Left Heart Access Emerges as a Strategic Frontier

On May 6, LEPU Medical announced that the radiofrequency puncture generator independently developed by its subsidiary, Shanghai Shape Memory Alloy Co., Ltd., received registration approval from the National Medical Products Administration (NMPA). The device is intended for use in conjunction with the disposable radiofrequency atrial septal puncture needle produced by LEPU Medical, and is used for transseptal puncture (TSP) from the right atrium to the left atrium.

LEPU Medical referred to this RF puncture generator system as another milestone achievement in the field of cardiac electrophysiology and structural heart disease.

Why it is called a "milestone achievement" may be inseparable from the commonality of atrial septal puncture in electrophysiology and structural heart disease surgeries. According to the announcement, with the continuous advancement of interventional treatments in the cardiac disease field, the importance of left heart access has become increasingly prominent, especially in atrial fibrillation ablation, left atrial appendage closure, and mitral valve surgery, where establishing left heart access is crucial. As a key technology, atrial septal puncture is closely related to the cardiac electrophysiology, left atrial appendage closure, and mitral valve intervention markets.

An expert in cardiology from a Class III, Grade A hospital in China told the 21st Century Business Herald reporter that atrial septal puncture is relatively common in electrophysiology procedures and is considered a basic operation. An industry insider in electrophysiology also pointed out to the 21st Century Business Herald reporter that radiofrequency puncture generators are indeed a relatively new product, and from the perspective of Northeast China, they are still rarely seen in routine clinical applications.

Widely used, but is the procedure already mature?

According to the annual report, in 2023 LEPU Medical achieved a total revenue of 7.98 billion yuan, a year-on-year decrease of 24.78%; net profit was 1.258 billion yuan, a year-on-year decrease of 42.91%. Its core business is cardiovascular implantation and intervention, with overall revenue close to 2 billion yuan in 2023, and the target for 2024 is 2.8 billion yuan. LEPU Medical once told reporters from the 21st Century Business Herald that the company's future performance growth will mainly come from new products in medical devices. Electrophysiology and structural heart disease are important parts of LEPU Medical’s cardiovascular implantation and intervention business.

According to Frost & Sullivan statistics, the number of cardiac electrophysiology procedures in China reached 214,000 cases in 2021. With the increasing degree of population aging and the continuous increase in the number of patients, the number of cardiac electrophysiology procedures in China has achieved sustained growth. At the same time, the application of left atrial appendage closure is also gradually expanding, with about 20,000 procedures performed in 2022, and it is expected to grow to 40,000 by 2024. Additionally, from 2021 to 2023, the number of mitral valve interventional procedures in China increased from 182 to 1,274, and this procedure has already shown a significant supply and demand gap. It is predicted that by 2025, the number of such procedures will reach over 10,000, achieving rapid growth.

Overall, the annual demand for atrial septal puncture procedures has exceeded 200,000 cases. With the increase in atrial fibrillation patients and the trend of aging, the atrial septal puncture technology will embrace a larger market space, indicating broad prospects.

Cardiac experts have introduced that, with the development of interventional treatment for cardiovascular diseases, especially the vigorous growth of atrial fibrillation radiofrequency ablation, transseptal puncture has become one of the basic operations that electrophysiologists must master. Transseptal puncture is widely used in catheter ablation for left heart system arrhythmias, such as atrial fibrillation, left atrial tachycardia, left-sided accessory pathways, and left ventricular tachycardia, most of which require a transseptal approach to complete. Additionally, cardiac ganglion modification for vasovagal syncope, left atrial appendage closure, mitral valve clipping, and mitral valve balloon dilation also require transseptal puncture.

The wide range of application scenarios might just be the advantage of this product, but has the atrial septal puncture technology basically matured?

LEPU Medical pointed out in the announcement that traditional mechanical puncture technology currently faces challenges such as high learning difficulty, inaccurate puncture point prediction, longer puncture time during surgery, and the potential to cause severe complications like cardiac tamponade and heart rupture. The aforementioned product is the first radiofrequency puncture generator system in China to receive NMPA approval.

The aforementioned electrophysiology industry insider told the 21st Century Economic Report: "The radiofrequency puncture generator is indeed a relatively new product. The atrial septal puncture procedure is involved in many surgeries, but overall it has become very mature and is no longer considered a clinical technical challenge. Moreover, the current consumables have all been upgraded and improved, showing good clinical performance."

The aforementioned clinical expert also told the 21st Century Economic Report: "In my personal opinion, there should be no further pain points that need improvement in the clinical application of atrial septal puncture."

However, the aforementioned industry insider pointed out that the market actually welcomes innovative products as a whole, and such products may create new business models.

"The application scenarios of radiofrequency puncture generators may not be limited to the radiofrequency field. If they can cover most radiofrequency therapeutic procedures, such as tumor ablation, the market prospects would be very promising. In fact, the biggest limitation for medical device products lies in their application scenarios. For instance, products like gauze and needles seem small and inexpensive, but they are needed across various medical scenarios in the entire healthcare field. On the other hand, an artificial heart may cost over 700,000 yuan per unit—an innovative product that appears cutting-edge—but with only a single application scenario. Nationwide, this surgery cannot be performed many times each year, which determines the upper limit of a product’s potential," the industry insider stated.

Controversy over Left Heart Pathway

The left heart access is crucial in various types of surgeries, such as interventional treatments in the fields of structural heart disease and cardiac electrophysiology, including mitral valve clipping, left atrial appendage closure, and atrial fibrillation, all of which rely on the establishment of left heart access. Therefore, in addition to LEPU ScienTech Medical Technology (Shanghai) Co., Ltd., multinational medical device giants also have a presence in this surgical field.

According to media reports, in October 2021, Boston Scientific announced the signing of a definitive agreement to acquire Baylis Medical for an upfront payment of $1.75 billion (approximately RMB 11.2 billion). The acquisition was completed in February 2022, making Boston Scientific the only company globally at that time to combine a comprehensive access portfolio with existing left atrial treatment solutions.

According to the introduction, Baylis Medical is an innovative medical device development company focused on the field of cardiology. It has several star products in the fields of electrophysiology and structural heart, including the radiofrequency (RF) NRG and VersaCross transseptal puncture platforms, as well as a series of auxiliary products required for surgery such as medical guidewires, sheaths, and dilators.

In addition to Boston Scientific, in July 2022, Medtronic acquired Actus Medical's left heart access products for $50 million (equivalent to 340 million RMB). The main product is the AcQCross Qx system, which can be used for left atrial appendage closure procedures—implanting a small device inside the left atrium of the heart to block blood flow, aiming to reduce the risk of stroke in patients with atrial fibrillation.

However, on November 8, 2023, Acutus Medical announced that it would reallocate resources to support the distribution business of left-heart access, with the direct result being a reduction of approximately 65% in the company’s workforce. According to its annual report, as of the end of 2022, the company had 225 employees, which means the layoffs could affect around 146 employees. The company reported plans to gradually phase out its electrophysiology mapping and ablation business, involving products such as the AcQMap Mapping System.

From the perspective of the electrophysiology market, according to data from the Forward Industry Research Institute, the current leading company in China's electrophysiology device industry is Johnson & Johnson of the United States, with a market share of approximately 43% in 2022. Other top-tier companies include Abbott, Medtronic, ScienTech Medical, and MicroPort EP, with market shares of 17.3%, 4.4%, 3.6%, and 3.2%, respectively, in 2022.

However, from 2020 to 2022, the market concentration of China's electrophysiology device industry showed a yearly declining trend. The industry's CR5 decreased from 93% to around 72%, among which the market share of the top three foreign-funded enterprises dropped from 87% to approximately 65%, and the market share of the leading enterprise, Johnson & Johnson (US), fell from 59% to about 43%.

Arterial Network once reported and analyzed that, from the perspective of market landscape, atrial septal puncture plays an important role in two major markets—cardiac electrophysiology and interventional mitral valve treatment—which are Abbott's main battlegrounds. Currently, the primary atrial septal puncture systems used in China are also from Abbott. Abbott is also a leader in the mitral valve market, with its transcatheter mitral valve edge-to-edge repair product holding a distinct advantage in China.

Besides the layout of multinational giants, the factor of centralized procurement is more noteworthy in the Chinese market.

For example, information from the Fujian Provincial Medical Insurance Bureau shows that the 2023 provincial alliance procurement for medical consumables in cardiac interventional electrophysiology covered 27 provinces and regions in China. A total of 18 manufacturers and 2,273 medical institutions participated, with the annual procurement amount of related medical consumables reaching 7 billion yuan, accounting for more than two-thirds of the total market in China. In the end, 16 companies were selected, with an average price reduction of 49.35% for the selected products. Taking atrial fibrillation ablation surgery, which is one of the more common procedures in cardiac interventional electrophysiology, as an example, the cost of consumables for a single surgery will decrease from an average of 76,000 yuan before the procurement to 42,000 yuan after the procurement.

According to the "Centralized Bulk Procurement Plan for Provincial Alliance of Medical Consumables in Cardiac Interventional Electrophysiology" issued by the Fujian Provincial Medical Insurance Bureau, the centralized procurement products already include atrial septal puncture consumables, such as atrial septal puncture sheaths and atrial septal puncture needles.

Source: 21st Century Economic Report Author: Wu Yinggang