Beijing HuaMai Tech Aborts IPO: Unprofitable Medical Device Firm Struggles Amid High Sales Expenses and Governance Risks

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　　Beijing Percutek Therapeutics Medical Equipment Co., Ltd. Terminates IPO: Unprofitable Medical Device Companies Struggle During the Lunar New Year! Sales Expenses Account for 50% of Operating Revenue, Triggering Inquiry! Failed IPO Results in Restoration of Certain Valuation Adjustment Clauses for Ms. Zhou

Source: International Investment Bank Research Report

　　Beijing Percutek Therapeutics Medical Equipment Co., Ltd. Terminates IPO: Unprofitable Medical Device Companies Struggle During the Lunar New Year! Sales Expenses Account for 50% of Operating Revenue, Triggering Inquiry! Failed Listing Restores Certain Valuation Adjustment Clauses for Ms. Zhou

Information on the SSE website shows that Beijing Percutek Therapeutics Medical Equipment Co., Ltd.'s IPO journey on the STAR Market has been terminated. Percutek Therapeutics submitted its application on the last day of the previous year, and after being questioned on January 18, it did not proceed to the listing meeting, until December 25, 2023, when it was terminated, lasting almost exactly one year.

　　1、Percutek Therapeutics adopts the fifth set of standards of the Sci-Tech Innovation Board, which means profitability is not considered.. The fifth set of standards generally applies to new drug companies, as everyone knows that the research and development cost of a new drug in Europe and America may start at 1 billion US dollars, which is an astronomical figure for most Chinese companies.However, one issue is that Chinese investors seem to have little interest in unprofitable companies, and already-listed companies have performed poorly. Therefore, the fifth set of standards has been criticized, with fewer and fewer companies successfully going public.

2. Percutek Therapeutics is small in scale and suffers from heavy losses.The IPO prospectus shows that the revenue scale of Percutek Therapeutics has only been in the tens of millions in recent years, while the losses have been nearly hundreds of millions each year, with no self-sustaining ability visible in the short term.

3. The main business of Percutek Therapeutics is "the research, production, and sales of medical device products in the fields of aortic, peripheral and coronary, neuro-intervention, and access." In other words, various stents. To be honest, cardiovascular diseases have become a common illness among Chinese people.This year, my family members have had two carotid artery stents installed, and a good friend of mine has had a cardiac stent installed. Last time I went back, a teacher in his 90s also had a cardiac stent installed. However, the relevant technology and products have always been dominated by international manufacturers such as Medtronic, so there is definitely a need for these kinds of products in China.

4. The IPO prospectus shows that Ms. Zhou, the controller of Percutek Therapeutics, previously worked at Medtronic. Ms. Zhou should be well aware of the market demands.. However, the IPO prospectus shows that the company's founding shareholders and chief technology officer have resigned. Although the company insists that this will not affect its operations, ......

　　5. Percutek Therapeutics also faces significant challenges in market expansion. The IPO prospectus reveals that the company’s sales expenses are substantial, accounting for 50% of its revenue. The company promotes its products through methods such as on-site support and conference marketing. Although the IPO prospectus does not indicate any bribery or similar behaviors, it is well-known that the high cost of medical devices has been investigated numerous times. Public media reports state that, over the past three years, among 70 verdicts related to bribery in the pharmaceuticals sector, 70% were associated with medical devices. For instance, my family spent over 70,000 yuan on two carotid artery stents, even though insurance covered most of the cost. However, if this trend continues, it is doubtful whether insurance funds will remain sustainable.

6. Through various private equity funds, then turn it into a medical product, IPO financing, investors cash out, and retail investors foot the bill—it has already become a business model.，but IPO is a double-edged sword. The same goes for Percutek Therapeutics. Now that the IPO has been terminated, the exit of private equity funds has been hindered, and some gambling clauses between the controlling person, Ms. Zhou, and the private equity funds need to be reinstated. This year will not be easy.

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Percutek Therapeutics Terminates IPO SponsorCITIC Securities

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The Fifth Standard: Non-Profit

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The actual controller, Ms. Zhou, has experience with Medtronic.

Numerous Private Equity Funds

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Raising 1.2925 billion is several times oneself

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The founding shareholder and chief technology officer have resigned.

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Sales expenses account for 50% of the turnover.

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More than 100 academic conferences annually

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Failed to go public, Ms. Zhou's certain gambling clauses restored

Editor: Liu Wanli SF014