C-MER Medical Focuses on Greater Bay Area Medical Services, Implements Dual-Specialty "Ophthalmology + Dentistry" and "Service + Product" Dual-Driven Growth Strategy.With the accelerated integration of Shenzhen and Hong Kong, the company's ophthalmology and dental treatment businesses are expected to grow rapidly.
Source:Sailing the Sea of Medicine
Author:Cai Mingzi/Gu Yihan
Editor: South Wing
Cover Source:C-MER Medical Official Website
01｜Core Reading Guide
- Leader in Medical Services in the Greater Bay Area, Dual-Specialty Dual-Drive Strategy Boosts Growth
C-MER Medical Focuses on Greater Bay Area Medical Services, AdoptsOphthalmology+"Double Specialty" in Dentistry, "Service+"Double Wheels" ProductDrive Growth Strategy.The actual controller, Professor Dennis S.C. Lam, is a leading figure in the Asia-Pacific ophthalmology field, with significant advantages in talent attraction and reserve. Moreover, as a Hong Kong-funded enterprise, it receives substantial local support under the relevant policies for development in the Greater Bay Area, such as the "Hong Kong-Macao Medicine and Device Connect" and other high-quality qualifications, thereby enhancing its competitive edge through differentiation.- C-MER Medical's leading position in Hong Kong, China is solid, with increased expansion in mainland China, and new hospitals are expected to achieve profitability quickly.
C-MER Medical is the leading private ophthalmology provider in Hong Kong, China, with a market share of over 10%. Through new establishment and acquisitions, its revenue CAGR from 2016 to 2022 reached25%, with its clinic layout and the number of doctors both in leading positions, securing a solid position as the industry leader.The company's development strategy in mainland China is to build a reputation for international medical service standards through its expert team and international advisory board, which will help with initial customer acquisition. Initially focusing on consumer healthcare, after integrating with health insurance, local experts will be gradually introduced to strengthen specialized department construction. It is expected that 3-4 hospitals will reach break-even by 2023. Meanwhile, the company is accelerating its expansion, with plans to add 4-5 new hospitals in 2023, aiming to complete the layout across all Greater Bay Area cities by 2025.
- Dental Services Focus on Patients in Hong Kong, China; Business Quickly Recovers Post-Resumption with Significant Long-Term Growth Potential
Shenzhen Aikangjian Focuses on Oral Diagnosis and Treatment for Hong Kong Customers, with 60% of Patients from Hong Kong Before the PandemicAfter the resumption of cross-border travel between Shenzhen and Hong Kong, the company's dental business quickly recovered to pre-pandemic levels., C-MER Medical's revenue in Shenzhen from January to May 2023 reached121 millionRMB, a year-on-year increase of183.2%, approaching the total revenue of 2022.In the long term, Shenzhen Aikangjian has great long-term development potential based on favorable conditions such as the imbalance between supply and demand for dental medical services in Hong Kong, China, the significant price difference in dental medical service projects between Shenzhen and Hong Kong, and its own excellent reputation.
- New hospital growth lower than expected; expansion pace slower than anticipated
Risk Warning: The growth of C-MER Medical's new hospitals is below expectations, and the expansion speed is slower than expected.
02｜Focus on Greater Bay Area Medical Services, Drive Growth with Dual Specialties · Dual EnginesStrategy
C-MER Medical began its ophthalmology services in Hong Kong, China, during its early development phase.2012Year1C-MER Medical opened its first eye center in Central, Hong Kong, China in the month, and subsequently continued to expand its business layout through new construction and acquisitions. CurrentlyC-MER Medical ranked first in market share in Hong Kong, China, with a solid leading position in the industry.
2013In the year, the company entered mainland China and opened its first ophthalmology hospital in Futian, Shenzhen. Considering the differences in business operation models under the mainland's medical insurance policy compared to Hong Kong, China,2014-2017In the year, the company focused on developing Futian C-MER Medical, exploring replication experiences in China.C-MER Medical Opens in Futian1Achieved profitability in the same year, and maintained rapid development thereafter。
The company was established in2018In 20XX, C-MER Medical began its expansion in mainland China by establishing C-MER Beijing and C-MER Bao'an Shenzhen.2019Acquisitions in Kunming and Shanghai in [Year]2C-MER Medical,2020-2022During the pandemic in 2020, new hospitals were established in Zhuhai, Huizhou, Fuzhou, Guangzhou, and Jieyang. Due to the impact of the pandemic on operations, the break-even period for these new hospitals was extended. However, mature operational experience has been successfully developed.2023Performance is expected to increase rapidly after the epidemic control was relaxed in the year, the company's goal2023Year3-4Hospitals Achieve Break-even.
In terms of business expansion,The company in2022Acquired Shenzhen Aikangjian in year to launch dental diagnosis and treatment servicesShenzhen Aikangjian has been deeply rooted in Shenzhen for many years, accumulating a high-quality reputation. In the short term, it benefits from the rapid increase in the number of patients due to the resumption of border crossings. In the long term, given the imbalance between supply and demand in Hong Kong's dental medical services and the significant price difference in dental medical service items between Hong Kong and Shenzhen, Shenzhen Aikangjian has substantial room for development and strong growth potential.
In addition to medical services, the company is also2023Year through acquisitionApollo LensEntering the upstream product market,Thus, the dual-specialty · dual-driver growth strategy was launched.
03｜The Greater Bay Area Medication and Device Program and Elderly Medical Vouchers Accelerate the Integration of Shenzhen-Hong Kong Healthcare
1."Hong Kong and Macao Medicine and Device Access" Qualification Builds Differentiated Treatment Advantages for Ophthalmology HospitalsIn November 2020, with the approval of the State Council, the National Market Supervision Administration, the National Medical Products Administration, and six other ministries jointly issued the "Work Plan for Innovation and Development of Pharmaceutical and Medical Device Regulation in the Guangdong-Hong Kong-Macao Greater Bay Area". According to this plan, designated medical institutions operating within the nine mainland cities of the Greater Bay Area may use urgently needed medicines already marketed in Hong Kong and Macao, as well as urgently needed medical devices that have been procured and used by public hospitals in Hong Kong and Macao and demonstrate clinical advancement. The approval will be handled by Guangdong Province.Currently, two batches of selected lists have been released, totaling 19 medical institutions.C-MER Medical in Zhuhai, a subsidiary of the company, is one of the five首批 “港澳药械通” designated hospitals., C-MER Medical Guangzhou and C-MER Medical Futian are included in the second batch of designated medical institutions list.
As of April 17, 2023, the "Hong Kong-Macao Medicine and Device Access Policy" has cumulatively approved urgently needed imported drugs.23(A total of 55 batches), 13 medical devices(A total of 15 batches), benefiting a total of 2,237 people. The introduction of pharmaceuticals and medical devices can fill the gaps in domestic diagnosis and treatment. For example, Entrectinib and Lorlatinib provide alternative treatments for refractory and specific gene mutation-type cancer patients, and Alpelisib brings new hope to PIK3CA-mutated HR+ advanced patients.
2.Elderly Medical Vouchers Promote HK Visitors to Seek Medical Treatment in Shenzhen
Introduced by the Government of the Hong Kong Special Administrative Region of ChinaElderly Medical Voucher Scheme, subsidizing Hong Kong elders aged 65 or above who hold a valid Hong Kong Identity Card or a "Certificate of Exemption" issued by the Immigration Department of the Hong Kong Special Administrative Region Government to use private primary healthcare services. Currently, each eligible elder can receive medical vouchers amounting to HKD 2,000 annually. Unused medical voucher amounts can be accumulated for use in subsequent years, with an accumulation cap of HKD 8,000.The Government of the Hong Kong Special Administrative Region of China launched a pilot scheme on October 6, 2015, allowing eligible Hong Kong elders to use medical vouchers to pay for outpatient medical care services provided by designated departments of The University of Hong Kong Shenzhen Hospital.Since June 26, 2019, the government has normalized the pilot program.Starting from April 17, 2023, the scope of use for the Elderly Medical Voucher will be expanded to include the Huawei Litchi Park Community Health Service Center, which is operated by The University of Hong Kong Shenzhen Hospital.According to the statistics from the Hospital Authority of Hong Kong, the total amounts claimed for medical vouchers in ophthalmology and dentistry in 2022 were respectively2.34、3.43HKD million, which is relatively high in specialized medical services. The median transaction amounts per claim for ophthalmology and dentistry are HKD 1,700 and HKD 800, respectively.(Optometry Service Medical Voucher Amount Regulation: Cannot Exceed HKD 2000 Every Two Years), and is at a relatively high level in various medical services.The use of elderly medical vouchers is expected to be further expanded in the Greater Bay Area. As a Hong Kong-funded medical institution, C-MER Medical is also expected to be included in the pilot list, further enhancing its appeal to Hong Kong customers.
04｜Medical Services: Focusing on the Greater Bay Area, Dual-Driven by Ophthalmology and Dentistry
1.Strong demand for refractive treatment in the Greater Bay Area; C-MER Medical, with its Hong Kong capital background and high-quality expert resources, has strong regional competitiveness.
According to "Basic Situation and Change Analysis of Population Aging in Guangdong", the coefficient of elderly population and the ratio of elderly to young people in Guangdong Province are significantly lower than the national average. A breakdown by city shows that,Shenzhen, Dongguan, Huizhou, Zhongshan, ZhuhaiAll belong to the adult-type population structure, with a lower degree of aging.According to the "White Paper on Myopia Surgery in China" released by Aier Eye Hospital,The age of the refractive surgery population is concentrated between 20-30 years old, with the proportion of people aged 20-29 being as high as62.4%. Thus, from the demand side,The Greater Bay Area has a strong overall consumption capacity, and the demand for refractive surgery is robust due to its demographic structure.
According to the statistics compiled by the Guangdong Health Commission, regarding the supply, five out of the nine cities in the Pearl River Delta currently have the number of ophthalmic medical institutions per million people.(Surgical operations can be performed, excluding ophthalmic clinics)Less than 1, and even in Shenzhen, it is only1.03`, the highest`Guangzhou: 1.66`, all lower than the United States`（2.0）, United Kingdom（4.1）The number of ophthalmic hospitals in Shenzhen, Foshan, and Guangzhou/Dongguan are 8, 6, and 5 respectively.There is still significant room for expansion in the overall supply of ophthalmic medical institutions.The overall plan for deepening the Guangzhou Nansha's comprehensive cooperation with Hong Kong and Macao proposes to "support healthcare service providers from Hong Kong and Macao to establish medical institutions in the nine PRD cities in accordance with regulations, either as wholly-owned, joint ventures, or cooperative projects," facilitating the expansion of Hong Kong-funded medical service institutions in the nine PRD cities.
Rely onExpansion strategy and high-quality talent reserve training crafted by the expert team and international advisory board, C-MER Medical'sThe following are the subsequent operations of the ophthalmology businessThree Major Prospects： ➊Existing hospitals resume operations, developing TCM hospitals gradually achieve break-evenExisting hospitals have resumed normal growth after the relaxation of epidemic controls. C-MER Medical Fulin still has significant growth potential. Additionally, four hospitals in Beijing, Bao'an, Kunming, and Zhuhai are expected to reach breakeven in 2023. The newly opened C-MER Medical hospitals in Guangzhou, Huizhou, Fuzhou, and Jieyang during the pandemic have achieved rapid growth. ➋Greater Bay Area Further ExpansionAdd 4-5 in 2023, complete the layout of all Greater Bay Area cities by 2025.The company aims to add 4-5 hospitals in the Greater Bay Area by 2023.(Outpatient/Optometry Center), Capital expenditure of 120-200 million yuan(A single medical institution invests around 30 to 60 million RMB, depending on the scale.)Currently, Foshan has obtained the license, and the Zhongshan and Shenzhen Longgang projects are also advancing. The company will use Guangzhou C-MER Medical as its core to establish a four-city synergy with Dongguan, Foshan, and Zhongshan to enhance human resource efficiency. ➌Business Opportunities Brought by the Integration of Shenzhen and Hong Kong（1）Hong Kong, China —> ShenzhenIn Hong Kong, China, ophthalmic medical services are in short supply, with the average waiting time for cataract surgery exceeding one year. Currently, the Hong Kong government is gradually expanding the use of elderly vouchers, and C-MER Medical, as one of the few Hong Kong-funded medical institutions in Shenzhen, has the opportunity to become one of the first privately-run Hong Kong-funded medical institutions to be accredited to accept Hong Kong elderly medical vouchers.（2）Shenzhen -> Hong Kong, China:Hong Kong, China has more and more advanced surgical options compared to mainland China. On March 26, 2023, the company held the EVO+ICL V5 Shenzhen-Hong Kong Direct Launch Conference, where patients can schedule an examination in Shenzhen, undergo surgery in Hong Kong, China, and have post-operative follow-ups at any C-MER hospital in mainland China. The EVO+ICL V5 has been in use at C-MER Eye Hospital in Hong Kong, China since 2016 and has not yet been introduced in mainland China. The new generation of lenses expands the optical zone of the implantable lens, improving night vision for patients and visual experiences for those with larger pupils.2.Dental Business: Rapid recovery to pre-pandemic levels after the reopening of the Shenzhen-Hong Kong border, with significant long-term growth potential
The company completed the acquisition of 61.5% equity in Shenzhen Aikangjian Dental in February 2022. Shenzhen Aikangjian, established in 1995, owns one dental hospital and twelve dental clinics. Many of the clinics are located near ports, providing convenient access for patients from Hong Kong, China, and the company offers..."Holiday-Free Dentistry," "Doctor Selection for Appointments," "One Doctor, One Patient, One Consultation Room," "Full Accompaniment," and "Plain Language Service" are Hong Kong-style distinctive services., quickly becoming a trusted dental brand among the majority of Hong Kong citizens in China, with Hong Kong patients accounting for 60% before the pandemic.C-MER Aikangjian Dental has gathered more than a hundred deans and director-level core physicians, most of whom come from renowned dental institutions such as Peking University School of Stomatology, the University of Hong Kong, West China Medical University, and Sun Yat-sen Medical University, as well as public dental hospitals across China, with over 500 medical staff members.C-MER Aikangjian Dental Implements "First-Visit Responsibility System", each case is strictly supervised by the Physician Committee.More than 40% of physicians in the group have an average medical practice experience of over 10 years, indicating a stable team.（1）Short-term: Rapid recovery of operating performance in 2023 after the switch.As of April 2023, Shenzhen Aikangjian Dental had received over 10,000 clients from Hong Kong, China since the full resumption of border crossings between Hong Kong, China and mainland China on February 6, 2023. By the end of April, the number exceeded 20,000 clients from Hong Kong, China. According to the company's announcement, Shenzhen Aikangjian's revenue from January to May 2023 reached121 millionRMB, year-on-year growth183.2%, close to RMB 122 million in total revenue for 2022. The company aims to quickly restore its revenue to the level of 2019.(320 million yuan)And Profit(0.35 billion yuan)Level(Net Profit Margin 10.94%)。（2）Long-term:ShenzhenBased on the uneven supply and demand of oral medical services in Hong Kong, China, the large price difference in oral medical service projects between Shenzhen and Hong Kong, and its own high-quality reputation with great growth potential. ➋Insufficient Supply of Dental Services in Hong Kong, China:First,Few Dentists in Hong Kong, China：Dentists in Hong Kong, China are divided into general dentists and specialist dentists. As of March 31, 2023, there are a total of 2,787 general dentists and 310 specialist dentists. According to data from the Hong Kong Hospital Authority, the number of dentists increased from 2,441 in 2016 to 2,706 in 2021, with an average annual increase.50 NamesLeft and right.Secondly,Few Dental Clinics:The general public can visit 11 dental emergency service clinics (only for pain relief and tooth extraction) and 7 oral and maxillofacial surgery and dental clinics.(For hospital-qualified staff and inpatients only, or by doctor's referral)、2 Specialty Outpatient Clinics(Caritas Hospital/Christian Alliance International Hospital), 45 Private Medical Institutions - Day Surgery Centers(Dentistry), 6 private medical institutions - private hospitals(The other 7 did not have dental consultation rooms)Hong Kong, China also provides dental services for civil servants.(Government Dental Clinics and Orthodontic Clinics are limited to civil servants and eligible persons only.), with a total of 43 rooms, but still in a state of undersupply, as the registration quota for new cases in June was already full by May. ➌Significant Price Differences in Dental Medical Services Between Mainland China and Hong Kong:Comparison of the Prices of Dental Projects in Hong Kong, China and Mainland China: Based on the disclosure of charging details by various hospitals in Hong Kong, China, the Philip Dental Hospital, which provides private medical treatment and is also a teaching hospital of the Faculty of Dentistry at the University of Hong Kong, has been selected for its relatively detailed disclosure.Compare the similar projects of Philip Dental Hospital, Rui'er Group, and some tertiary hospitals in China.Found that the price in mainland China is significantly lower than that in Hong Kong, China.Shenzhen Aikangjian Has Accumulated a High-Quality Reputation: The Shenzhen Health Commission regularly releases quarterly/annual public satisfaction surveys of the medical industry's services. In the 2022 survey of 75 non-public hospitals,Shenzhen Aikangjian ranks second in the city and has accumulated a high-quality reputation locally in Shenzhen.
05｜Acquisition of 55% Equity in Apollo Lens to Layout Upstream and Create New Growth Points
The company announced on June 1, 2023, its plan to issue a 3-year convertible bond.(Cost approximately RMB 50.5 million)Acquisition of Mingda Eyeglass Lenses Co., Ltd.("Mingda Lenses" hereinafter)Apollo Lens, a subsidiary in China for lens distribution and technology development55% Equity。Mingda Lens is a leading custom lens manufacturer and coating service provider in Asia, operating 8 custom lens grinding factories, 3 casting plants, and 7 regional offices across Asia, serving customers in over 25 countries. It is also a high-quality eyeglass frame manufacturer with 3 factories in mainland China, serving clients worldwide, and acts as a distributor of optical products for several international brands.
Apollo Lens has developed for many years in mainland China, with mature service institutions in Guangzhou, Shenzhen, Shanghai, Beijing and other places, serving more than 2,000 customers including public hospitals in China, private ophthalmic hospitals, and optical chain enterprises, with comprehensive channel coverage.In terms of products, Apollo Lens has its own brand Apollo lenses, functional product series such as Xintongxue, Shibotai, Star Blue, and Qiandumei Thin, as well as several mid-to-high-end lens brands authorized for distribution.C-MER Medical boasts an extensive global network in the medical and academic fields, along with specialized expertise in ophthalmology, which will help the acquisition target accelerate the development of a comprehensive pipeline of customized lens products.At the same time,C-MER Medical can quickly enter the high-growth upstream ophthalmic industry, including defocus lenses and progressive lenses, through this transaction., leveraging Apollo Lens' nationwide distribution channels primarily in the Greater Bay Area, to promote the transformation and implementation of more innovative ophthalmic products, creating additional growth opportunities.
Currently, the company's new products, defocus glasses and OK lenses, are also being accelerated in layout, with clinical trials for OK lenses expected to commence in 2023.The company also set targets for the performance of Apollo Lens, aiming for the myopia control product business to start making significant contributions by 2023, with total profits of no less than RMB 50 million between 2023 and 2027.
C-MER MedicalC-MER OphthalmologyFocus on Medical Services in the Greater Bay Area,Implement the "Ophthalmology + Dentistry" dual-specialty and "Service + Product" dual-driver growth strategy.In the short term,Company Benefits from the Easing of Pandemic Controls and the Opening of Shen-Hong Passages, Performance is Expected to Rise Rapidly, New medical services opened during the pandemicThe hospital is also expected to achieve breakeven quickly;In the long term,Greater Bay Area Refractive Diagnosis and TreatmentStrong demand, supply still has significant room for expansion, Ophthalmology and dental services in Hong Kong, China are in severe short supply, and there is a large price difference between Shenzhen and Hong Kong medical services,With the accelerated integration of Shenzhen and Hong Kong, the company's ophthalmology and dental treatment businesses are expected to grow rapidly.
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