Chengdu-Based Cardiac Electrophysiology Firm Jinjiang Medical, Backed by Sino-Eternal, Hillhouse, and Weigao, Files for IPO

On June 12, 2022, Sichuan Jinjiang Electronic Science and Technology Co., Ltd. (hereinafter referred to as "Jinjiang Electronic") submitted a prospectus for the STAR Market, planning to raise 26.91 billion yuan. The sponsor for this issuance is CITIC Securities Co., Ltd.

Jinjiang Electronic is a veteran in China's cardiac electrophysiology field, established in Chengdu, Sichuan in 2002, and has been focusing on the cardiac electrophysiology industry for twenty years. Previously, Jinjiang Electronic completed over 700 million yuan in cumulative financing across Series A and B rounds in the primary market, setting a record for financing among domestically produced electrophysiology companies. In the Series A round of financing, in December 2021, Jinjiang Electronic received a total of 200 million yuan in new investments from Hillhouse Qi Yi and Hillhouse Qi Rui.

Behind Jinjiang Electronic's IPO stand several institutions, including Salubris Instruments, Hillhouse Capital, Songyuan Fund, Cinda Kunpeng, Guanghua Wutong, Yuanheng Lizhen, Weigao Group, and HuiMei Capital.

In China, multinational companies such as Johnson & Johnson and Abbott account for over 85% of the cardiac electrophysiology market. Johnson & Johnson has always been the dominant player in the electrophysiology market. Chinese manufacturers have been unable to compete effectively due to the lack of core magnetic and electric three-dimensional products. Chinese companies like HT Medical, MicroPort EP, Jinjiang Electronic, and Xincheng Cardio can only share about 15% of the market.

Among the domestically produced梯队, Hu Tai Medical and MicroPort EP have successfully gone public, and Jinjiang Electronic is expected to become the third IPO in the electrophysiology field. In 2022, MicroPort EP's revenue was 260 million yuan; Hu Tai Medical’s revenue in 2022 was 1.216 billion yuan, with cardiac electrophysiology sales revenue at 293 million yuan, and Jinjiang Electronic’s revenue in 2022 was 59.159 million yuan.

From the perspective of the existing market share, Jinjiang Electronic is not at the forefront even among domestically produced teams. Why has Jinjiang Electronic been recognized by multiple industrial institutions in China? What is the confidence behind Jinjiang Electronic’s push for an IPO? VCBeat (WeChat ID: vcbeat) has conducted an analysis.

In the cardiac electrophysiology sector, particularly in the treatment of complex arrhythmias represented by atrial fibrillation, the comprehensive competitive barriers for product portfolios are extremely high. Jinjiang Electronic's entry into this field is related to the dual medical and electronic engineering background of its two founding brothers.

Li Chuya, founder and technical director of Jinjiang Electronic, participated in the development of China's first fully digital multi-channel physiological recorder in 1997, possessing extensive experience in the research and development of cardiac electrophysiology equipment. Another founder, Mr. Li Chuwen, graduated from the Cardiovascular Department of Beijing Medical University (now Peking University Health Science Center), with profound professional knowledge and academic accumulation in the cardiovascular field.

In 2002, based on extensive R&D and industrialization experience in the field of cardiac electrophysiology, Jinjiang Electronic focused its main business on the research, development, production, and sales of cardiac electrophysiology equipment. It successfully developed and launched a variety of products, including multi-channel physiological recorders, radiofrequency ablation generators, electrophysiological stimulators, and perfusion pumps.

After 2011, Jinjiang Electronic began to expand into the electrophysiology consumables field and acquired CARDIMA, an innovative American cardiac electrophysiology device company. After 2020, multiple electrophysiology consumable catheter products of Jinjiang Electronic were approved. In 2013, it launched China's first domestically produced three-dimensional cardiac mapping system, forming a complete product line of cardiac electrophysiology covering both equipment and consumables.

Relying on its deep cultivation in the field of electrophysiology, Jinjiang Electronic achieved operating revenues of 41.339 million yuan, 60.6159 million yuan, and 59.159 million yuan respectively from 2020 to 2022, with net profits of 24.725 million yuan, -16.5897 million yuan, and -1.0424 million yuan respectively.

In the past two decades, like most domestic cardiac electrophysiology companies, Jinjiang Electronic has been in a phase of vigorous catch-up. However, after 2020, Jinjiang Electronic encountered an opportunity to overtake on a curve.

Jinjiang Electronic's opportunity to overtake on the curve comes from the technological transformation in the field of cardiac electrophysiology.

Emergence of Pulse Field Ablation (PFA) as a New Technique in Cardiac Electrophysiology. Based on the type of energy used, cardiac electrophysiology ablation methods can be categorized into radiofrequency ablation, cryoablation, and pulse field ablation. Currently, radiofrequency ablation is the most widely used. However, radiofrequency ablation has a long learning curve, often requiring doctors to train for three to five years. It is also complex to operate and tends to result in longer procedure times.

Pulsed Field Ablation has the shortest application time in cardiac electrophysiology, but with its advantages of simple operation and safety, Pulsed Field Ablation may become a revolutionary new ablation technology, rewriting the existing market landscape.

In terms of surgical safety, compared with radiofrequency ablation and cryoablation, pulsed field ablation has tissue selectivity, which can specifically target myocardial tissue cells while avoiding damage to adjacent tissues such as blood vessels, nerves, muscles, and mucous membranes outside the heart. Pulsed field ablation is a non-thermal ablation method, thus it does not cause heat-related injuries, offering better safety advantages. Moreover, the operation of pulsed field ablation is simpler, effectively shortening the operation time, with a high success rate, low operational difficulty, and a short learning curve.

This transformative technology has garnered attention from multiple enterprises globally, with major electrophysiology companies such as Boston Scientific, Medtronic, and Johnson & Johnson making strategic investments. Currently, Boston Scientific's Farapulse PFA pulsed field ablation product and Affera's Sphere pulsed field ablation product, under Medtronic, received EU CE certification in 2021 and 2023 respectively. In the Chinese market, no PFA cardiac electrophysiology products have been approved for marketing yet, but Boston Scientific’s FARAPULSE pulsed field ablation system has entered the "special review green channel" for innovative medical devices.

In the past, in the field of electrophysiology, Chinese companies lagged behind multinational corporations in the three-dimensional system sector, but in terms of PFA technology, Chinese companies and imported brands are on an equal footing.

Jinjiang Electronic is the first company in China to deploy this technology. Jinjiang Electronic's LEAD-PFA® Cardiac Pulse Field Ablation Instrument and PulsedFA® Single-Use Cardiac Pulse Field Ablation Catheter are leading in China’s PFA cardiac electrophysiology field. The product registration application has been officially accepted by NMPA, and the clinical trials have been completed. The products are expected to be approved in the fourth quarter of 2023.

After PFA became a new focus in the electrophysiology field, many companies in China have also entered the market. In addition to existing players such as HT Medical and MicroPort EP, several emerging participants have also joined the R&D efforts.

Jinjiang Electronic stands out due to its two core technologies: the three-dimensional system and PFA technology.

The 3D mapping system allows operators to intuitively observe the three-dimensional structure of the heart, the conduction pathway of electrical signals, and the mechanisms behind rapid arrhythmias. It also enables precise localization of the actual position of the catheter and the ablation target. The 3D mapping system significantly reduces the use of X-rays, minimizing radiation exposure for both the operator and the patient during surgery.

The emergence of magnetic and electric positioning 3D mapping technology has further compensated for the shortcomings of electric positioning 3D mapping, which can be affected by factors such as differences in human tissue. Currently, cardiac electrophysiology procedures utilizing magnetic and electric positioning 3D mapping technology have become the mainstream in the market.

According to a Frost & Sullivan research report, in 2017, two-dimensional (2D) cardiac electrophysiology procedures and three-dimensional (3D) electrophysiology procedures accounted for 30.22% and 69.78% of all cardiac electrophysiology procedures in China, respectively. By 2021, 2D and 3D cardiac electrophysiology procedures accounted for 17.69% and 82.31% of all cardiac electrophysiology procedures in China, respectively. The proportion of 3D procedures has grown rapidly, becoming the mainstream approach in cardiac electrophysiology surgeries.

Johnson & Johnson and Abbott precisely rely on the CARTO 3 system and the EnSite PRECISION system to firmly dominate the three-dimensional mapping market.

But Chinese companies struggle to reach the core 3D market, mainly because there was a previous gap in domestically produced magnetic and electric 3D systems. Although domestically produced 3D systems have been gradually approved in the past two years, a complete solution for配套的高端导管 has yet to be formed. Domestic products are mainly concentrated in atrial septal puncture systems and simple mapping catheters.

Compared with mainstream electrophysiology manufacturers like Johnson & Johnson and Abbott, the gap between domestic companies and imported manufacturers in the three-dimensional system is mainly reflected in the absence of high-density mapping modules and pressure-sensing module applications in the three-dimensional mapping system.

Under the development trend where 3D magnetic and electrical localization becomes mainstream, catheters with magnetic localization functionality have become a primary direction for mapping catheters. Key technologies of mapping catheters include the ability to reach various anatomical locations of the heart, precisely extract ECG signals, and quickly perform mapping while assisting in 3D modeling. High-density mapping technology is an important development trend in the field of mapping catheters in recent years. High-density mapping catheters can simultaneously collect ECG signals and positional information from multiple points within the patient's heart during the mapping process of cardiac electrophysiology procedures, further reducing mapping and 3D modeling time as well as shortening operation duration.

Jinjiang Electronic launched the new-generation LEAD-Mapping® 3D Cardiac Electrophysiology Mapping System, which adopts magnetic and electrical fusion technology, in December 2022. The PFA product of Jinjiang Electronic features magnetic and electrical positioning functions, allowing for seamless integration with the company's proprietary 3D magnetic and electrical positioning system. Combined with pressure-sensing catheters, high-precision mapping technology, etc., it provides a complete solution for electrophysiological procedures. The combination of the magnetic and electrical 3D system with PFA technology has made Jinjiang Electronic one of the first companies in China to launch a 3D PFA solution with magnetic and electrical positioning.

Jinjiang Electronic's catheter products are equipped with and further developed to feature cold saline infusion and pressure sensing functions. The pressure sensing technology enables forward and lateral pressure contact testing of the catheter, ensuring the stability of pressure sensing is not affected by external interference such as saline infusion. This assists surgeons in more accurately controlling the contact force of the catheter for more precise ablation operations, enhancing the safety and effectiveness of the surgery. Jinjiang Electronic’s PFA catheters are equipped with a pressure sensing module.

PFA technology is expected to replace part of the radiofrequency ablation market share. Jinjiang Electronic's magnetic and electrical positioning 3D PFA technology also has the potential to capture more market share in the electrophysiology market. This is why, despite Jinjiang Electronic's current market share being lower than that of Huitai Medical and MicroPort Electrophysiology, it is still favored by investors.

According to a Frost & Sullivan research report, the number of cardiac electrophysiology procedures in China reached 214,000 cases in 2021, with a compound annual growth rate (CAGR) of 11.60% from 2017 to 2021. It is estimated that by 2025, the number of cardiac electrophysiology procedures in China will reach 574,600 cases, reflecting a CAGR of 28.00% during this period. With the gradual clinical adoption of emerging ablation technologies such as PFA, the number of cardiac electrophysiology procedures in China is expected to further increase, reaching an estimated 1,629,500 cases by 2032, with a CAGR of 16.06% from 2025 to 2032.

According to a Frost & Sullivan research report, against the backdrop of an increasing number of cardiac electrophysiology procedures, the market size of China's cardiac electrophysiology devices reached 6.58 billion yuan in 2021, with a compound annual growth rate of 28.36% from 2017 to 2021 in China's cardiac electrophysiology device market.

In this rapidly growing market, although Jinjiang Electronic has mastered 3D and PFA technologies, it still faces fierce competition.

First, let's look at import enterprises. Jinjiang Electronic, which has a first-mover advantage in PFA technology, faces strong competition from Boston Scientific.

Boston Scientific Continues to Invest Heavily in Cardiac Electrophysiology, Arriving with a New Technology Portfolio. In 2021, Boston Scientific acquired Farapulse to develop PFA cardiac electrophysiology products, with its Farapulse PFA product being the world's first PFA electrophysiology product to receive CE certification. Additionally, Boston Scientific acquired Rhythmia to obtain a three-dimensional mapping system product. In 2022, Boston Scientific also acquired Baylis Medical, which owns an atrial septal puncture system, further reducing the complexity of surgical procedures in the field of cardiac electrophysiology ablation.

Farapulse PFA has undergone extensive clinical trials globally, with substantial data demonstrating its practical safety and efficacy. The procedure takes approximately one hour. The latest data presented at the European Heart Rhythm Association (EHRA) annual meeting shows a one-year non-recurrence rate of 82% for patients with paroxysmal or intermittent atrial fibrillation and 72% for those with persistent atrial fibrillation.

The domestic launch of the Farapulse PFA product is also proceeding rapidly, with the product having entered the green approval channel in 2021. The first surgery was completed in February this year in Boao Lecheng. It can be foreseen that if Jinjiang Electronic wants to compete with Boston Scientific, which is well-prepared, more large-scale RCT studies and data analysis will be needed to confirm safety and efficacy.

At the same time, domestically produced enterprises have also started to lay out 3D + PFA technology. Currently, MicroPort EP's PFA product is in the clinical enrollment stage. In the R&D of PFA, MicroPort EP adopts a development strategy that combines it with a 3D mapping system, and in the future, it will rely on the 3D mapping system platform to build a cardiac electrophysiology pulse ablation product line. As of 2022, MicroPort EP has performed over 30,000 cumulative 3D surgeries, covering more than 700 hospitals.

Huitai Medical's electrophysiology magnetic positioning pressure-sensing ablation catheter, magnetic-electric positioning pressure-perceiving pulse ablation catheter, and magnetic-electric positioning circular pulse ablation catheter are all in the follow-up stage after completing clinical enrollment. Huitai Medical's PFA will also be developed in conjunction with a three-dimensional system. By the end of the third quarter of 2022, Huitai Medical's electrophysiology three-dimensional consumables had been introduced into over 300 hospitals, with more than 90 sets of three-dimensional electrophysiology equipment cumulatively deployed in the market.

Currently, the electrophysiology field has also ushered in centralized procurement. On October 14, 2022, a procurement alliance consisting of 27 provinces (regions, municipalities) including Fujian, Hebei, and Shanxi was formed to represent public medical institutions (including military medical institutions) in various regions, as well as voluntarily participating social-run medical institutions designated for medical insurance, to carry out inter-provincial alliance bulk procurement of medical consumables for cardiac interventional electrophysiology.

This electrophysiology volume procurement adopted a bundled procurement model. Since some supporting catheter products from domestic companies had not yet been approved at that time, the high-end 3D market was still dominated by imported products. With the completion of product lines from domestic companies, it is expected that domestic companies will leverage volume procurement to quickly enter hospitals in the future.

China has nearly 20 million patients with atrial fibrillation, and its domestic electrophysiology market is expected to reach a scale of tens of billions of yuan, which can accommodate multiple participants. However, the electrophysiology market has relatively high comprehensive barriers, and market growth still requires continuous product refinement. It can be seen that Chinese manufacturers are addressing gaps in areas such as 3D systems and catheters, with various companies filling the void in domestically produced products. PFA products, in particular, are now on an equal footing with multinational corporations, and expectations are high for Chinese enterprises to make significant progress in this market.