Yuyue Medical Expands Ophthalmic Portfolio with 100% Acquisition of LeRun Contact Lenses

Recently, Qichacha APP showed that Chalice Solution PTE Ltd had undergone industrial and commercial changes. The original shareholders, Jiangsu Hongyi Garden Construction Engineering Co., Ltd. and DANYANG NEW GLOBAL GLASSES CO.,LTD., exited, and a new shareholder, Jiangsu Yuyue Medical Equipment&Supply Co.,Ltd. (002223), was added with 100% shareholding.

 

It is worth mentioning that as early as 2019, Yuyue had spent nearly 80 million yuan to acquire two ophthalmic device companies. So, what does this acquisition mean for Yuyue Medical?

 

 

Recently, Jiangsu Hongyi Garden Construction Engineering Co., Ltd. ("Hongyi Garden") and DANYANG NEW GLOBAL GLASSES CO.,LTD. ("New Global Glasses") respectively transferred their shares of Chalice Solution PTE Ltd ("Chalice Solution") to Jiangsu Yuyue Medical Equipment&Supply Co.,Ltd. After the completion of the transfer, Yuyue Medical Equipment&Supply Co.,Ltd holds 100% of Chalice Solution.

 

According to the inquiry, before the share transfer, Chalice Solution PTE Ltd was held by Jiangsu Hongyi Garden Construction Engineering Co., Ltd. and DANYANG NEW GLOBAL GLASSES CO.,LTD. with 71% and 29% shares respectively. After the share transfer, the company is now 100% owned by Jiangsu Yuyue Medical Equipment&Supply Co.,Ltd. In addition, the legal representative of Chalice Solution PTE Ltd has changed from Gao Li to Zhao Shuai. Key members have also changed: Gao Li has stepped down as General Manager and Executive Director, Han Yan has exited the position of supervisor, Zhao Shuai has been newly appointed as General Manager and Executive Director, and Zheng Hongzhe has been appointed as supervisor.

 

Chalice Solution PTE Ltd was established on July 11, 2017, with Zhao Shuai as the legal representative. The registered capital is 10 million yuan, and the business scope includes eyewear and accessories.Excipients、Contact lens care solution, storage solution, cleaning solution,Medical DeviceWholesale, retail, etc.

 

Jiangsu Hongyi Garden Construction Engineering Co., Ltd. was established on March 24, 2010. The legal representative is Han Tongbin, and the registered capital is 50 million yuan. The business scope includes garden horticulture, greening projects, municipal engineering design, construction, and maintenance. The company is held by Han Tongbin and Li Yanzhen with respective stakes of 60% and 40%.

 

DANYANG NEW GLOBAL GLASSES CO.,LTD. was established on November 28, 2013. The legal representative is Han Tongjun, with a registered capital of approximately 101 million yuan. Its business scope includes the research and development and production of resin lenses. The company is held by Han Tongjun, Chalice Solution PTE Ltd, and Zhenjiang Tongqiu Glasses Co., Ltd., with respective shares of approximately 65.61%, 23.67%, and 10.71%. The company has three external investments.Enterprise, including Danyang Huayao Tools Co., Ltd., etc.

 

 

In fact, this is not the first time that Jiangsu Yuyue Medical Equipment&Supply Co., Ltd. has made an acquisition in the ophthalmology field. Previously, the company acquired the equity of Suzhou Six-Six Vision Technology and Chalice Solution PTE Ltd for 37.4223 million yuan and 42 million yuan, respectively.

 

On October 30, 2019, Jiangsu Yuyue Medical Equipment&Supply Co., Ltd. announced that the company planned to acquire 95.95% of the shares of Suzhou Lulu Vision Technology with its own funds of 37.4223 million yuan. Lulu Vision has become a holding subsidiary of Yuyue Medical.

 

Six-Six Vision Technology was restructured from the Suzhou Medical Equipment General Factory, which was originally established in 1956 (the restructuring took place on June 6, 2001). With a history of 66 years, it is a technology-based small and medium-sized enterprise in Jiangsu Province specializing in the research and development, production, sales, and service of ophthalmic medical devices. Its main products include six series comprising more than 160 varieties and 600 specifications, such as slit-lamp microscopes, surgical microscopes, ophthalmic microsurgical instruments, ophthalmic electronic diagnostic and therapeutic equipment, ophthalmic laser medical devices, and intraocular lenses.

 

LiuLiu Vision Technology has excellent brand accumulation in the field of ophthalmic medical devices and enjoys high popularity. Its main products account for more than 70% of the market share in China and are exported to more than thirty countries and regions, including the United States and Spain.

 

The acquisition of Six-Six Vision Technology has enriched Yuyue Medical's product categories in the ophthalmic device细分领域. On one hand, Six-Six Vision boasts strong brand recognition and technological积累; on the other hand, with the加剧 of China's population老龄化 and the rise of various chronic...DiseaseThe younger demographic has brought about derivative effects, with the incidence of ophthalmic diseases and demand for diagnosis and treatment increasing year by year. The market's demand for ophthalmic medical devices is also continuously growing, indicating tremendous potential in related business fields.

 

On October 8 of the same year, Jiangsu Yuyue Medical Equipment&Supply Co., Ltd. also purchased 20.96% of Chalice Solution PTE Ltd's equity for 42 million yuan. The acquired company is mainly engaged in the research and development, design, and production of contact lenses, as well as the wholesale and import and export business of similar products. Jiangsu Yuyue Medical Equipment&Supply Co., Ltd. stated that the investment in Chalice Solution PTE Ltd is mainly a strategic layout based on the company’s prudent consideration of the business prospects of related products, to ensure a stable and efficient supply chain, explore and lay out new product areas, and expand existing business segments.

 

 

Currently, the myopia rate in China is about 50%, much higher than the global average. As one of the countries with the highest incidence of myopia in the world, it is foreseeable that the potential of China's eyewear market will be enormous in the future. Especially with the increasing frequency of consumer electronics usage in China, the onset age of myopia continues to decrease. According to relevant data from the National Health Commission, the myopia rate among high school students in China is close to 80%, and the myopia rate for those under 6 years old has reached 14.5%.

 

It is reported that due to the different types, diopters, cycles, diameters, colors, and patterns of contact lenses, the products can meet consumers' various personalized needs in different occasions, and the product range is relatively rich. In recent years, the market size of contact lenses has been increasing year by year.

 

Data shows that in 2020, the sales revenue of contact lenses in China reached 10.67 billion yuan, increasing by 1.14% year-on-year. The growth rate declined due to the impact of the pandemic. By 2021, the market size growth rate of contact lenses in China recovered to 10.68%, reaching 11.81 billion yuan, reflecting huge market potential.

 

From the perspective of the material of contact lenses, since contact lenses are in direct contact with the cornea, their material has always been a concern for the public. Since the advent of contact lenses, the main materials have included PMMA (Plexiglass), RGP (Rigid Gas Permeable contact lenses), hydrogel, and silicone hydrogel. Currently, after continuous technological improvements, the mainstream materials are mainly divided into hydrogel and silicone hydrogel; materials such as PMMA have gradually been abandoned.

 

Among them, silicone hydrogel has become the main material for soft contact lenses in the international market, accounting for about 65% of the market. The second-ranked material is hydrogel, with a market share of approximately 22%. However, due to the limited number of silicone hydrogel contact lens brands currently produced in China, there is a primary reliance on imported products.

 

In fact, contact lenses are considered high-risk medical device products. In China, contact lenses are regulated as Class III medical devices.

 

Globally, the top three players in the contact lens market are Alcon, Johnson & Johnson, and CooperVision. Due to the high technical barriers in contact lens production, the Chinese market is still predominantly occupied by foreign brands. However, in recent years, domestically produced brands have been increasingly investing in the contact lens sector. By 2019, the number of companies in China involved in the contact lens and colored contact lens business exceeded 100,000, with over 40,000 of them located in Zhejiang Province alone, a major hub for e-commerce.

 

 

Currently, China's ophthalmic device market mainly includes different fields such as orthokeratology lenses, intraocular lenses (IOL), implantable collamer lenses (ICL), and contact lenses. Among them, ophthalmic OCT (Optical Coherence Tomography) and cosmetic contact lenses are the key细分fields where capital is heavily invested.

 

So, can Yuyue's several acquisitions of ophthalmic device companies really find new growth points? Perhaps this also depends on the current development status of the entire ophthalmology industry.

 

Ophthalmic devices are the fifth largest sub-sector of the global medical device industry, ranking just behind IVD, cardiovascular, diagnostic imaging equipment, and orthopedics.

 

Ophthalmology is mainly divided into three major sectors: ophthalmic medical services, ophthalmic devices, and ophthalmic drugs. According to a Frost & Sullivan report, in 2019, the total scale of China's ophthalmology market had reached 170 billion yuan, of which the ophthalmic services market accounted for 124 billion yuan, or 73%; the ophthalmic device market was 26.7 billion yuan, accounting for 16%; and the ophthalmic drug market was 19.3 billion yuan, making up 11%.

 

Data from the "China Medical Device Industry Development Report" shows that the scale of China's ophthalmic medical device market has grown from 11.1 billion yuan in 2014 to 26.7 billion yuan in 2019, with an annual compound growth rate of nearly 20%. It is expected to reach 37.6 billion yuan in 2021.

 

From the development of several listed ophthalmology companies, in 2021, Aier Eye Hospital's revenue reached 15 billion yuan, a year-on-year increase of 25.93%; non-GAAP attributable net profit was 2.783 billion yuan, a year-on-year increase of 30.59%. Oupukang Vision achieved a revenue of 1.295 billion yuan in 2021, a year-on-year increase of 48.74%; net profit attributable to the listed company was 555 million yuan, a year-on-year increase of 28.02%. Companies entering the ophthalmic device sector continue to maintain optimistic growth.

 

 

At the end of December 2021, an investor asked Jiangsu Yuyue Medical Equipment&Supply Co., Ltd. about the positioning of its eyewear sector, inquiring whether the eyewear sector could become a segment accounting for more than 25% of the company's profits.

 

In response, Yuyue Medical stated that ophthalmic medical device products and contact lens-related products are part of its strategic planning incubation business. Among them, the "Six Six" brand has gained high recognition and solid brand accumulation in the ophthalmic device field, and the company’s contact lens products have already been sold online with positive market feedback. In the future, Yuyue Medical will actively promote the joint development of brand, technology, and business for ophthalmic-related products.

 

However, from the perspective of the ophthalmology market, it remains uncertain whether Jiangsu Yuyue Medical Equipment&Supply Co., Ltd. can ride on the "tailwind" of industry growth. Some industry insiders have also noted that the scale of the companies acquired by Yuyue Medical in its recent acquisitions has not been particularly large, and may simply be strengthening its existing ophthalmic device business. So, how will Yuyue Medical plan for sustainable development in the ophthalmology field in the future? We will continue to monitor.