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Editor |Xu Yue
Since the onset of the pandemic, the healthcare sector has seen sustained market growth, with numerous domestic medical device and biopharmaceutical companies pursuing spin-off financing, initial public offerings (IPOs), or post-listing refinancing.
On August 31, MicroPort MedBot announced the completion of a RMB 3 billion financing round, comprising RMB 1.5 billion in direct capital injection and RMB 1.5 billion from the transfer of MicroPort’s equity interests.
This marks another financing round for a “MicroPort-affiliated” company this year, following MicroPort CardioFlow, MicroPort Orthopedics, MicroPort CRM, MicroPort Mingyue, and MicroPort EP.
This financing round introduced multiple strategic investors, including Hillhouse Capital, CPE, Bailin Capital, Yuanyi Investment, and E Fund Capital. Upon completion of the financing, MicroPort MedBot remains a subsidiary controlled by MicroPort, with a valuation of RMB 22.5 billion.
MicroPort, founded in 1998, relied primarily on its single product line of cardiovascular stents for a long period after its establishment.
Around 2008, MicroPort began to accelerate its expansion, successively acquiring Beijing Pangrui, Suzhou Haisi, Dongguan Kewei, Longmai Medical, the OrthoRecon joint reconstruction business in the United States, and Cordis’s Conor Medsystems under Johnson & Johnson.
A review of MicroPort’s previous acquisitions reveals that the company, once reliant on a single product line, has gradually expanded its business coverage through multiple acquisitions into ten major fields: orthopedic implants and repair, cardiovascular intervention, electrophysiology, aortic and peripheral vascular intervention, neurointervention, rhythm management, diabetes and endocrine management, and surgical solutions.
According to information from the Tianyancha app, Beijing Pangrui, Suzhou Haiousi, Dongguan Kewei, and Longmai Medical hold technical patents in areas such as insulin pumps, orthopedic devices, ECMO (extracorporeal membrane oxygenation), and drug-eluting coronary stents, respectively. Furthermore, their acquisition of Johnson & Johnson’s Cordis subsidiary, Conor Medsystems, also secured coronary stent products and technologies.
“After acquiring the aforementioned companies, MicroPort conducted internal re-incubation, followed by spin-offs and subsequent rounds of financing. ‘Having initially secured intellectual property rights and strategic positioning in key therapeutic areas through acquisitions, MicroPort leveraged its industrial background and centralized operational platform to successfully mature these projects and win the favor of market-oriented investors. It is fair to say that MicroPort is a highly successful corporate investor,’ a medical sector investor who requested anonymity told Interface News.”
In the capital markets, MicroPort listed on the Main Board of the Hong Kong Stock Exchange in 2010, embarking on its securitization journey. In 2019, MicroPort’s subsidiary MicroPort Endovastec (Shanghai) Co., Ltd. (“Endovastec”), which is engaged in the business of interventional medical devices for aortic and peripheral vascular diseases, was listed on the STAR Market as one of the first 25 companies. In January 2020, MicroPort announced that it was considering spinning off MicroPort CardioFlow for an independent listing on a recognized stock exchange; MicroPort CardioFlow is primarily engaged in the development of medical devices for the treatment of valvular heart disease.
During this year’s shareholder meeting, Chang Zhaohua, Chairman of MicroPort, stated that in addition to manufacturing medical products, MicroPort also functions as an incubator for listed companies. This business model is designed to achieve sustainable corporate growth, and the series of financing activities undertaken in the first half of this year were aligned with this objective.
Investors in the healthcare sector mentioned above stated that after bidding farewell to rapid growth in its cardiovascular interventional business, MicroPort needs to identify new businesses and growth drivers. MicroPort itself functions more like a platform builder, planting new seeds within the soil of its existing operations.
“With a relatively small initial investment, once the business has grown to a certain stage, it can be spun off as an independent entity to implement an employee stock ownership plan (ESOP), thereby providing equity incentives at the subsidiary level to align and retain key personnel.” Finally, the involvement of institutional investors helps nurture the business to maturity.
“From a financial operations perspective, in projects requiring continuous R&D investment, the combination of equity incentives for project teams and the introduction of external investors not only reduces near-term personnel expenses through long-term equity options but also alleviates the parent company’s cash flow pressure from R&D expenditures. Furthermore, it allows for the exclusion of subsidiaries with long-term R&D losses from the consolidated financial statements.”
On February 14, the China Securities Regulatory Commission (CSRC) released the “Decision on Amending [Regulation Name]”, the “Decision on Amending [Regulation Name]”, and the “Decision on Amending [Regulation Name]”. The revisions include introducing lower discount rates, larger financing scales, shorter lock-up periods, and a greater number of issuance targets, thereby creating more flexible operational space for listed companies’ refinancing.
Subsequently, multiple medical device companies, including Lepu Medical, successively announced private placement plans to introduce renowned venture capital firms. However, a pharmaceutical industry analyst stated that for MicroPort, since the parent company’s business has passed its high-growth phase, the market can no longer assign it a high valuation; therefore, it is not suitable for the parent company platform to conduct refinancing.