Xinhua Medical to Acquire 36.19% Stake in Zhongzhi Biotech for RMB 166 Million to Expand IVD Portfolio
On December 30, SHINVA MEDICAL INSTRUMENT CO.,LTD. announced that it plans to acquire a 36.1913% equity stake in Wuhan Zhongzhi Biotechnologies INC. for RMB 166 million in cash, aiming to expand its in vitro diagnostics business and strengthen its capabilities in the field of pathogenic microorganism detection.
Shinva Medical Instrument Co., Ltd., established in 1943, has formed a “2+2” business structure centered on two core businesses—medical devices and pharmaceutical equipment—with medical commerce and medical services as complementary segments.
On December 10, SHINVA MEDICAL INSTRUMENT CO.,LTD. held its earnings briefing for the third quarter of 2024. According to the released performance data, the company achieved a revenue of RMB 7.423 billion in the first three quarters of 2024, representing a year-on-year increase of only 1.45%; the net profit attributable to shareholders of the listed company was RMB 617 million, up by 6.63% year-on-year; and the net profit margin stood at 8.31%.
Wang Yuquan, Chairman of SHINVA MEDICAL INSTRUMENT CO.,LTD, stated at the earnings briefing that the company has identified three key drivers for future growth: steady business operations, new product portfolio development, and overseas business expansion.
In terms of business operations,SHINVA MEDICAL INSTRUMENT CO.,LTD. will continue to deepen its presence in areas of competitive advantage and strengthen the synergistic development of its two core segments: medical device manufacturing and pharmaceutical equipment.
Infection control equipment, as the foundational business of SHINVA MEDICAL INSTRUMENT CO.,LTD. (Xinhua Medical), remains its most competitive product line. A 2023 research report by Southwest Securities noted that Xinhua Medical’s infection control equipment continues to hold a market share exceeding 70%, demonstrating strong competitive advantages. As of November 2024, Xinhua Medical had completed the design, renovation, and implementation of sterile supply centers for nearly 6,000 medical institutions.
The market share of pharmaceutical equipment also ranks among the top in the industry. Huaan Securities noted that China's pharmaceutical equipment competitive landscape is fragmented, with Tofflon and Truking Technology holding market shares of 13.7% and 10.2%, respectively, ranking first and second; SHINVA MEDICAL INSTRUMENT CO.,LTD holds a market share of 5.4%, ranking third.
SHINVA MEDICAL INSTRUMENT CO.,LTD. is also actively laying out innovative products.In September 2024, Shinva Medical’s XHCT-16iM CT scanner received the NMPA Class III registration certificate and was officially launched. As the first large-bore CT system in China, this device employs wireless power transmission technology to enable scanning with an 85 cm bore diameter. Featuring a high-precision patient table and a laser positioning system, it achieves a table positioning error of less than 0.5 mm, thereby meeting the requirements for various special positions needed in radiotherapy localization and interventional procedures. This product will also synergize with Shinva Medical’s other radiotherapy equipment to capture a larger share of the high-end radiation therapy market.
On December 13, SHINVA MEDICAL INSTRUMENT CO.,LTD. announced that its “Real-time Image-Guided Linear Accelerator” was selected for the 2024 List of High-End Medical Equipment Promotion and Application Projects, jointly released by the Ministry of Industry and Information Technology (MIIT) and the National Health Commission (NHC). This selection signifies national-level recognition of SHINVA’s technological innovation capabilities in the field of high-end medical equipment.
2024 was also a year in which SHINVA MEDICAL INSTRUMENT CO.,LTD. rapidly expanded its international presence.In the first half of 2024, Shinva Medical’s international strategic layout yielded significant results, achieving rapid export growth. The company secured a contract to supply a complete set of sterilization and disinfection equipment for CSSD (Central Sterile Supply Department) in Angola, obtained NRTL authorization in the United States, and saw its first batch of pharmaceutical filling lines enter the U.S. market. Additionally, an assembly plant was established in Indonesia, and collaborations were reached with clients in Argentina, the Democratic Republic of the Congo, Morocco, and other countries.
Currently, Shinva Medical’s business operations are anchored by the Belt and Road Initiative, connecting to more than 110 countries and regions worldwide, with five overseas sales centers established in Russia, Germany, Indonesia, Vietnam, and Egypt.
The acquired party, Zhongzhi Biotechnologies, was established in 2011 and is primarily engaged in the research, development, production, and sales of RNA-based in vitro diagnostic kits, along with supporting instruments and consumables. Its main products include series for the detection of respiratory tract infection pathogens, reproductive tract infection pathogens, and intestinal infection pathogens.
In 2016, Zhongzhi Biotechnologies was listed on the New Third Board. According to data from Hithink RoyalFlush, Zhongzhi Biotechnologies reported revenue of RMB 63.3714 million for the period from January to June 2024, a year-on-year increase of 47.43%, and net profit of RMB 3.3756 million, a year-on-year increase of 20.34%.
The growth in performance is inseparable from Zhongzhi Biotechnologies' innovative technologies and extensive product portfolio.
Advanced Technologies, Zhongzhi Biotechnologies’ “Dual Amplification Technology (DAT)” — a multiplex detection technology for pathogen RNA nucleic acids — is an achievement of the National Development and Reform Commission’s pilot program for the regional clustered development of strategic emerging industries and a research project under the National Health and Family Planning Commission’s Major Science and Technology Special Project during the 12th Five-Year Plan period.
“Zhongzhi Biotechnologies RNA Isothermal Amplification–Gold Probe Lateral Flow Assay (RGT)”—a rapid pathogen RNA nucleic acid detection technology that delivers results in as little as 30 minutes, enabling walk-in testing without the need for large-scale instrumentation. With low barriers to implementation, it is suitable for healthcare institutions at all levels and meets the demands of outpatient and emergency departments for rapid testing, rolling report generation, and expedited patient triage.
Multi-Biotin Signal Amplification (MBSA) technology refers to the amplification of target detection signals through the linkage of multiple biotin molecules, thereby enhancing the sensitivity of nucleic acid detection. This technique features high sensitivity and strong specificity, allows for direct detection of RNA molecules without reverse transcription, and offers a simple operational procedure.
Looking at innovation achievements,In 2015, Zhongzhi Biotechnologies pioneered the “Zhongzhi Star” seven-pathogen respiratory nucleic acid detection kit. This product was the first respiratory multiplex nucleic acid testing product in China to receive NMPA certification, and it remains the only domestically available multiplex RNA detection product for respiratory pathogens.
Subsequently, Zhongzhi Biotechnologies successively developed and launched multiplex and rapid test kits for respiratory pathogens, including influenza A and B, Mycoplasma pneumoniae, and SARS-CoV-2. The company also introduced a comprehensive solution for nucleic acid testing of respiratory pathogens, meeting the needs for differential diagnosis of multiple pathogens, such as influenza viruses and Mycoplasma pneumoniae, across various scenarios.
In 2024, Zhongzhi Biotechnologies successively launched its reproductive health product series, comprehensively introducing four products for the rapid RNA detection and multiplex testing of Neisseria gonorrhoeae (NG), Chlamydia trachomatis (CT), and Ureaplasma urealyticum (UU).At this point, Zhongzhi Biotechnologies’ product portfolio covers three major areas of infectious diseases: respiratory, gastrointestinal, and reproductive tract infections, providing comprehensive testing solutions for outpatient, emergency, and inpatient departments in healthcare institutions.
Following the acquisition, Wuhan Zhongzhi Biotechnologies INC. will leverage business synergies in customer acquisition and resource management to create new growth drivers.
It should be noted that, according to Securities Times, the book value of all shareholders' equity of Wuhan Zhongzhi Biotechnologies INC. as of the valuation reference date was RMB 87.2552 million, with an assessed value of RMB 461 million. As of the date of the acquisition announcement (December 30, 2024), the market capitalization of Wuhan Zhongzhi Biotechnologies INC. was RMB 176 million.
SHINVA MEDICAL INSTRUMENT CO.,LTD. plans to acquire a 36.1913% equity stake in Wuhan Zhongzhi Biotechnologies INC. for RMB 166 million, resulting in a calculated per-share acquisition price of RMB 11.7864. The closing price of Zhongzhi Biotechnologies’ shares on the day the acquisition announcement was released was RMB 4.5 per share. The acquisition price offered by SHINVA MEDICAL is significantly higher than both the book value of Zhongzhi Biotechnologies’ shareholders’ equity and its stock price, indicating a substantial premium. This has, to some extent, impacted SHINVA MEDICAL’s stock price. As of press time, SHINVA MEDICAL’s share price stood at RMB 16.66, with its latest market capitalization reaching RMB 10.11 billion.