Su Li Kang Biotech, a Leading Chinese FSMP Company Backed by Quanyuan Industrial, Yang Jiyong Team and Zhongding Capital, Files for IPO

VCBeat has learned that Yuanquan Industrial, the Yang Jiyong team, and Zhongding Capital have jointly invested over RMB 100 million to acquire a controlling stake in Zhejiang Hisun Sukang Biotechnology Co., Ltd. (hereinafter referred to as “Sukang”), a leading domestic enterprise in the field of foods for special medical purposes (FSMP). Shanyun Capital served as the financial advisor for this transaction. The funds raised will be utilized for new product research and development, as well as for the channel development and operational expansion of FSMP products.

Foods for Special Medical Purposes (FSMPs), fully known as formula foods for special medical purposes, are specially processed and formulated dietary products designed to meet the specific nutritional or dietary needs of individuals with limited food intake, impaired digestion and absorption, metabolic disorders, or special disease states.

Sulikang, formerly a health and wellness subsidiary of the A-share listed company Hisun Pharmaceutical, is among the first enterprises in China to focus on the research, development, and production of foods for special medical purposes (FSMP). Since its establishment, Sulikang has built manufacturing facilities and production lines at a leading domestic level, along with a high-standard testing center and a comprehensive quality control system. It is one of the few FSMP companies in China that integrates R&D, production, and professional marketing.

The registration requirements for foods for special medical purposes (FSMP) are significantly stricter than those for ordinary foods, approaching the regulatory standards applied to pharmaceuticals. The journey from research and development to final registration involves high professional demands, lengthy timelines, substantial capital investment, and low approval rates, resulting in significant industry barriers. In August 2020, Sulikang successfully obtained China’s first FSMP registration certificate for a protein component product. Currently, the company has multiple new products under registration or awaiting approval, including highly anticipated products targeting specific diseases. By the end of 2023, Sulikang is expected to become one of the leading manufacturers in China’s FSMP sector, holding the largest number of registration certificates and featuring blockbuster products. As an early entrant into the blue-ocean market of FSMP in China, Sulikang is building its core competitiveness through a diversified product portfolio.

Meanwhile, since taking controlling interest, the management team has built a specialized marketing team that is well-known in the industry and highly competitive. The company’s general manager, Yang Jiyong, brings over 20 years of experience in specialty drug marketing and management. He previously served as the sales head at several major domestic and international pharmaceutical companies, including Roche and AskPharm. Known for his innovative and pioneering approach, he has successfully marketed renowned products across multiple therapeutic areas, including oncology, gastroenterology, and HPV.

The global market size of medical foods for adults has exceeded $20 billion, with a growth rate significantly higher than that of the infant medical food market. The medical food industry is highly concentrated, with the top three global manufacturers (Abbott, Nestlé, and Danone Nutricia) holding nearly 70% of the market share. After decades of development, leading global manufacturers offer a diverse range of products capable of meeting the nutritional needs of patients with different diseases and at various stages of their conditions.

China’s FSMP industry started relatively late and remains in its early stages of development. In the United States, 65% of patients with malnutrition use clinical nutrition products, whereas in China, no more than 5% of patients at nutritional risk use FSMPs, indicating substantial room for growth in the penetration rate of FSMPs for nutritional support in the domestic market.

From 2016 to 2019, the State Administration for Market Regulation issued multiple laws and regulations, establishing a comprehensive framework for foods for special medical purposes (FSMP) covering registration, production, distribution, and promotion. These measures standardized industry development and designated FSMP as the sole category of special foods intended for individuals with specific disease conditions. Since 2020, key provinces have introduced online listing regulations and specific implementation policies at the hospital level, with competent authorities and hospitals actively advancing these initiatives in tandem. In 2023, as numerous provinces and municipalities rolled out policies clarifying exclusive billing codes for FSMP categories and facilitating integration with hospital information systems, collaboration between clinical departments and nutrition departments has been strengthened. Driven by these robust policy supports, the FSMP market is approaching an inflection point for explosive sales growth. The year 2023 is poised to become the “policy year” for the FSMP industry. Over the next five years, the Chinese FSMP market is expected to achieve rapid adoption and volume expansion, emerging as a blue-ocean market with a scale exceeding RMB 10 billion.

Sulikang has keenly captured changes in the market and policy landscape, establishing a comprehensive presence in the field of Foods for Special Medical Purpose (FSMP). The company’s products are now officially sold in over 200 hospitals, and it has established partnerships with multiple chain pharmacy groups. By collaborating with key research institutions and clinical experts, Sulikang has developed a range of products targeting diseases with clear market demand, comprehensively meeting patients’ specialized nutritional needs.

Yang Jiyong, General Manager of SukangStatement: Sulikang is among the earliest enterprises in China to enter the field of Foods for Special Medical Purpose (FSMP), boasting substantial accumulated expertise and high-quality assets. Since being taken over by a market-oriented management team, the company has experienced rapid growth. We believe that China’s FSMP sector represents a hundred-billion-yuan market opportunity, comparable in scale to the pharmaceutical and health supplement industries, with the oncology-related segment alone poised to quickly exceed ten billion yuan. We have now grown into a first-tier player in China’s adult FSMP industry and are confident in becoming the leading Chinese-owned enterprise in this sector within the next three years.

Sun Yanhua, Partner at Zhongding CapitalIt indicates that the FSMP (Food for Special Medical Purpose) market is in its incubation stage but holds immense potential. As a pioneer, Sukang originated from Hisun Pharmaceutical, a listed pharmaceutical company, and is one of the earliest FSMP enterprises in China, boasting a solid foundation in production and R&D. Building on this strength, the new controlling management team has leveraged channel advantages to secure entry into numerous benchmark hospitals. We look forward to the company becoming a leading enterprise in China’s FSMP industry in the near future.