Kerubal Health & Science Nominated for Qipu Award, Advances with Innovative FSMP Pipeline and Commercialization Strategy

In early December, the final list of winners for the “Qipu Awards,” hailed by the industry as the Oscars of the healthcare sector, was announced. KHS Group was shortlisted for the “Qipu Nomination Award for Innovation in Health Industry Development.”

In fact, the China Health Industry Innovation Platform (CHIP), also known as Qipu, was founded in 2014 by Professor Cai Jiangnan. It aims to foster a culture of value innovation within the health industry and promote its sound development under the new healthcare reform environment. In 2018, the China Health Industry Innovation Platform (Qipu Awards) was included in the “Several Opinions on Promoting High-Quality Development of the Health Service Industry and Accelerating the Construction of a World-Class Medical Center City,” issued by the Shanghai Municipal People’s Government, thereby becoming part of “Shanghai’s platform for showcasing, releasing, trading, and discussing health technology innovation achievements with international influence.” This alone underscores the value of the awards.

In 2022, the China Health Industry Innovation Summit and the 4th “Qipu Awards” Ceremony were held as scheduled. Thirty-six recipients of the “Qipu Nomination Award,” selected from 265 submitted projects, made on-site presentations. Eighty authorities and leading experts in the medical and health sectors served as judges, leveraging their professional and unique perspectives to identify outstanding projects with significant innovation and socioeconomic value. KHS Group received the “Qipu Nomination Award for Innovation in Health Industry Development.” This award category, encompassing the broader health and wellness sector, was the most competitive track with a total of 44 shortlisted projects. Among the four projects ultimately nominated, only three were in the health and wellness sector; KHS’s foods for special medical purposes (FSMP) was one of them, alongside other notable nominees such as Taikang Bybo’s dental orthodontics services and Shanghai Fuli’s home-based care and rehabilitation services.

“These projects are highly innovative and outstanding within their respective niche segments, having achieved significant success in commercial implementation,” stated the China Health Industry Innovation Platform. For KHS Group, a nominee for the Qipu Award, this recognition underscores the growing attention being paid to the sector of foods for special medical purposes (FSMP). For the industry as a whole, it signals the rapid rise of domestic FSMP brands, with KHS Group serving as a prime example.

The FSMP sector, which has begun to attract capital attention, still faces issues of supply-demand balance.

From the demand perspective, as the use of foods for special medical purposes (FSMP) can better enhance clinical treatment outcomes, demand for FSMP is rising alongside growing awareness among clinicians and the general public.

The Global Burden of Disease Study 2017, published in The Lancet in 2019, revealed that “poor diet” accounted for approximately 20% of global deaths, ranking it as the leading risk factor for mortality. Extensive clinical practice has demonstrated that nutritional therapy can enhance clinical outcomes and maximize therapeutic efficacy. With the accelerating aging of China’s population and the expanding prevalence of chronic diseases, the demand for nutritional support during disease rehabilitation has further intensified.

Based on an estimated per capita consumption of RMB 1,000 for foods for special medical purposes (FSMP), the market for infant FSMP should be valued at tens of billions of yuan, while the adult FSMP market should exceed RMB 100 billion. However, in reality, the total FSMP market size in China just surpassed the RMB 10 billion mark in 2021. This discrepancy is largely attributable to constraints in FSMP supply.

From the supply side, the market remains dominated by foreign enterprises, and the current supply of foods for special medical purposes (FSMP) tailored to the Chinese physique remains insufficient.

On the one hand, standards and regulations for the market of foods for special medical purposes (FSMP) are still being developed and refined, and practitioners in China’s FSMP industry are still navigating their way forward through exploration.Even so, the current scale of China’s market for foods for special medical purposes (FSMP), exceeding RMB 10 billion, signals promising future growth prospects.

On the other hand, the current market is still dominated by foreign companies, and the number of products that domestic companies have participated in and obtained approval for is still relatively small.To maximize the nutritional support efficacy of foods for special medical purposes (FSMP), in-depth research into factors such as ethnicity and dietary patterns is required. Currently, most companies still adopt formulas developed by overseas enterprises for foreign populations, resulting in certain disparities in nutritional support outcomes. Furthermore, lactose intolerance, which is more prevalent among the Chinese population, poses additional challenges to nutrient absorption rates.

Yang Guomin, Founder and CEO of KHS Group

After personally enduring the “ordeal” of seeking treatment everywhere for his child’s cow’s milk protein allergy, Yang Guomin recognized the supply–demand imbalance in the special medical purpose food (FSMP) sector. Drawing on his years of frontline experience and insights in the pharmaceutical industry, he identified FSMP as an unprecedented blue-ocean market. Ultimately, he joined forces with friends who had also worked in the pharmaceutical industry for many years to co-found Kelubao Group. As a father, Yang Guomin did not want to see what happened to his child happen to others; as CEO of Kelubao Group, he resolved to leverage the company to develop FSMP products tailored to the physiological characteristics of the Chinese population.

The nomination for the Qipu Award is attributed not only to the optimism of health industry professionals toward the FSMP sector, but also to Kelubao Group’s own innovative strength.

Dr. Gao Yuyou, Vice President of R&D at KHS Group

On one hand, KHS has established a comprehensive system encompassing research and development (R&D), production, and quality control. Dr. Gao Yuyou, Vice President of R&D at KHS, pointed out that the group has devoted considerable effort to every aspect, from the innovative R&D of formulations and raw materials to processing techniques and quality control.

KHS’s R&D efforts extend beyond product ingredients and raw materials to encompass manufacturing processes.As of the end of November 2022, it had obtained 47 domestic patents and copyrights.In particular, in the R&D testing and production of foods for special medical purposes (FSMPs), it holds an invention patent for trace element analysis of ingredients and a utility model patent for a natural ingredient extraction process used in FSMP raw materials. The acquisition of these patents has further strengthened its competitive moat.

The breakthroughs achieved in R&D are attributable to Kelubao Group’s own robust research and development capabilities. Currently, Kelubao operates multiple R&D and technology centers in Ningbo, Yixing, and Singapore, having established an international independent R&D team. In line with the physiological characteristics of the Chinese population, the company has completed formulation rationales, formula validation, pilot production, and regulatory registration for its corresponding products. Furthermore, in 2021, Kelubao Group entered into a strategic collaboration with the team of Academician Chen Jian from the Future Food Science Center at Jiangnan University. This partnership focuses on specialized research in areas such as raw materials, manufacturing processes, and mechanistic insights into ingredients for foods for special medical purposes (FSMP), thereby establishing unique technical barriers in emerging technology fields.

In terms of production and quality control, KHS has established production lines for various dosage forms, including dry-mix, wet-mix, and liquid formulations. The company adopts internationally mainstream production technologies, equipment, and process management systems, and is equipped with its own laboratory featuring comprehensive testing capabilities. This enables the execution of over 2,000 specialized tests across the entire workflow, from raw materials to finished products.Furthermore, the collaboration with Beingmate has further enabled it to meet the product quality control standards required of listed companies.

On the other hand, as Dr. Gao Yuyou pointed out, “What got KHS Group nominated for the Qipu Award was not only its R&D and production capabilities, but more critically, another key capability that sets it apart—its ability to commercialize.”“Most companies that have entered the FSMP market encounter difficulties before achieving commercialization. Commercialization is also a major concern for KHS Group.”

From the perspective of KHS Group itself, it has expanded its channel layout in the fields of hospitals and maternal and infant stores through its team that has been engaged in the pharmaceutical field for a long time. At present, KHS Group covers nearly 1,000 hospitals and more than 3,700 maternal and infant stores. Meanwhile, driven by keen insights into market and user needs, its layout is not limited to offline channels; online e-commerce channels and private domain communities have also been laid out and operated for a long time.The development of a robust channel network has enabled rapid commercialization.

In addition, KHS Group is building a new marketing model through its strategic partnership with Beingmate, which may become another pillar of its commercial growth in the future.

Not long ago, KHS Group made a strategic equity investment in Ling’ao Company, a wholly-owned subsidiary of Beingmate. As an initial exploration aimed at fostering broader and deeper strategic cooperation in the future, both parties will jointly operate Ling’ao Company, transforming it into a service platform for value delivery to provide customers with more extensive and in-depth health services.

In short, both parties will deeply engage and manage the user base that Beingmate has cultivated in the Chinese market over many years. Through initiatives such as illustrated educational content on nutrition and disease knowledge, and live broadcasts by pediatric experts, they will further implement knowledge-based marketing. By fostering sound decision-making among users, this approach aims to drive sales of products including foods for special medical purposes (FSMP) and maternal, infant, and toddler care items.

Unlike traditional marketing models, by leveraging user profiles established during the initial service phase, both parties will further utilize user data to deliver personalized health services, thereby enhancing user stickiness and fostering a virtuous cycle between marketing and sales.

It is reported that KHS Group is also intensifying its refined management of users covered by its existing marketing channels. With the continued integration of its ecosystem, this will ultimately facilitate better and faster commercial development for KHS Group.

For KHS, the Qipu Award nomination is merely the beginning. For the healthcare industry, KHS’s nomination has drawn greater attention to the blue-ocean market of foods for special medical purposes (FSMP). At the conference, numerous medical companies approached KHS to explore potential follow-up collaborations.

KHS will further drive industry development through its strategic layout.On one hand, KHS Group will continue to deepen its production pipeline for foods for special medical purposes (FSMP). It is reported that the group currently has multiple FSMP products under regulatory review. On the other hand, through its subsidiary Yishi—a professional brand specializing in hypoallergenic nutritional supplements and snacks—KHS Group is building a comprehensive health and nutrition food ecosystem. This ecosystem spans from infant FSMPs to hypoallergenic complementary foods, hypoallergenic snacks, and hypoallergenic nutritional products, extending to adult FSMPs.

With the establishment of a comprehensive product portfolio and its highly competitive commercialization capabilities, KHS Group is poised to gain greater competitiveness within the industry. This development may further catalyze the rise of domestically produced FSMP brands, represented by KHS Group.