Yinyi Bio's ChiNext IPO Application Accepted, Leading Domestic Substitute in Vascular Interventional Medical Devices

In recent years, the high-quality development of China’s healthcare service system has raised higher demands for the “domestication” of cost-effective medical devices, sparking significant market attention toward technology-driven innovative enterprises in this sector.

On June 27, the listing application materials of Liaoning Yinyi Biotechnology Co., Ltd. (hereinafter referred to as “Yinyi Biotech”), a leader in the domestic production of high-end medical devices for vascular intervention, were formally accepted by the Shenzhen Stock Exchange for its ChiNext listing.

Based on the disclosed prospectus, Yinyi Bio has been dedicated to the research and development, manufacturing, and sales of high-end vascular interventional medical devices since its establishment. The company holds seven Class III medical device registration certificates and is recognized as a National High-Tech Enterprise.

Currently, the company focuses primarily on the interventional treatment of coronary artery disease (CAD). It has developed a comprehensive product portfolio covering the key stages of percutaneous coronary intervention (PCI), designed to relieve coronary stenosis or occlusion, reduce the degree of vascular narrowing, restore myocardial perfusion, ensure unobstructed blood flow, and improve therapeutic outcomes. Its R&D pipeline includes the world’s first drug-coated balloon approved for primary coronary bifurcation lesions and China’s first polymer-free drug-eluting coronary metal stent system, pioneering domestic substitution in the niche segment of vascular interventional medical devices.

“The first drug-eluting balloon catheter approved internationally for the treatment of coronary bifurcation lesions, providing a new therapeutic strategy for the clinically urgent management of bifurcation lesions.” At the time of its initial market approval, Yinyi Biomedical’s independently developed Qingzhou^®Drug-eluting balloons have received such an evaluation from the National Medical Products Administration.

In fact, as early as 2015, "Made in China 2025" explicitly listed biopharmaceuticals and high-performance medical devices as one of the ten key areas for priority development. Among these, high-value medical consumables for diseases such as cardiovascular conditions were identified as a focal point for innovation and localization. The subsequently released "14th Five-Year Plan for the Development of the Medical Equipment Industry" further proposed that by 2025, mainstream medical equipment would basically achieve effective supply, with significant improvements in the performance and quality of high-end medical equipment products. Against this backdrop, Yinyi Bio’s achievements in "domestic substitution" within its niche segment of the medical device industry are undoubtedly critical.

According to the information disclosed in the prospectus, Yinyi Biotech’s independently developed Qingzhou® Drug-Coated Balloon features excellent crossability and deliverability, as well as superior drug-coating quality. It has been clinically applied at renowned cardiovascular hospitals such as Fuwai Hospital of the Chinese Academy of Medical Sciences, Beijing Anzhen Hospital affiliated with Capital Medical University, Zhongshan Hospital affiliated with Fudan University, and Ruijin Hospital affiliated with Shanghai Jiao Tong University School of Medicine, as well as in more than 1,000 hospitals across China. Since its market launch, sales have grown rapidly, breaking the market monopoly held by international medical device giant B. Braun (SeQuent Please) from Germany.

Specifically, Yinyi Biotech, through Qingzhou^®Drug-coated balloons enable an innovative "intervention without implantation" therapeutic approach for the treatment of coronary artery disease. During the procedure, a drug-coated balloon is delivered through a minimal incision in the patient's wrist or groin to the lesion site within the coronary arteries. Brief inflation of the balloon transfers the antiproliferative agents (drugs that inhibit cell proliferation) coated on its surface to the vessel wall, thereby suppressing excessive neointimal hyperplasia and effectively preventing or alleviating vascular stenosis. After treatment, the balloon catheter is withdrawn, leaving no foreign material in the patient's body, thus achieving true "intervention without implantation."

It is precisely based on this significant advantage that Qingzhou^®Its market share in China has been rising steadily. According to Frost & Sullivan data, in 2021, Qingzhou^®Drug-eluting balloons have ranked first in sales volume in the Chinese market, with a 41.5% share, surpassing the 27.1% held by comparable products from Germany’s B. Braun, thereby truly achieving “domestic substitution.”

Following the Qingzhou® product, Yinyi Biotech’s self-developed Ziyun® drug-coated balloon is also expected to obtain registration approval and be launched in 2024. According to reports, this product is primarily used for neurointerventional procedures in patients with intracranial arterial stenosis. It has currently completed animal studies, full performance testing, and biological evaluation, and is in the clinical trial phase. Notably, there is currently a market gap for such products in China, positioning Yinyi Biotech to once again achieve domestic substitution with its self-developed product.

Yinyi Biotech’s outstanding R&D capabilities have underpinned its successive breakthroughs in the “localization” of high-end medical devices in the field of vascular intervention.

Prospectus data show that Yinyi Bio’s R&D expenses have been doubling continuously since 2019. In that year, the company’s R&D spending amounted to RMB 10.4088 million, which rose to RMB 20.7468 million the following year. By 2021, annual R&D expenses doubled again, reaching RMB 41.8306 million.

“Yinyi Bio has established a multidisciplinary, cross-field R&D team with a global perspective and extensive industry experience,” the company stated in its prospectus. As of December 31, 2021, Yinyi Bio had 46 R&D personnel, including seven core technical staff members.

Among them, Professor Dong Heyan, the head of the company’s R&D team, has over 20 years of R&D experience in the vascular interventional medical device industry. As an expert in biomedical materials, he possesses extensive experience in industrialization. Wang Wei, the company’s Deputy General Manager, also has more than 20 years of research experience in the fields of biomaterials and biomedical engineering, and is responsible for planning, evaluating, and implementing the company’s medium- to long-term development strategies, as well as assessing project proposals for scientific research. Hu Yiping, Director of the Scientific R&D Department, who oversees new product development, clinical trials, and regulatory registration, has more than 10 years of research experience in the field of biomedical materials.

Based on the latest R&D progress, Yin Yi Bio has launched over 20 R&D projects in the fields of cardiovascular, cerebrovascular, peripheral vascular, and pulmonary vascular diseases. Among these, five products are expected to receive regulatory approval and be officially launched in 2022.

While leveraging innovative R&D to stimulate its endogenous growth momentum, Yin Yi Biologics is also relying on innovation to mitigate the direct impact of the centralized procurement policies in the new era.

In July 2019, the General Office of the State Council issued the “Notice on Printing and Distributing the Reform Plan for the Governance of High-Value Medical Consumables,” exploring volume-based procurement in the field of high-value medical consumables.

By June 2021, multiple ministries and commissions had jointly issued the “Guiding Opinions on Carrying Out Centralized Volume-Based Procurement and Use of High-Value Medical Consumables Organized at the National Level,” which proposed that the state formulate basic policies and requirements, organize various regions to form alliances, and carry out national centralized volume-based procurement of high-value medical consumables with public medical institutions as the implementing entities. The initiative aims to explore and improve volume-based procurement policies, gradually expand coverage, and promote the return of prices for high-value medical consumables to reasonable levels.

Since the core of the volume-based procurement policy is "exchanging volume for price," meaning that manufacturers lower prices in return for guaranteed purchase volumes by medical institutions, the relevant centralized procurement policies have also had a significant impact on companies in the pharmaceutical and healthcare sectors.

However, based on the performance of Yinyi Bio, the company’s overall revenue has not been significantly impacted by the centralized procurement policy. Data from the prospectus shows that Yinyi Bio has maintained continuous growth in both revenue and net profit over the past three years. In 2021, the company’s operating revenue reached RMB 617 million, and the net profit attributable to shareholders of the parent company was RMB 271 million, representing year-on-year increases of 70.13% and 136.12%, respectively. Against this backdrop, although Yinyi Bio continues to expand its business and increase investment in market promotion, the ratio of selling expenses to revenue has been declining year by year, dropping from 42.26% in 2019 to 29.99% in 2021.

The Company further stated in its prospectus that the implementation of centralized procurement policies in recent years has, in fact, accelerated the growth of market demand and driven sales of its core products. For instance, sales of the Qingzhou® drug-coated balloon experienced explosive growth in 2021.

According to the prospectus, from 2020 to 2021, 31 provinces, municipalities, and autonomous regions across China successively implemented centralized volume-based procurement for coronary balloon dilation catheters, with Yin Yi Biotech’s products selected in 18 of these regions. During the same period, Qingzhou^®The sales revenue growth rates of Yinyi Biomedical’s drug-coated balloon catheters reached 73.24% and 91.97%, respectively, while the sales volume growth rates were 106.79% and 181.11%, respectively, achieving doubled growth in both sales revenue and volume.

In this regard, Caixin Securities analyst Zou Jianjun stated in a research report that volume-based procurement (VBP) for medical devices will become normalized and institutionalized, with accelerated expansion in scope. However, the price reductions from device VBP have shown a moderating trend, bidding rules have become more flexible, and greater emphasis is being placed on clinical needs. “Manufacturers with strong innovation capabilities and favorable competitive landscapes for their products can leverage VBP to rapidly enter mainstream hospitals and achieve rapid performance growth.”

To address the impact of volume-based procurement (VBP), Yinyi Biomedical also stated in its prospectus that the company will monitor and participate in VBP programs across various regions, while expanding and maintaining hospital relationships to increase the market share of its existing products. Meanwhile, it will actively invest in the research and development of vascular interventional medical devices, create innovative products, diversify its product portfolio, and enhance its risk resilience.