Tongyi Medical Files for IPO: Aiming to Build a Leading Global Brand in Pediatric Respiratory Devices Exported to Over 30 Countries

Back in 2015, a documentary on smog sparked heated debate.

Chen Xingang, a former physician, keenly recognized that factors such as environmental pollution and widespread tobacco use have led to a rise in the number of patients with respiratory diseases, which in turn will drive the growth of respiratory inhalation formulations—pharmaceutical-device combination products administered via oral or nasal inhalation into the lungs to alleviate and treat asthma and COPD.

However, the field of respiratory inhalation formulations had already become a red ocean of intense competition.

Market research has yielded new insights: in more segmented markets, respiratory inhalation formulations that meet adult standards do not necessarily address the needs of pediatric patients, and the field of pediatric respiratory inhalation products remains underexplored.

Also in 2015, Chen Xingang and Min Xiaokun co-founded Pedo-care Medical. Their initial market entry point was nebulizers designed for pediatric patients.

After seven years of development, Jiangsu Pedo-care Medical Equipment Co., Ltd. has built a portfolio of products and services related to respiratory testing, along with certain auxiliary therapeutic and therapeutic devices. As it gradually expands its product pipeline, the company has initially established a respiratory medical device ecosystem covering both diagnosis and treatment.

As R&D efforts deepen, the company is also attempting to build a respiratory ethnic data platform tailored for the Chinese population from the ground up, so as to better serve patients. Currently, while Jiangsu Pedo-care Medical Equipment Co., Ltd. ranks among the top in China for exports of pediatric nebulizers, it is gradually adjusting its market strategy to further expand into the domestic market.

With many questions about how Tongyi Medical developed and what its current plans are, VCBeat interviewed Chen Xingang, Chairman of Tongyi Medical, and CEO Min Xiaokun.

The founding of Pedo-care Medical is rooted in the insights of Chen Xingang and Min Xiaokun, both former physicians. The two were alumni of the same medical school and later worked at Northern Jiangsu People’s Hospital, a Grade 3A hospital.

In 2011, when Chen Xin founded his first company, the two began their entrepreneurial journey together. Within less than two years, they grew the annual revenue of their company, which distributed products such as Boston Scientific’s interventional guidewires and Bracco’s contrast agents, to over RMB 30 million. Tongyi Medical, established in 2015, is another new company born from their efforts.

At that time, the entire nation was focused on the impact of smog. Tongyi Medical set its sights on the niche pediatric respiratory sector for its entrepreneurial venture.

Jiangsu Pedo-care Medical Equipment Co., Ltd. initially chose to focus its R&D efforts on nebulizers, largely because they are the most commonly used inhalation devices among patients in China. Since the diameter of nebulized particles is a critical factor affecting nebulization efficiency, the company initially concentrated on developing inhalation devices, with a particular emphasis on optimizing the delivery of aerosol particles deep into the patients’ lungs.

According to Min Xiaokun, CEO of Jiangsu Pedo-care Medical Equipment Co., Ltd. (Tongyi Medical), there was a lack of awareness in the market at that time regarding nebulizers suitable for pediatric patients. Therefore, while conducting product research and development, Tongyi Medical also focused on cultivating the hospital market. This is because nebulizers are customized by hospitals based on the severity of asthma or COPD patients’ conditions; patients must receive customization and administration of respiratory inhalation preparations at hospitals and purchase these devices through hospital channels. However, clinical promotion yielded minimal results, leading Min Xiaokun to initially consider the decision to cultivate the relevant market in 2017 as a failure.

With limited success in the domestic market, Pedo-care Medical leveraged its existing advantageous resources to expand into the international market in 2017, establishing a Pakistan office. In 2018, as some of its products obtained EU CE certification, Pedo-care Medical further exported its products to 16 countries participating in the Belt and Road Initiative. Subsequently, Pedo-care Medical’s product portfolio, including nebulizers, has been exported to more than 30 countries. It is reported that by 2020, Pedo-care Medical’s annual sales volume of nebulizers had reached 400,000 units.

Affected by the broader environment, including the pandemic, Jiangsu Pedo-care Medical Equipment Co., Ltd. has been gradually adjusting its strategy to place greater emphasis on the domestic market. In October 2020, the company was selected as one of the first batch of sci-tech innovation enterprises supported by the Nantong Municipal Government, and in the same year, it was recognized as a National High-Tech Enterprise.

To better facilitate its development, Chen Xingang enrolled in the Fosun Star Future Entrepreneurship Camp in 2021. While recognizing Fosun Group’s capabilities in integrating resources within the healthcare industry, Chen Xingang stated that joining the Fosun Star Future Entrepreneurship Camp has further helped Jiangsu Pedo-care Medical Equipment Co., Ltd. improve its corporate governance and gain more convenient access to the latest national policies and cutting-edge innovative technologies.

In 2022, Jiangsu Pedo-care Medical Equipment Co., Ltd., a nebulizer manufacturer, was selected for the “Top 30 List of the 2022 Specialized, Refined, Differential, and Innovative Dark Horse Competition (Spring Season).” The competition attracted nearly 500 enterprises from across China to register, with over 200 participating in the online preliminary rounds. Inclusion on this list serves as a testament to the strength and capabilities of Jiangsu Pedo-care Medical Equipment Co., Ltd.

In addition to nebulizers, Jiangsu Pedo-care Medical Equipment Co., Ltd. has gradually built multiple product pipelines covering both hardware and software over a seven-year period, initially establishing an ecosystem of pediatric respiratory medical devices.

Hardware Products of Pedo-care Medical

Pedo-care Medical has divided its products into three pipelines.

One category comprises hardware products, including diagnostic devices such as FeNO analyzers and pulmonary diffusion function testers, as well as adjunctive and therapeutic devices such as emergency resuscitation NRU systems. Since 2015, Jiangsu Pedo-care Medical Equipment Co., Ltd. has strategically positioned itself in the respiratory medical device sector, thereby establishing an initial ecosystem spanning from diagnosis to treatment.

One category is consumable products. Previously, Jiangsu Pedo-care Medical Equipment Co., Ltd. had long been exporting abroad, with its consumable products primarily targeting overseas markets. Now, with a heightened focus on the domestic market, the company plans to expand the deployment of its corresponding consumable products on a broader scale, while simultaneously introducing its related terminal equipment into more hospitals.

One category comprises software products. Within this category, functional expansions for hardware devices are included. For instance, the “Smart Nebulization Room” adds a GPS module to the nebulizer hardware, with corresponding software integrated into the hospital’s call system to enable real-time monitoring of device usage. Another example is the integration of ventilator software systems with hospital HIS (Hospital Information Systems). Furthermore, this category includes platform development, such as the respiratory ethnicity data platform currently being built by Jiangsu Pedo-care Medical Equipment Co., Ltd.

The respiratory ethnic data platform, which Jiangsu Pedo-care Medical Equipment Co., Ltd. currently prioritizes as a key initiative, holds significant importance both for the company and for society at large.

Min Xiaokun pointed out that the respiratory population data platform developed by Pedo-care Medical has initially established a cloud data platform to receive usage and measurement data from terminal devices; it has built the basic framework for a scientific research data center and preliminarily set up an auxiliary diagnostic platform for pulmonary function. He also stated that they have applied for and undertaken several research projects.

One of the objectives in building its respiratory ethnicity data platform is to provide region-specific reference values for respiratory diagnostics across different populations, thereby assisting primary care hospitals and junior physicians in improving diagnostic accuracy.

Min Xiaokun further explained that in clinical practice, there are significant differences in “reference values” across provinces, while variations among residents within the same province tend to be smaller, with data points being more closely aligned. For instance, notable differences exist in respiratory data between residents of Sichuan Province and those of the three northeastern provinces. By establishing more refined standards, healthcare providers can better serve populations in different regions and improve diagnostic accuracy for patients. In addition, the National Center for Respiratory Medicine is currently conducting research on ethnicity-related respiratory parameters, and the Respiratory Ethnicity Data Platform developed by Jiangsu Pedo-care Medical Equipment Co., Ltd. can contribute data to support some of these research initiatives. For Jiangsu Pedo-care Medical Equipment Co., Ltd., the development of this platform is expected to further enhance the diagnostic accuracy and treatment precision of its related products, thereby better serving society.

The ability to strategically lay out and diversify its product pipeline is closely tied to Jiangsu Pedo-care Medical Equipment Co., Ltd.’s in-house R&D capabilities. It is reported that the company has established a team of nearly 50 employees, including approximately 30 R&D and production staff. Many of its R&D professionals bring prior experience from listed companies or large enterprises.

To enhance its research and development (R&D) capabilities, Jiangsu Pedo-care Medical Equipment Co., Ltd. (hereinafter referred to as "Pedo-care") established the "Sino-German Joint Venture Respiratory Products Research Center" with Germany’s AC Air Controls at the end of last year. As a mature and experienced R&D service provider, AC Air Controls has been serving the international medical device industry for over 18 years. Its core business areas include medical gas control, respiratory therapy, artificial lungs, artificial livers, integrated emergency ventilation devices, and neonatal ventilation products for critically ill patients, among others. Through the establishment of this joint venture research center, Pedo-care is further strengthening its innovation capabilities. Additionally, leveraging its own advantages, Pedo-care is well-positioned to provide Contract Research Organization (CRO) services to medical device companies in related fields.

The platform-based R&D strategy has also made subsequent product innovations at Jiangsu Pedo-care Medical Equipment Co., Ltd. more targeted and clearly directed.

Amid uncertainties such as the pandemic, how to further expand market share has become a critical question for numerous medical device companies.

Jiangsu Pedo-care Medical Equipment Co., Ltd. has already achieved certain results in its overseas channel layout. In the international market, its related products have been exported to more than 30 countries, gradually establishing an international sales network. Now, the company has decided to increase its investment in the domestic market, placing greater emphasis on expanding its market share for related products in China.

Min Xiaokun explained that when initially building the Pedo-care Medical brand, they believed brand growth required time to accumulate, so they chose to serve as an OEM manufacturer for a well-known listed company. However, Pedo-care Medical did not abandon its plan to establish itself as a leading brand in the domestic pediatric respiratory medical device market. Through research into this niche segment, they found that even today, there is still a lack of leading brands in respiratory medical devices specifically designed for children on the current market.

The expansion into overseas markets and domestic contract manufacturing have also created the conditions for Jiangsu Pedo-care Medical Equipment Co., Ltd. to now focus on the Chinese market:

First, the brand awareness established through overseas market expansion will play a certain role in the development of Pedo-care Medical’s domestic market;

Secondly, by serving as an OEM manufacturer for a domestic listed company and a well-known industry enterprise, Jiangsu Pedo-care Medical Equipment Co., Ltd. has further enhanced the quality and brand recognition of its medical products.

Furthermore, Jiangsu Pedo-care Medical Equipment Co., Ltd. has long established a presence in the domestic market, particularly within hospital channels, enabling it to reach a broad patient population.

The adjustment of marketing strategies also serves the adjustment of brand strategy.

Jiangsu Pedo-care Medical Equipment Co., Ltd. aims to ensure its presence within a 3-kilometer radius of every user, accessible at hospitals or pharmacies, over the next 5 to 10 years. In addition to the aforementioned research and development of various medical device products, the company seeks to further address the needs of pediatric patients by creating tailored children's health records, enabling real-time upload of examination data, and leveraging networked specialized children’s hospitals. Ultimately, Jiangsu Pedo-care intends to gradually build an ecosystem in the respiratory field that integrates both software (systems) and hardware (devices), covering the entire spectrum from diagnosis to treatment.

Currently, multiple respiratory medical device products from Pedo-care Medical are undergoing regulatory approval. Min Xiaokun noted that the pandemic has heightened demand for pulmonary function testing and treatment equipment among the National Health Commission and hospitals across China, enabling Pedo-care Medical to rapidly expand its product pipeline. The company’s current advantages lie in the relatively advanced clinical progress of certain products and its diversified product portfolio.

It is reported that in 2016, Jiangsu Pedo-care Medical Equipment Co., Ltd. secured RMB 16 million in angel financing. Currently, the company is undertaking its Pre-A round of financing, with the proceeds planned to be used for the research and development of related software and hardware products, as well as product manufacturing.

Chen Xingang pointed out that with the development of the epidemic, both doctors and patients have improved their understanding of respiratory diseases to a certain extent. In the future, as medical devices in the respiratory field become smaller and more suitable for home use, related sectors will usher in huge development opportunities.

Meanwhile, Pedo-care Medical will usher in its own development while maintaining its innovation capabilities.

Fosun Star Future Startup Camp is an incubation and investment platform under Fosun’s Star Future Capital, established in reliance on Fosun and Fosun Pharma, with a focus on the broader healthcare sector. Adopting a “community + incubation + investment” model, it explores frontier innovation areas, centers on entrepreneurial talent, and proactively identifies and invests in future unicorns.

In 2022, Fosun Star Future Entrepreneurship Camp is set to launch its fourth cohort. Targeting entrepreneurs in the healthcare sector and aspiring innovators, the program invites top-tier global mentors and introduces six core incubation modules, offering entrepreneurship courses and services grounded in China’s medical industry background and practical experience.