EFC Capital Releases '2022 China Health Industry White Paper' and Files IPO Prospectus

Editor’s Note: This article is from China Renaissance Capital, authored by Li Gang, Zhang Xiao, Wu You, Wang Bin, Li Jin, and Li Rui, and published by VCBeat with authorization.

In 2021, China’s health industry experienced a year of significant ups and downs. It was the second year of the global COVID-19 pandemic, a period during which capital markets gradually cooled down, and a time marked by the continuous emergence of innovation hotspots.

In our “2021 iCapital China Health Industry White Paper” released last year, we estimated that the scale of China’s health industry reached RMB 8–9 trillion in 2019–2020. With the further intensification of population aging in China in 2021 and the increased attention and investment in health by both the government and the public in the post-pandemic era,We estimate2021China's Health Industry Has Initially Achieveda scale of approximately 10 trillion yuan, of which pharmaceuticalsProductThe relevant market size is approximately2.9 trillion yuan, the market size of medical devices and diagnostics is approximately 1 trillion yuan, and the market size of medical services, digital health, and pan-health is approximately 5.5~60.5 trillion yuan.

According to the "Statistical Communiqué of the People's Republic of China on the 2021 National Economic and Social Development" released by the National Bureau of Statistics, China's natural population growth rate in 2021 was only 0.34‰, a decrease of 1.11‰ from 2020. In 2021, the population aged 60 and above reached 270 million, accounting for 18.9% of the total population, an increase of 0.2 percentage points from 2020; the population aged 65 and above exceeded 200 million, representing 14.2% of the national total population, an increase of 0.7 percentage points from 2020, further intensifying the aging of China's population. Therefore,In our view, the accelerating aging of China’s demographic structure remains the most critical underlying driver of the Chinese health industry.

If we say that the national will of the Chinese government in 2020 was"Comprehensively advance the building of a Healthy China" and "implement the national strategy for actively responding to population aging,"Thus, in 2021, policy guidelines with the overarching objectives of “universal accessibility” and “cost reduction and efficiency enhancement” were being progressively implemented.After three years of effort, the reform of centralized volume-based procurement has entered a new phase of normalization and institutionalization. According to data provided by the National Healthcare Security Administration, China has carried out six rounds of volume-based drug procurement to date, covering a total of 234 drugs. The value of these procured drugs accounts for 30% of the annual total drug procurement expenditure of public medical institutions, resulting in cost savings of over RMB 260 billion.

In 2021, China’s big health industry entered the “fast lane” in the capital market, with its valuation system undergoing changes and overall investment becoming more rational.According to statistics from IT Juzi, the amount of private equity financing in China’s healthcare sector reached RMB 223.65 billion in 2020, a year-on-year increase of 133.62%. In 2021, the financing amount totaled RMB 252.28 billion, representing a 12.8% year-on-year growth. The number of private equity financing deals in China’s healthcare sector amounted to 1,538 in 2020, up by 53.65% year on year. In 2021, the number of financing deals reached 1,831, marking a 19.05% year-on-year increase.It can thus be seen that in the primary market, the growth rate of both the number and amount of financing deals in China’s big health industry has slowed down.

In the secondary market, the broader health industry has experienced “roller-coaster”-style volatility, with the first and second halves of the year resembling “two extremes of ice and fire.”Taking A-shares as an example, the number of initial public offerings (IPOs) by healthcare companies on the STAR Market totaled 24 in the first half of 2021, but declined to 13 in the second half—only half the level of the first half. In the Hong Kong stock market, a total of 34 companies in the big health industry went public in 2021, with half of them trading below their offer prices on the first day of listing, a phenomenon extremely rare in the history of the Hong Kong stock market.

It is worth noting that in 2021, the digital and AI health industry witnessed several innovative hotspots. The application of “AI+” across various scenarios continued to expand and deepen. Following its adoption in medical imaging, AI has seen broader and more profound integration into fields such as surgical robotics, brain-computer interfaces, and innovative drug R&D. Although most companies in China’s digital and AI health sector are still in their early to mid-stages, the industry as a whole is maturing. Since entering an upward cycle in 2020, enthusiasm for financing and investment has remained strong, with the number of transactions surging by approximately 65% year-on-year in 2021.

1. Centralized volume-based procurement of pharmaceuticals and high-value medical consumables enters a new phase of normalization and institutionalization

Since 2018, the National Healthcare Security Administration has been advancing reforms in volume-based procurement (VBP) for pharmaceuticals and high-value medical consumables. Over the subsequent three years, the scope of national VBP has continued to expand, with the reform entering a phase of normalization and institutionalization. By the end of 2021, six rounds comprising five batches of pharmaceuticals and two batches of high-value consumables had been procured through centralized volume-based procurement, covering a total of 234 drug varieties. The value of these procurements accounted for 30% of the total annual pharmaceutical procurement expenditure of public medical institutions.

In the pharmaceutical sector, after five rounds of centralized procurement, the scope of drugs covered has gradually expanded, ranging from medications for common and chronic diseases such as hypertension, diabetes, and gastrointestinal disorders, to those for major conditions like malignant tumors and rare diseases. The sixth round marked the first expansion of centralized procurement from chemical drugs to biologics, with a specialized procurement initiative for insulin, demonstrating an "accelerated pace" in the process.

In the field of high-value medical consumables, national-level centralized procurement has focused on two major sectors: cardiovascular and orthopedics. These sectors feature numerous domestic and international enterprises and a high rate of localization, which helps alleviate the payment pressure on medical insurance. For instance, in the centralized volume-based procurement of artificial joints conducted in September 2021, the average price of selected products dropped from RMB 30,000 to under RMB 10,000. Provincial governments have also initiated centralized procurement for products such as ultrasonic scalpels, in vitro diagnostics (IVD), cardiac pacemakers, and coils.

As the volume-based procurement (VBP) initiative advances, its rules are being progressively refined. Rather than focusing solely on low prices, the framework also takes into account factors such as supply security and the sustainable development of enterprises. For instance, in the VBP for artificial joints, submitted prices include accompanying service fees, and reasonable corporate costs and expenses are also considered.

According to the 14th Five-Year Plan for National Healthcare Security, by 2025, the number of drug varieties included in centralized volume-based procurement (VBP) will increase from 112 in 2020 to over 500; the proportion of VBP drugs in total drug procurement expenditures (excluding traditional Chinese medicine decoction pieces) in public hospitals will rise from approximately 75% in 2020 to 90% in 2025. The number of high-value medical consumable varieties under VBP will increase from one in 2020 to more than five, with the share of VBP high-value consumables in total high-value consumable procurement expenditures in public hospitals reaching 80% by 2025.

While alleviating the pressure on medical insurance payments, it is evident that the national volume-based procurement (VBP) program is reshaping the medical consumables industry. The centralized procurement of drugs and medical consumables prioritizes varieties with a high degree of domestic substitution and significant clinical usage. This approach accelerates the replacement of imported products with Chinese-made alternatives, thereby boosting industrial development. Furthermore, direct state procurement and guaranteed purchase volumes liberate winning enterprises from disordered distribution channels, allowing the savings in sales expenses to be reinvested in product research and development, thus promoting industrial upgrading. In this context, we specially quote Chen Jinfu, Deputy Director of the National Healthcare Security Administration: “Behind the reverence for quality and technology lies value orientation and innovation-driven growth. Healthcare procurement by medical insurance is not merely about assessing current cost-effectiveness, but about investing in the future strength of China’s healthcare system.”

2. Accelerated Implementation of DRG/DIP Payment Reform

The purpose of payment method reform is to improve the efficiency of medical insurance fund utilization, use limited medical insurance funds to purchase higher-quality medical services for insured individuals, and simultaneously drive comprehensive internal management changes in hospitals, return to the essence of healthcare, and provide higher-quality medical services.

Since 2019, the National Healthcare Security Administration has successively launched national pilots for DRG-based payment in 30 cities and DIP-based payment in 71 cities. Over the three-year pilot period, all participating cities have fully implemented actual payments, largely achieving the expected outcomes.

On November 26, 2021, the National Healthcare Security Administration issued the Three-Year Action Plan for Payment Reform Based on Diagnosis-Related Groups (DRG) and Big Data Diagnosis-Intervention Packet (DIP), which stated that from 2022 to 2024, the tasks of reforming DRG/DIP payment methods would be fully completed to promote high-quality development of medical insurance; by the end of 2024, all pooled regions nationwide would implement DRG/DIP payment reforms, with pilot regions that initiated reforms earlier continuously consolidating their achievements; by the end of 2025, DRG/DIP payment methods would cover all eligible medical institutions providing inpatient services, basically achieving full coverage of disease categories and medical insurance funds. By 2025, inpatient expenses covered by Diagnosis-Related Group-based payment and Disease-Specific payment would account for 70% of total inpatient expenses.

As the reform of diversified payment methods accelerates its implementation, medical institutions will enter an era of refined budgeting and operational management. Collaborative reforms in areas such as coding management, information transmission, medical record quality control, and the construction of internal operational mechanisms will transform the current extensive, scale-expansion-oriented operational model. This shift will place greater emphasis on endogenous growth and cost control, thereby reflecting the technical value of medical services.

3、National Strategy for Actively Addressing Population Aging

Population aging is a challenge that China must continuously address over the next 50 years. In the "Proposal for the 14th Five-Year Plan for National Economic and Social Development and the Long-Range Objectives Through the Year 2035," the Chinese government explicitly proposed implementing a national strategy to proactively respond to population aging, establishing and improving a basic, inclusive, and diversified elderly care service system to continually meet the growing multi-level and high-quality health and elderly care needs of the older population. In December 2021, the "14th Five-Year Plan for National Aging Undertakings and the Elderly Care Service System" was released, providing a comprehensive and detailed blueprint for the development of the elderly care service system.

On the supply side of elderly care services, the 14th Five-Year Plan has clarified the key indicators for building an elderly care service system. By 2025, the total number of elderly care beds will increase from 8.21 million to over 9 million, with nursing-type beds in elderly care institutions accounting for 55%. More than 60% of general hospitals at secondary level and above will establish geriatric departments, and the monthly visitation rate for elderly people in extreme poverty will reach 100%. A diversified elderly care service system that provides basic support and broad benefits will be established.

On the payment side of elderly care services, while steadily advancing pilot programs for long-term care insurance to alleviate the financial burden of caregiving for the elderly, efforts are being made to promote and standardize the development of the third pillar of pension insurance. This includes supporting commercial insurance institutions in developing commercial pension insurance and health insurance products tailored to the elderly, thereby further improving solutions for future elderly care payment issues. In September 2021, National Pension Insurance Co., Ltd. received approval for its establishment. The company was founded with a total capital contribution of RMB 11.15 billion from 10 bank wealth management subsidiaries, one insurance company, and six investment companies with diverse backgrounds. It focuses on developing innovative pension finance businesses, including pension annuity insurance, exclusive commercial pension insurance, and commercial pension plans.

As population aging deepens, attention from the state, society, and individuals toward this demographic shift will continue to intensify. The silver economy is not only a fundamental necessity but also a vast potential market, poised to generate new opportunities across consumption, healthcare, technology, finance, and other sectors.

1. Next-Generation Health Industry Companies Enter the Commercialization Phase

If we define technology-driven companies—such as those in innovative biotechnology, innovative medical technologies and devices, and medical artificial intelligence—as new-generation companies,2011–2020: A Decade of Technology Validation for New-Generation Companies, EstablishPipeline、Accumulationa period of accumulating strength, and inIn the third decade of this century, which began in 2021, we will witnessTheseNew GenerationThe company is gradually entering the commercialization phase, generating remarkable market value.

2021 marked the inaugural year of large-scale commercialization for Chinese biotech companies. Multiple PD-1 monoclonal antibody indications for major cancer types were approved in China, while the first domestically developed ADC drug and independently developed CAR-T therapy were successively launched, enabling numerous Chinese biotech firms to achieve significant revenue scales.

2021 also marked the spring of commercialization boom for innovative medical technology and device companies. Innovative surgical procedures and medical devices have gradually gained recognition and coverage under national health insurance programs. For instance, technologies such as TAVR (Transcatheter Aortic Valve Replacement) and surgical robots, after years of accumulation and thorough validation of their clinical performance, began to be included in the health insurance reimbursement lists across multiple provinces and cities in China this year.

In 2021, with the full opening of the approval channel for Class III medical device certificates for AI-based imaging, numerous Chinese companies successively obtained certifications in fields such as central nervous system, cardiovascular diseases, pulmonary nodules, diabetic retinopathy, and orthopedics. Some enterprises have even generated substantial revenue overseas, with their products deployed across Europe, the United States, countries along the Belt and Road Initiative, and various regions in Southeast Asia. Meanwhile, AI-driven new drug R&D companies have entered into collaborative research agreements or signed license-out commercial contracts with multiple large pharmaceutical firms, thereby generating revenue.

We believe that in the coming years, we will also witness the large-scale commercialization of various high-tech sectors, including brain-computer interface technology, digital therapeutics, synthetic biology, and gene editing.

2、NumberDigitalization and intelligence are profoundly reshaping industry development.

In recent years, artificial intelligence and various digital tools have gradually permeated every aspect of the healthcare industry, initially demonstrating their significant potential to break through bottlenecks and reduce costs while improving efficiency across multiple domains.We believe that as the methods and capabilities of digitalization and intelligence in empowering the entire health industry continue to expand and improve, many traditional technologies and business models within the broader healthcare sector face the potential for disruption and restructuring.

1) AI-Empowered New Drug R&D

In recent years, with the rapid development of deep learning capabilities and artificial intelligence technologies, as well as a substantial increase in computing power, AI is making significant strides in new drug development and demonstrating remarkable potential.

Taking protein structure prediction as an example, DeepMind’s AlphaFold2 has predicted the structures of more than 350,000 proteins, covering 98.5% of the human proteome and the proteomes of 20 organisms.

All of the world’s top 20 multinational pharmaceutical companies have made substantial investments in artificial intelligence (AI). A large number of domestic and international enterprises, including Novartis, Pfizer, GSK, AstraZeneca, Sanofi, and Fosun Pharma, are actively exploring AI-driven drug discovery and development, aiming to achieve leapfrog improvements in R&D efficiency. Meanwhile, internet giants such as Google, Tencent, Alibaba, and Baidu are also accelerating their strategic deployments in this field.

Furthermore, numerous startups worldwide are joining this wave of AI-driven drug discovery from various sectors—including AI and software platform services, CROs, and biotechnology—attempting to address the data-related pain points currently facing the industry from different angles and thereby advancing the development of the AI-driven drug discovery sector.

Currently, the majority of advanced drug pipelines in the AI-driven pharmaceutical industry are being steadily advanced by emerging AI-focused biotech companies, while traditional pharmaceutical companies have been relatively sluggish in their engagement with AI-enabled drug discovery.Future3-5 years, if traditional pharmaceutical companies could make more resolute investments in this field, and existingAI-driven drug discovery pipelines canIn clinical practiceExperimentPhase AchievementsMajor Breakthrough,The AI drug discovery market is poised for greater development opportunities and will attract increased attention from mainstream capital.

2) Empowering Traditional Diagnostics with Digital Diagnostics

In the post-pandemic era, digital diagnostic technologies, combined with online models such as internet hospitals and online consultation platforms, can significantly enhance the accuracy of traditional diagnostics and the efficiency of consultations, broaden the coverage of medical services, and empower traditional diagnostics across multiple scenarios and throughout the entire process.

In the hospital setting, the integration of digital and traditional diagnostic technologies is expanding to more departments; for example, its application in the clinical laboratory has effectively addressedClinical pain points such as sample accessibility, automated pre-processing, and unattended end-to-end workflows,It has significantly reduced repetitive tasks for laboratory physicians. In out-of-hospital settings, digital applications play an even more critical role. For instance, the integration of digital therapeutics with internet hospitals enables patients with mental health conditions—who are unwilling or unable to visit hospitals in person—to access continuous diagnostic and therapeutic monitoring through new channels. Additionally, early cancer screening technologies allow consumers to perform self-tests at home or at check-up centers, ultimately enabling accurate assessment of their health status via mobile devices. The application of digital technologies has opened up new directions and endless possibilities for traditional diagnostics in consumer-facing (to-C) scenarios.

Over the past year, leading companies in the digital diagnostics sector, such as Airdoc, successfully completed their initial public offerings (IPOs). In the primary market, firms including Qianglian Zhichuang, Left Hand Doctor, Ruitu Bio, ClearBio, and Freenome have sequentially secured equity financing rounds exceeding RMB 100 million.

We anticipate focusing on in-hospital specialty areas such as cardiology, neurosurgery, and brain science as key breakthrough directions; leveraging remote AI-based image recognition software, clinical decision support systems (CDSS), online off-site consultations, patient follow-up, and chronic disease management as primary vehicles for efficiency improvement; and relying on natural language processing, data mining, and deep learning as the core underlying technological supports.Digital diagnostics will undoubtedly bring tremendous changes to traditional medical diagnosis in the future,Empowerment and transformation that are complementary, or even disruptive.

3) Digital Therapeutics Become a Powerful Complement to Traditional Treatment Solutions

Digital therapeutics, as a novel digital health solution, have taken shape during their rapid development over the past two years. Following Pear’s listing on the Nasdaq in June 2021, Akili, an ADHD-focused digital therapeutics company, announced in January 2022 its plan to list on the Nasdaq, with its product having received FDA clearance and approval through the De Novo classification pathway. Many domestic digital therapeutics companies have also entered clinical trial phases; representative firms such as Shijing Medical, Wangli Technology, and Shukang Medical have obtained Class II medical device approvals from the National Medical Products Administration (NMPA).

We believe that as digital therapeutics gain increasing recognition among physicians and patients, they will become a powerful complement to traditional treatment regimens, continuously permeating all aspects of healthcare services, thereby improving disease cure rates while establishing viable pathways for commercial monetization.In terms of indications, cognitive disorders and chronic diseases that heavily rely on long-term, continuous health management will become the optimal entry point for digital therapeutics, such as mental health conditions, dermatological diseases, diabetes, and visual function disorders.In these areas, we are highly optimistic about the application prospects of digital therapeutics.

4) Surgical Robots Are Being More Widely Applied in Clinical Surgical Settings

Compared with traditional surgery, which relies heavily on surgeons, surgical robots offer greater flexibility, precision, and stability. Consequently, surgical robots and AI-assisted surgical planning are being increasingly widely adopted.

InOver the past decade, hundreds of new companies have entered the market abroad.Global Surgical RobotsMarket, there are also 80 in China.MultipleNew innovative companies are entering the market, which is currently experiencing rapid overall growth.Stage。According to Frost & Sullivan’s estimates, the global surgical robot market is projected to grow at a compound annual growth rate (CAGR) of 26.2% from 2020, reaching $33.6 billion in 2026; the domestic market in China is expected to expand at a CAGR of 44.3%, reaching $3.84 billion in 2026.

In 2021, surgical robots were successively included in the medical insurance schemes of Shanghai and Beijing. In April 2021, the Shanghai Medical Insurance Bureau incorporated 28 new items, including “AI-assisted therapeutic technologies,” into the coverage scope of Shanghai’s Basic Medical Insurance. The limited coverage for AI-assisted therapy was restricted to radical prostatectomy, partial nephrectomy, total hysterectomy, and radical resection of rectal cancer. Patients’ out-of-pocket payment ratio was set at 20%. Beijing also launched its medical insurance reimbursement plan in August 2021, covering both surgical robots and related consumables. Specifically, the fee for robot-assisted orthopedic surgery was fixed at RMB 8,000, fully reimbursable through medical insurance.

From the technological emergence of surgical robots to their gradual clinical acceptance and widespread adoption, and further to their increasing reimbursement coverage, this trajectory reveals the profound shock and far-reaching impact that technological innovation has imposed on traditional treatment modalities, exemplified by conventional surgery.

5) Traditional Hospitals Are Undergoing Increasingly Thorough Digital Transformation

Hospitals are the primary setting for the implementation of all medical products and technologies; therefore, the digitalization and intelligent transformation of hospitals will profoundly influence the development of the entire health industry and the innovation of business models. The construction of smart hospitals aims to enhance efficiency, improve outcomes, and reduce costs, primarily encompassing three aspects: smart healthcare for medical staff, smart services for patients, and smart management for hospital administration.

The "Action Plan for Promoting High-Quality Development of Public Hospitals (2021–2025)," jointly issued by the National Health Commission and the National Administration of Traditional Chinese Medicine in September 2021, explicitly prioritizes informatization as a key area of hospital infrastructure development, aiming to build an integrated “smart hospital” information system encompassing electronic medical records, smart services, and smart management.

● “Smart Healthcare” for medical professionals, centered on electronic medical records (EMRs), is committed to achieving the “Four Unifications” in standardized clinical data management (standardized documentation of medical record front pages, disease classification coding, surgical procedure coding, and medical nomenclature). This provides unified data assets for hospital digitalization and intelligence, thereby facilitating the development of digital products. Medical big data aimed at achieving interoperability of healthcare data, AI-based medical record quality control, clinical decision support systems, and imaging diagnostic systems are continuously helping physicians enhance their digital and intelligent capabilities in diagnosis and treatment.

● Patient-oriented “smart services” leverage technologies such as the internet, artificial intelligence, and the Internet of Things to connect hospitals, physicians, and patients, thereby facilitating medical consultations, follow-up visits, and health management. Internet hospitals, remote diagnosis and treatment, and “Internet + nursing” services continue to develop rapidly. Meanwhile, research and development of digital therapeutics in various specialized fields are being actively advanced, further enhancing the digitization and intelligentization of patient management and services.

● “Smart Management” for hospital administration promotes the use of intelligent and information-based tools to improve medical quality and efficiency, while enhancing refined and digital management capabilities. With the rapid advancement of payment reforms such as Diagnosis-Related Groups (DRG) and Big Data Diagnosis-Intervention Packet (DIP), specialized software and hardware vendors—offering solutions for DRG/DIP payment management, integrated business-finance systems, intelligent risk control, performance management, and smart pharmaceutical and consumable management—are poised for rapid growth, helping hospitals elevate their level of refined management.

We anticipate that in the coming year, as the requirements for hospital smart service ratings continue to deepen, particularlyDriven by the reform policies on DRG/DIP payment methods, smart hospital construction will continue to beAll levelsHospitalManagement'sEmphasis,to this endAssisting HospitalsAchieveCost Reduction, Efficiency Enhancement, and Refined OperationsObjective。Meanwhile, with the advancement of diagnosis-related group (DRG) payment models, innovative technologies and services that can achieve better therapeutic outcomes for patients—such as digital therapeutics—will also accelerate their implementation and application in hospital settings.

3. Healthcare and consumer sectors are increasingly converging

China’s consumer healthcare sector has undergone three waves of development to date. The first wave began a decade ago, starting with sectors possessing certain consumer service attributes, such as medical aesthetics, dentistry, and hair transplantation. This period gave rise to a cohort of star companies, including Bloomage Biotech, Angelalign, and Yonghe Hair Transplant, thereby establishing the foundation for China’s first wave of consumer healthcare.

Subsequently, riding the wave of healthcare digitalization, the second wave of consumer healthcare—characterized by “Internet+”—has spurred the emergence of universal health management solutions, giving rise to representative companies such as KEEP, Boohee Health, and Ping An Good Doctor. According to a Frost & Sullivan report, the market size for online consumer healthcare services is projected to reach RMB 128 billion by 2025, with a compound annual growth rate (CAGR) of 66.5% from 2019 to 2025.

Meanwhile, we are also witnessing a new intersection among consumption, healthcare, and digital technologies, giving rise to the third wave of consumer healthcare business models.If traditional “consumer healthcare” places greater emphasis on the consumer attributes of its target demographic, then the new intersection--We refer to it as “healthcare consumption”--It places greater emphasis on the “disease condition” attributes of the target population. Built upon a foundation of serious medical care, it serves patients with clear medical needs and the ability to pay out-of-pocket. By leveraging the convenience and accessibility afforded by digital healthcare, it enables certain issues that would traditionally require a “medical” setting to be addressed in a more “consumer-oriented” context.

From the perspective of clinical manifestations, what we refer to as “medical consumption” is primarily concentrated in fields with inherent out-of-pocket payment characteristics, such as mental health, ophthalmology, dentistry, and rehabilitation. From the perspective of target demographics, it is mainly focused on women, children, and the elderly, which constitutes the commercial foundation of medical consumption.

The core driver propelling the development of the medical consumption industry is China’s healthcare payment system. On one hand,Although health insurance accounts for more than50%, yet the focus remains on covering basic medical care, with out-of-pocket payments still accounting for a significant proportion of approximately 40%; the commercial health insurance system remains underdeveloped.The coverage ratio of commercial health insurance still lags significantly behind that of developed countries, failing to cover preventive healthcare services that align with public needs. On the other hand, China’s vast population, uneven development, varying levels of health awareness among individuals, and highly differentiated demands further complicate the landscape. Meanwhile, digitalization has introduced new diagnostic and therapeutic approaches, generating novel needs that are not covered by either basic medical insurance or commercial health insurance. Consequently, individuals seeking treatment for specific conditions are more inclined to pay out-of-pocket to improve their quality of life. These factors collectively result in certain diagnostic and treatment modalities being funded exclusively through out-of-pocket payments driven by individual needs. The inelastic nature of these demands serves as a powerful driver of medical consumption. We have reason to believe that various segments of China’s medical consumption market will witness remarkable rapid growth in the coming years.

1. The secondary market is returning to rationality and rebuilding its valuation framework, which is conducive to the healthy development of the industry.

Looking back at the secondary market performance of the healthcare industry in 2021, “trading below IPO price” was likely the key theme. Both the A-share and Hong Kong stock markets experienced frequent waves of stocks trading below their initial public offering (IPO) prices, with the trend being particularly pronounced in the Hong Kong market. In 2021, a total of 38 healthcare companies listed on the STAR Market and 19 on non-STAR Market segments of the Shanghai Stock Exchange. As of December 31, 2021, only 10 and 5 of these companies, respectively, had closing prices higher than their first-day closing prices, representing 26.3% in each case. Throughout 2021, 34 healthcare companies were listed on the Hong Kong Stock Exchange, including 20 under Chapter 18A for biotech firms. Among these 34 listed companies, 17 (50%) traded below their IPO prices on the first day of listing, and 27 (79.4%) fell below their IPO prices within 30 days post-listing. As of December 31, 2021, only 6 companies (17.6%) still had closing prices above their first-day closing prices.

If the valuation inversion between the primary and secondary markets persists, it will have a significant impact on primary market financing across the entire health and wellness industry, while refinancing in the secondary market will also face difficulties.

2. Investors show a stronger preference for early-stage ventures, with high-potential startups more likely to attract capital interest

In 2021, early-stage projects were more favored by investment institutions in the field of private equity financing for big health. Among all equity financing events throughout the year, the proportion of Series A and earlier rounds increased from 57.1% in 2020 to 63.3% in 2021. This trend was particularly evident in the fields of innovative biopharmaceuticals and medical technology & devices: In the area of innovative biopharmaceuticals, the share of Series A and earlier rounds rose from 62.2% in 2020 to 67.5% in 2021, while the share of Series E to Pre-IPO rounds dropped from 5.9% in 2020 to 1.3% in 2021; in the medical device sector, the proportion of Series A and earlier rounds climbed from 44.9% in 2020 to 60.5% in 2021, whereas the share of Series E to Pre-IPO rounds declined from 2.5% in 2020 to 1.2% in 2021. Entering at an earlier stage implies greater risk but also offers more opportunities and larger potential for value appreciation.

3. USD Investors Shift from Key Participants to Holding Cash, While RMB Players Rise Prominently

From the perspective of fundraising, statistics from third-party data platforms Qimingpian and IT Juzi show that in 2021, a total of 196 RMB and USD funds successfully completed fundraising in the capital market, with a total fundraising scale of RMB 998.8 billion. In 2020, there were 118 funds, with a total fundraising scale of RMB 632 billion. Compared to 2020, the overall fundraising scale in 2021 saw a significant increase of 58%. Among them, the total scale of USD funds increased by 50% year-on-year, while the total scale of RMB funds grew significantly by 63% year-on-year.

In 2021, a total of 103 healthcare-related funds (including pure healthcare funds and comprehensive funds covering healthcare investments) successfully completed fundraising, with a total amount raised reaching RMB 375.5 billion, a year-on-year increase of 30%. Among these, there were approximately 50 pure healthcare funds, with a fund size of RMB 150.2 billion, representing a year-on-year increase of 131%; and approximately 53 comprehensive funds, with an estimated allocable capital for the healthcare sector of around RMB 63.6 billion. Combined with pure healthcare funds, the total amounted to RMB 213.8 billion, reflecting a year-on-year growth of 62%.

From an investment perspective, in the healthcare and medical sector in 2021, the top 100 investment firms made a total of 1,943 investments, representing a 31% year-on-year increase. By type of institution among the top 100, domestic diversified funds were the most active, with 688 investments, accounting for 35% of the total. Specialized healthcare funds ranked second, showing a significant increase in activity compared to 2020: they made 614 investments in 2021, accounting for 32%, up from only 316 investments (24%) in 2020. Government-backed funds ranked third, with 190 investments, accounting for 10%, remaining flat compared to the previous year. Corporate groups, financial institutions, global USD funds covering China, and funds of funds (FOFs) followed, with 164, 138, 136, and 13 investments respectively, accounting for 8%, 7%, 7%, and 1% respectively; their shares of total investment count all declined compared to the previous year.

We believe that, against the backdrop of domestic products replacing imports and the protection of personal health data security,RMB-denominated investment institutions will play the most prominent role in the investment landscape of the healthcare industry.

As centralized volume-based procurement of pharmaceuticals and high-value medical consumables enters a normalized and institutionalized phase, traditional companies that rely primarily on generic production and lack strong innovation will face immense pressure, while genuine independent innovation and R&D will stand out against the backdrop of this procurement reform.

In the pharmaceutical sector, volume-based procurement (VBP) is driving upgrades in drug quality, curbing low-quality, redundant R&D efforts across the industry, and accelerating the market entry of high-quality innovative drugs. Overall, profit margins for generic drugs are being further squeezed, while biopharmaceutical companies that truly possess core technologies and address significant unmet market needs are encountering major development opportunities. This trend is also evident in the medical device sector. Under the influence of centralized procurement policies, investment attention is increasingly focused on companies with high growth potential, low domestic penetration rates, original and leading technological platforms, and sustained R&D innovation capabilities.

In 2021, China’s population aged 65 and above exceeded 200 million, accounting for 14.2% of the total national population, a year-on-year increase of 0.7 percentage points from 2020. In the foreseeable future, the degree of population aging in China will continue to deepen, creating substantial growth opportunities for the broader health industry associated with an aging society.

As the elderly population’s educational attainment, purchasing power, and diversity of needs have increased, the once-prevalent elderly care models based on “real estate” or “finance” have gradually faded from the historical stage.A new generation of the elderly care industry, driven by big data and artificial intelligence, remote intelligent diagnosis and treatment systems, and commercial insurance payments, is rising strongly. New-generation companies in the elderly care sector are also bound to attract greater favor from capital.

In recent years, with the rapid advancements in artificial intelligence and the continuous exploration by a wave of emerging startups represented by Neuralink, both basic research and commercial applications in the field of brain science are developing at an accelerated pace. According to the research report “The Bio Revolution Report” released by McKinsey in June 2020,Over the next 10 to 20 years, the global brain-computer interface (BCI) industry is projected to generate an annual direct economic impact of up to $200 billion., widely applied in various scenarios and applications such as entertainment, healthcare, industry, and military.

We believe that the rapid development of brain science, represented by brain-computer interfaces (BCIs), in recent years is mainly due to the following three reasons:

1. Continuous Advancements in Basic Science and Technology

With advances in neuroscience, biocompatible materials, sensors, big data, and artificial intelligence, significant breakthroughs have been achieved in key technologies closely related to the human brain, including modern neuroimaging research, signal acquisition and processing, decoding algorithms, and system implementation.

2. Increased life expectancy and the explosive growth of knowledge have led to changes in the brain's working lifespan andContradictions in Delayed Brain Development

The first issue is the contradiction between the extension of average human lifespan and the limited functional longevity of the brain. Since most neurons in the brain cannot regenerate, the vast majority of people begin to experience severe symptoms such as memory decline, dementia, brain tumors, and brain atrophy between the ages of 50 and 70. This not only makes it difficult to sustain high-level cognitive activities but also leads to a dramatic decline in quality of life. Meanwhile, thanks to advances in modern technology and medical care, life expectancy in many countries and regions has increased to 80–90 years. In the foreseeable future, the global average life expectancy may approach or even exceed 100 years. However, the functional lifespan of the human brain has not extended in parallel with the prolongation of overall bodily lifespan. The inevitable consequence is that Alzheimer’s disease is becoming increasingly prevalent among the elderly population.

Second is the contradiction between the explosive growth of knowledge and the slow development of the biological brain. Biologists generally agree that there has been no significant biological evolution in the individual human brain over the past 2,000 years. As a result, at the current stage, it takes a young person approximately 20 years to acquire the basic skills of human civilization as well as specialized knowledge and competencies in certain fields. To reach the frontier of a specific subfield and make novel contributions to the advancement of civilization requires an additional 10–20 years, or even longer. Therefore, with the accelerating pace of scientific, technological, and civilizational progress, all individuals will face the major challenge of their learning capacity failing to keep up with the rapid expansion of information.

We believe that the aforementioned two major contradictions constitute the underlying logic that will garner sustained attention in the current and future development of brain-computer interface (BCI) technology.

3、NeuroscienceLearnRiseforNational strategy and supported by the governmentStrong Support

Since 2013, major countries around the world have successively launched large-scale brain science research initiatives. The United States, the European Union, Israel, Canada, Japan, and South Korea have devoted substantial resources to these efforts. For instance, the “BRAIN Initiative” announced by the White House in April 2013 planned to invest $4.5 billion over a decade in brain science research.

China’s Brain Research Initiative was launched in 2016. The “13th Five-Year” National Basic Research Special Plan, jointly issued by four ministries and commissions in April 2017, explicitly identified three core focus areas: brain and cognition, brain-inspired intelligence, and brain health. In early November 2020, the Ministry of Science and Technology convened the first central expert meeting for the China Brain Project, at which it was revealed that China would allocate RMB 54 billion to advance the development of its Brain Research Initiative.

Brain-computer interface technology has three main applications in the medical field: improving (orRecovery）, AlternativeandEnhancement。Among them,Improvement(orRecovery）This can be achieved through “rehabilitation training” or “neuromodulation.” “Rehabilitation training” focuses on motor dysfunction, while “neuromodulation” targets disorders of brain development, as well as conditions involving impairments in consciousness and cognitive function.SubstitutionIt is a method of controlling assistive devices through thought, primarily targeting patients with motor or sensory dysfunction;EnhancementBrain-computer interfaces involving chip implantation are primarily targeted at healthy individuals. Currently, global applications of brain-computer interface (BCI) technology in the medical field cover conditions such as paralysis (severe disability resulting from stroke, trauma, or neurodegeneration), spinal cord injury, epilepsy, Parkinson’s disease, amyotrophic lateral sclerosis (ALS), Alzheimer’s disease, and attention-deficit/hyperactivity disorder (ADHD), as well as visual impairment. However, the primary focus remains on stroke and epilepsy, which represent the two most mature areas of clinical application for the BCI medical industry to date. As of now, four U.S. companies have received relevant approvals from the U.S. Food and Drug Administration (FDA), all concentrated in the fields of epilepsy, stroke, and paralysis. In terms of applications developed for healthy populations, Neuralink and Kernel—a company that has cumulatively raised over $100 million in investment—are typical representatives.

Compared with invasive (semi-invasive) "serious" brain-computer medical applications,From the perspective of short-term applicability, we are more optimistic about the application of non-invasive brain-computer interface technology in the early diagnosis and intervention of Alzheimer's disease, dementia, and depression, as well as in sleep monitoring and management, and even in consumer and gaming sectors.For example, in 2020, NextMind, a Paris-based startup, launched a brain-computer interface (BCI) development kit at CES for $400, which could control electronic devices such as VR/AR headsets by reading visual cortex signals in real time. The company was acquired by Snap Inc., which is actively exploring the AR field, in March 2022.

Currently, the medical market for brain-computer interfaces (BCIs) is highly competitive, with a diverse range of participants. In addition to innovative startups, major players in the medical industry and internet technology companies have also entered the field, including Medtronic, Facebook, and Tencent. According to statistics from the China Academy of Information and Communications Technology (CAICT), there are currently more than 200 companies worldwide offering BCI products and services, primarily concentrated in the United States and China.

In the future, the field of brain science is bound to become another arena for competition between China and the United States in terms of national strength, capital, and talent. We firmly believe that brain science willBe the NextTothat bring disruptive impacts to human societyThis field holds unparalleled strategic and commercial value.

Beyond existing conventional pharmacological treatments, non-pharmacological interventions (such as surgery, radiation therapy, and physical therapy), and psychological and behavioral therapies, Digital Therapeutics (hereinafter referred to as DTx) offers a novel therapeutic approach. As software applications (Apps), DTx primarily treats diseases by modifying patients’ lifestyles and behaviors, exerting effects equivalent or similar to those of conventional pharmaceuticals in disease treatment and prevention. DTx can also be used in combination with other drugs or medical devices to enhance therapeutic efficacy. DTx not only serves as a complement to traditional treatments but also pioneers an entirely new therapeutic modality. Therefore, DTx can be regarded as “digital medicine”; essentially, it is a special category of “drug” subject to stringent regulation, akin to traditional pharmaceuticals and medical devices, but delivered in the form of software applications. A defining characteristic of DTx is that its clinical safety and efficacy are substantiated by clinical evidence, and it has obtained certification and approval from regulatory authorities.

As an innovative business model, digital therapeutics (DTx) has gradually garnered widespread attention from pharmaceutical and medical device manufacturers, internet technology companies, and investment institutions, becoming a highly contested sector in recent years. With the exploration and practical application of this business model expanding into an increasing number of disease areas, more companies are entering the DTx industry. The scope has evolved from chronic disease management, represented by diabetes and hypertension, to interventions for neuropsychiatric disorders, such as depression, addictive behaviors, autism spectrum disorder, and attention deficit disorders.

The digital therapeutics market has experienced explosive growth in recent years. According to MarketsandMarkets, the global digital therapeutics market size is projected to grow from $3.4 billion in 2021 to $13.1 billion five years later, maintaining a compound annual growth rate of over 20%. Public data indicates that in 2021, there were 127 transactions involving 59 domestic DTx projects, with 180 participating investment institutions and total financing reaching nearly RMB 4.3 billion.Financing is skewed toward early-stage deals, with a gradual shift of momentum toward mid- to late-stage investments. As the overall market remains in its early stages, early-stage financing is expected to persist, while mid- to late-stage financing will continue to increase.

In this emerging field of digital health, we observe:

1、Digital therapeutics target the core of treatment, representing a pioneering new model in digital health.

Digital therapeutics truly touch the core of healthcare—treatment, which is the key to transforming the entire medical and health ecosystem. Whether as a supplement to existing treatments or as an entirely new therapeutic approach, digital therapeutics will undoubtedly drive the industry’s growth by expanding both the existing market base and incremental demand.

2、Demand and Technological Advancements Drive the Rapid Development of the Digital Therapeutics Industry

We believe that the huge market demand driven by the high prevalence of chronic diseases due to population aging has always been the underlying logic driving the development of the digital therapeutics industry. Coupled with the empowerment of the healthcare sector by new-generation digital internet technologies and the ongoing digital transformation of the healthcare industry, these factors have laid a solid foundation for the implementation of digital therapeutics.

3、The Core Value of Digital TherapeuticsgraduallyGained Recognition from All Parties

Currently, the scope of Digital Therapeutics (DTx) is primarily focused on conditions where traditional medical interventions have limitations, such as mental health disorders and amblyopia/strabismus. However, DTx represents more than just a supplement or optimization of conventional treatments; it signifies a profound clinical exploration, improvement, and upgrade involving tens of thousands of digital health and digital medical applications. By leveraging evidence from evidence-based medicine and real-world studies, DTx has demonstrated its clinical efficacy and safety, gaining recognition from regulators, patients, healthcare providers, payers, and pharmaceutical and medical device companies, thereby creating substantial value. DTx can overcome several limitations associated with traditional clinical practices, reduce costs related to hospitalization or physician visits, improve adherence to healthy lifestyle behaviors and continuous monitoring of prescribed medications, and optimize time spent on administrative tasks and routine communication. Digital technologies in the form of DTx are poised to reshape the future of disease prevention, diagnosis, and management.

4- Clinical trials are the foundation for the commercialization of digital therapeutics, with a surge in clinical registrations.

Clinical efficacy is the prerequisite and foundation for commercialization. DTx products must undergo clinical trials to demonstrate their clinical efficacy, safety, and reliability in order to obtain regulatory approval as clinical treatment options; therefore, clinical trials are critically important and necessary for DTx products. From 2016 to 2021, the number of registered global digital therapeutics clinical trials grew rapidly, increasing from 16 in 2016 to 98 in 2020, a more than fivefold increase. The neuropsychiatric field is currently the primary focus, with expansion into chronic disease areas such as cancer, respiratory conditions, cardiovascular diseases, pain management, and digestive disorders.

5, The commercial pathway for digital therapeutics is being validated, with four key elements: R&D, regulatory approval, distribution channels, and operations.

A composite knowledge system capable of identifying clinical needs and possessing multi-industry insights serves as the prerequisite and foundation for the research and development of digital therapeutic products. The key to success for digital therapy enterprises lies in adopting an expert-centric approach with IT as a tool, adapting to evolving policies and regulations, leveraging the distribution channels and operational execution capabilities of traditional pharmaceutical companies, and establishing viable business models.

We anticipate that digital therapeutics companies capable of delivering genuine clinical value will be the primary beneficiaries of industry growth. This cohort includes “digital drugs” backed by evidence-based medicine that bring breakthrough improvements to patient diagnosis and treatment, as well as “digital companions” that provide pharmaceutical and medical device enterprises with enhanced sales enablement tools and access to real-world product usage data. Only companies that truly deliver value will achieve sustainable development and market recognition, whereas those merely chasing concepts and capitalizing on market trends are destined to be short-lived.Therefore, we place greater emphasis on companies or projects that possess long-term expertise in one or more disease areas, leverage cutting-edge innovative technologies (such as VR) to optimize traditional diagnostic and treatment pathways, and have accumulated extensive user clinical cases and data algorithms.

Amid the frequent emergence of global pandemics and political “black swan” events, major capital markets worldwide have gradually cooled. The healthcare industry is likewise facing the test of a capital winter; the once-hot IPO market has gradually calmed down. As important means and pathways for capital exit, strategic restructurings and mergers and acquisitions (M&A) will attract significant attention. We believe the following themes will become the key focus areas for M&A and restructuring this year:

1、Key seller-side drivers propelling the M&A and restructuring market include small and medium-sized enterprises (SMEs) banding together for mutual support, funds seeking exit upon maturity, listed companies considering asset spin-offs and sales, and the privatization of Chinese concept stocks:

1) SMEs Increase Revenue and Reduce Costs Through “Collective Collaboration”, leverage complementary strengths to form a more robust operating entity and accelerate the financing process

The continuous implementation of medical insurance cost-containment policies and centralized procurement policies for drugs and consumables is forcing reforms in the healthcare industry,Amid the impact of the COVID-19 pandemic, and facing rigid cost expenditures, some small and medium-sized enterprises (SMEs) have also encountered significant operational difficulties. Against this backdrop,Small and medium-sized pharmaceutical enterprises lacking absolute competitiveness are facing an accelerated industry consolidation. Through mergers, these enterprises can, on one hand, enhance their bargaining power and achieve economies of scale; on the other hand, they can mitigate operational risks, overcome constraints imposed by “bottleneck” resources on corporate development, improve operational efficiency, and reduce comprehensive costs. Ultimately, they can rapidly emerge as leaders in niche segments, enjoy higher valuation premiums in the capital markets, and realize a “1+1>2” synergistic effect. It is expected that, particularly in sectors with high requirements for scale—such as healthcare services, medical devices, and pharmaceutical distribution—M&A activities driven by smaller players joining forces will become increasingly prevalent.

2) IPO Listing Path Blocked, FundsActiveSeeking ExitMergers and Acquisitions (M&A) and Restructuring Resulting Therefrom

Multiple factors have led to a valuation correction in the healthcare sector of the secondary market. Furthermore, stricter IPO review standards have resulted in numerous healthcare companies having their A-share IPO applications rejected or voluntarily withdrawn, while their H-share listing filings have lapsed or been voluntarily withdrawn. According to incomplete statistics, more than 40 large health companies saw their Hong Kong stock exchange filings lapse in 2021 alone, and dozens of enterprises on the A-share market declared IPO failures, with most choosing to voluntarily withdraw their IPO applications. These included many star enterprises in niche sectors, leading to a sharp decline in market confidence regarding IPOs as an exit route for healthcare companies. Against the backdrop of obstructed IPO exit pathways, funds face pressing needs for exit upon maturity, and companies are under pressure from expiring valuation adjustment mechanism (VAM) agreements tied to qualified IPOs. Consequently, M&A exits in the primary market have become a crucial option for institutional investors to resolve exit dilemmas, for founders to release themselves from VAM repurchase commitments, and to reduce debt leverage. It has been observed that M&A transactions in the healthcare sector have increased significantly since 2020, with both total financing volume and number of deals continuing to rise. According to incomplete statistics, the number of M&A transactions reached 243 in 2021, with a total transaction value of RMB 89.9 billion, hitting a historical high.

3) Listed CompanyStart viaSeeking Asset Sales or Spin-offs，Expand Financing Channels to Achieve CorporateOverall Valuation LevelThe improvement of

Amid valuation corrections in the secondary market, Hong Kong-listed companies are facing liquidity pressures; A-share listed companies are under pressure from institutional shareholders seeking exit upon fund maturity and high levels of equity pledges or debt by actual controllers. On one hand, Hong Kong-listed companies need to explore new financing channels through asset spin-offs or sales; on the other hand, shareholders of A-share listed companies need to reduce their financial leverage and improve overall corporate financial performance through asset spin-offs or sales, with some listed companies also able to achieve higher overall valuations through asset spin-offs. Throughout 2021, there were nearly 20 asset spin-off and sale transactions by listed companies exceeding RMB 500 million, with a total value surpassing RMB 22 billion. Asset sales by listed companies, particularly the sale of controlling stakes in core assets, have further diversified and invigorated M&A activities.

4) U.S. StocksChinese ADRs underperformed,The stock price significantly deviates from the company's intrinsic value,Seeking Privatization and DelistingRelisting Will Become a Trend

In 2021, the market capitalization of Chinese healthcare stocks listed in the U.S. experienced continuous volatile declines, with frequent instances of trading below IPO price and cash-to-market-cap inversion. Moreover, some of these companies faced delisting risks under pressure from new regulations issued by the U.S. Securities and Exchange Commission (SEC). Throughout 2021, among the 19 Chinese healthcare stocks that had been listed in the U.S. for more than one year, only six achieved positive annual returns; the maximum drawdown reached -76.2%, and the median volatility stood at -34.0%. By the end of 2021, 23 out of the total 31 Chinese healthcare companies listed in the U.S. were trading below their first-day closing prices. It is observable that some Chinese healthcare firms have already initiated privatization and delisting procedures, considering relisting on mainland China’s A-share market or Hong Kong’s H-share market. The anticipated wave of such returns is expected to generate a series of M&A opportunities stemming from privatizations of high-quality healthcare enterprises. However, these companies will face uncertain risks due to increasingly stringent domestic regulatory policies.

2、Financial investors controlling portfolio companies need to continuously seek external growth opportunities, while strategic investors need to refine their industrial chain layouts through mergers and acquisitions (M&A) and carry out continuous integration, thereby becoming the primary buyer-side drivers propelling the development of the M&A market:

1) Financial investors place greater emphasis on the quality of post-investment management for controlling stakes, particularly in achieving rapid value appreciation through inorganic growth via M&A.

In 2021, capital fundraising became increasingly concentrated among top-tier players. Funds with new raises exceeding RMB 5 billion accounted for less than 1% of the total number of funds but represented over 20% of the total amount raised. To circumvent foreign investment access restrictions in core sectors such as healthcare, large USD-denominated funds also began actively raising RMB-denominated funds. Affected by policy reforms in the healthcare industry and valuation corrections in the secondary market, the overall growth rate of the sector slowed down, and companies’ organic growth remained limited. Compared with the selection of sub-sectors, the grasp of investment trends, and the timing of exits through capital markets, financial investors are increasingly focusing on post-investment management after mergers and acquisitions (M&A), particularly on helping target companies achieve rapid enhancement of enterprise value in the short to medium term through external expansion via M&A.

2) Strategic investors face intense competition and need to achieve scaled development or consolidate their leading position through mergers and acquisitions.

As regulatory frameworks and policies become more stringent and standardized, leading companies in the healthcare industry face a more intense policy and competitive landscape. Seeking high-quality targets for external growth through mergers and acquisitions (M&A) has become an inevitable strategic choice for achieving rapid development and consolidating their market leadership. In 2021, there were over 30 M&A transactions involving listed companies with values exceeding RMB 500 million, totaling more than RMB 62 billion. Among these, small and medium-sized listed companies engaged in a greater number of deals compared to large listed companies, although the latter exhibited larger average transaction sizes. Overall, domestic M&A dominated in terms of volume, while cross-border M&A transactions were characterized by larger individual deal sizes. Meanwhile, under the pressure of centralized procurement policies, pharmaceutical companies tend to leverage M&A to optimize their upstream and downstream layouts, rapidly expand their product pipelines, and enhance overall commercialization capabilities. Medical device companies are more actively pursuing horizontal and vertical M&A integration to build platform-based enterprises, thereby mitigating the potential impact of centralized procurement on their sustained profitability. Furthermore, some listed companies that experienced rapid revenue growth during the pandemic have accumulated substantial cash reserves and seek to enrich their product pipelines, improve asset returns, or achieve corporate transformation through M&A.

Chief Advisor | Wang Ran

Authors | Li Gang, Zhang Xiao, Wu You, Wang Bin, Li Jin, Li Rui

Edited by Guo Banghui, Wu Jing, Gao Dawei

Graphics | Li Xin, Han Linfeng