Gross Profit Surges Tenfold: How Novogene Health Opened the Door to China's Cancer Early Screening Market

On August 20, 2021, New Horizon Health disclosed its financial results for the first half of 2021, with overall revenue experiencing a significant year-on-year increase compared to the same period in 2020.It grew from RMB 10.53 million in the first half of 2020 to RMB 43.9 million in the first half of 2021, representing a year-on-year increase of up to 317%;Gross profit was further driven by its two flagship products, Changweiqing and the Popo Tube.Rising from RMB 2.24 million in the first half of 2020 to RMB 24.7 million, representing a year-on-year increase of more than tenfold.

It can be said that New Horizon Health delivered a satisfactory performance in the first six months following the formal approval of Changweiqing.

This outstanding performance was built on the foundation that New Horizon Health’s initiatives in the first half of 2021 were primarily focused on market education. Over the past six months, the company has consistently communicated through various visible and invisible channels, leveraging its sales team, mass media, and diverse partners to disseminate the concept of early cancer screening to society at large, thereby embedding the importance of early diagnosis and treatment of colorectal cancer into the minds of all high-risk individuals.

New Horizon Health’s impressive performance in the first half of 2021 was largely attributable to its flagship products, Changweiqing and Pupu Guan.

ChangWeiqing shipped 121,500 units during the reporting period, driving RMB 14.2 million in revenue; PuPuGuan achieved blockbuster sales of over 1.9 million units, generating RMB 29.6 million in revenue. The rapid scale-up of product volumes also helped spread New Horizon Health’s costs, further expanding its gross profit margin to 56.2%.

Overall, New Horizon Health’s sales performance in the first half of 2021 continued the rapid growth seen in the fourth quarter of 2020. As we previously anticipated, after obtaining the Class III medical device registration certificate for its “flagship product” Colotect, the company successfully established a leading presence in the early cancer screening sector. This not only enabled Colotect’s sales to fully recover from the downturn experienced in 2020, but also helped drive greater market acceptance of its more affordable product, Pupu Tube. Indeed, sales of Pupu Tube have become so robust that they now arguably overshadow those of the flagship product.

For the emerging market of early screening, it is an inevitable trend of industrial development that low-priced products take the lead.New Horizon Health is essentially conducting market education from scratch, which necessitates guiding a larger population from a state of unawareness to initial trial. In this phase, the cost-effective “Poo Tube” naturally becomes the preferred choice for first-time users of early screening products. Looking ahead, users of the “Poo Tube” will have greater potential to be converted into users of “ColoClear,” thereby unlocking significant growth potential for New Horizon Health’s existing product pipeline.

As the holder of a Class III medical device registration certificate for cancer early screening, New Horizon Health’s core strategy for product promotion remains focused on the clinical sector. The primary significance of its flagship products, Colotect and Pupu Tube, lies in their role as pre-colonoscopy screening gateways in clinical practice, thereby reducing the frequency of colonoscopies. This approach spares a large number of patients from the discomfort associated with colonoscopy while also alleviating the shortage of clinical physician resources.

In January 2021, prior to the listing of New Horizon Health, China’s first colorectal cancer screening guideline“Guidelines for Colorectal Cancer Screening and Early Diagnosis and Treatment in China (2020, Beijing)”has already listed the non-invasive multi-target fecal FIT-DNA testing technology (i.e., the detection method used by Changweiqing) as one of the important means for early screening of colorectal cancer. Subsequently, in April 2021, the multi-target fecal FIT-DNA testing technology was included for the first time in"CSCO Guidelines for the Diagnosis and Treatment of Colorectal Cancer (2021)"。

The consecutive inclusion in two landmark guidelines has significantly bridged the gap between New Horizon Health and clinicians., paving the way for the promotion of its products. Therefore, after Changweiqing received approval, New Horizon Health rapidly expanded its sales team. In the first half of 2021, the company’s marketing team grew by 137% within six months, reaching 270 members, and aggressively expanded its presence in major hospitals.

As the team expands rapidly, training its core personnel in the process, New Horizon Health is well aware that it would be no easy feat for its gradually maturing sales force to comprehensively cover the domestic hospital market. Beyond hospitals, internet healthcare, health check-up centers, and the consumer (C-end) market are all accessible arenas for Colotect, representing key channels in New Horizon Health’s strategic expansion. Although Colotect enjoys a significant first-mover advantage over other products using the same technological pathway, it is precisely for this reason that New Horizon Health must seize the current window of opportunity, integrate resources, and promote its product more extensively.

This is precisely what New Horizon Health has been focusing on over the past six months: identifying the most suitable partners in different markets to build comprehensive promotional support for its product portfolio.

Following the acquisition of the Class III medical device certification for Colotect, the most significant impact on New Horizon Health’s promotional strategy is that the company can now engage in direct face-to-face dialogues with physicians to demonstrate the clinical value of its product. For a single-cancer early screening product like Colotect, priced at nearly RMB 2,000, physicians hold substantial influence in helping price-sensitive consumers understand the product’s value. Whether a physician suspects precancerous lesions in a patient or the patient themselves has concerns about such conditions, Colotect serves as a valuable solution, acting as a refined screening step prior to colonoscopy.

Therefore, in promoting its products to clinicians, New Horizon Health partnered with AstraZeneca China, whose reach covers both the top-tier market and the county-level tumor market. On March 15, 2021, New Horizon Health and AstraZeneca China signed a strategic cooperation memorandum and a promotion agreement for Coloscreen®, launching an in-depth strategic partnership in the Chinese market. Under this collaboration, New Horizon Health’s team focuses primarily on market access, while AstraZeneca’s team concentrates on channel development, promotion, and clinical engagement, thereby complementing each other’s strengths. Leveraging what is arguably the most powerful field promotion team in China’s pharmaceutical industry, New Horizon Health has been able to rapidly penetrate every county and embed Coloscreen® into the practice of every gastroenterologist in hospitals across the country.

The health checkup sector is one of the channels that New Horizon Health has strategically cultivated for a long time. The approval of Coloscreen has made it easier to promote the product within this setting. In its previous series of analyses on early cancer screening, VCBeat repeatedly emphasized the importance of the health checkup channel for promoting early cancer screening products. Clearly, New Horizon Health recognized this earlier than we did.

Following product approval, New Horizon Health has maintained its influence in the health screening sector, achieving channel synergy with more screening institutions. In May 2021, it signed a strategic cooperation agreement with Zhongkang International to jointly promote Changweiqing. In the premium health screening segment, New Horizon Health entered into a strategic partnership with Mingliu Health in July 2021, comprehensively promoting New Horizon Health’s cancer early screening products and services across all institutions and platforms under the Mingliu Health Group.

With several collaborations successfully implemented, the name of New Horizon Health has permeated nearly all private health checkup institutions across China. Whether in the high-end or mass-market segments, New Horizon Health’s early cancer screening products are widely visible.

Within New Horizon Health’s market education matrix, the field team is tasked with educating physicians, while a broad network of partners supports health check-up users. To reach the remaining, more extensive high-risk population, the company relies on consumer-facing (C-end) traffic channels. Having been reshaped by the pandemic, internet healthcare has evolved into a major C-end traffic gateway. Meanwhile, internet healthcare platforms require products such as Colosure and Pupu Tube, which can be sold directly to consumers, to meet the needs of patients seeking consultations. The collaboration between New Horizon Health and internet healthcare platforms was thus a natural fit.

Thus, we have seen that in April, New Horizon Health and JD Health entered into a strategic partnership to comprehensively advance innovative healthcare services under the “Internet + Early Cancer Screening” model; subsequently, in early July, New Horizon Health signed a strategic cooperation agreement with Ping An Good Doctor, joining forces to promote the adoption and popularization of early cancer screening and to fully explore integrated healthcare services spanning cancer prevention, diagnosis, and treatment.

The internet has also made the vast grassroots market more accessible. Compared with large cities where medical resources are abundant, early screening holds greater value in counties and rural areas that suffer from a severe shortage of colonoscopy equipment, thereby effectively facilitating tiered diagnosis and treatment. In the latter half of July, New Horizon Health signed a cooperation agreement with Yunqueyi to jointly promote the adoption and popularization of early colorectal cancer screening at the grassroots level. In August, New Horizon Health entered into a partnership with China Post E-Commerce Co., Ltd., a subsidiary of China Post Group, to drive the promotion and penetration of its PooPoo Tube® and Colotect® products in township and rural areas, helping to bridge the “last mile” in intestinal health and cancer prevention screening.

Beyond collaborations in the professional sector, New Horizon Health has also made frequent appearances in mass media and retail channels.

For example, in April, during the 27th National Cancer Prevention and Control Publicity Week, New Horizon Health, in collaboration with the Colorectal Cancer Professional Committee of the China Anti-Cancer Association, held the inaugural New Horizon Health Brand Day event. Themed “Changing the Trajectory of Life,” the event featured seven top experts and speakers from academia, clinical practice, and industry, who shared their personal experiences in advancing early cancer screening and jointly promoted public awareness of the latest advances in colorectal cancer early screening.

In June, New Horizon Health partnered with Kuaishou Health and Xiaohe Health for the first time to launch the hashtag campaign #ColorectalHealth EarlyCancerScreening, mobilizing nearly 200 doctors and science communicators on the platforms to promote awareness of colorectal cancer prevention and control, thereby enhancing health risk awareness among high-risk populations. The total video views on the hashtag page #EarlyCancerScreeningOnKuaishou exceeded 86.8 million.

Moreover, consumers have responded positively and enthusiastically to New Horizon Health’s series of cancer prevention campaigns. The brand day event in April was livestreamed on platforms such as CCTV.com and the People’s Daily Health Client, garnering over 5 million online views. In June, videos under the hashtag “#EarlyCancerScreeningOnKuaishou” accumulated more than 86.8 million views. Furthermore, during the 2021 “618” shopping festival, Changweiqing achieved cumulative sales of over 5,000 units on JD.com, becoming the top-selling single product in the genetic testing category and ranking first on JD.com’s consumer healthcare chart on the day of the event.

Re-examining New Horizon Health’s collaborative strategy over the past six months from the aforementioned four dimensions, it becomes evident that the company has focused on a single objective: to disseminate the concept of early cancer screening more broadly and extensively. This core mission has been significantly amplified through its partners’ matrix-style layout.

New Horizon Health has placed significant emphasis on lower-tier markets in its selection of partners.Such as AstraZeneca’s primary care sales team, Zhongkang International’s extensive network of health examination centers, Yunqueyi’s influence in primary care diagnosis and treatment, and China Post E-commerce’s grassroots coverage capabilities. In its analysis of New Horizon Health’s 2020 annual report, VCBeat already put forward the view that the significant rise in sales of the “Pupu Tube” indicates that cancer prevention awareness among high-risk populations has gradually begun to awaken, although they remain on the sidelines regarding Changweiqing, which is relatively expensive.

This price-sensitive demographic is primarily distributed across primary-level markets, requiring a driving force to facilitate their consumption upgrade from the "Pupu Tube" to "ColoClear." Based on sales performance in the first half of 2021, New Horizon Health’s marketing initiatives have continued to influence awareness, understanding, and trial of early screening products among high-risk populations, with rapid diffusion. With the establishment of a comprehensive partner matrix, the consumption upgrade from "Pupu Tube" to "ColoClear" is imminent.

What has drawn our particular attention is that, alongside the release of its semi-annual report, New Horizon Health also announced a major strategic move. The former star of the primary market is now venturing into investment.

Official Text: New Horizon Health, a publicly listed company, contributed USD 30 million to establish the New Horizon Venture Capital Fund. The fund’s first phase of capital raising was completed on August 20, 2021. It focuses on investing in the field of molecular diagnostics to promote screening and early detection of cancer and other major diseases. In July 2021, New Horizon Health established an R&D partnership with Proteomedix, a Swiss biotechnology company specializing in prostate cancer screening and detection, and invested CHF 3 million in convertible bonds. In August 2021, New Horizon Health signed an asset acquisition agreement with Epigenomics (Frankfurt Prime Standard: ECX, OTCQX: EPGNY), a German molecular diagnostics company focused on colorectal cancer detection using blood samples.

New Horizon Health’s investment focus has expanded from its core competency in early cancer screening to the broader field of molecular diagnostics.The two investments disclosed this time, Proteomedix and Epigenomics, both cleverly overlap with the areas of expertise of New Horizon Health, while offering differentiated specific products.Epigenomics focuses on colorectal cancer detection, while Proteomedix concentrates on prostate cancer screening; these two areas—gastrointestinal tumors and urological tumors, respectively—are precisely the key focus areas of New Horizon Health. In terms of technological approach, both portfolio companies have opted for blood-based testing solutions, creating a clear differentiation from New Horizon Health’s flagship stool- and urine-based tests.

Based solely on current investment disclosure information, the products of these two portfolio companies have the potential to be introduced into China by New Horizon Health, thereby enriching its own product portfolio. Leveraging New Horizon Health’s established influence in the fields of gastrointestinal and urological oncology, these products could rapidly gain market access.

Through this intensified investment strategy, New Horizon Health has indeed passed on the torch of molecular diagnostic innovation, enabling innovative technologies to develop more smoothly with the support of industry pioneers, ultimately “changing the trajectory of lives.”