Strategic Expansion in High-Value Consumables: What’s This Orthopedic Leader Planning?

High-value orthopedic implant consumables represent one of the most significant markets within China’s medical device industry. In 2019, sales revenue in China’s orthopedic implant medical device market reached RMB 30.8 billion, with a compound annual growth rate (CAGR) of 17.3% from 2015 to 2019. Meanwhile, the orthopedic sector is highly competitive, with numerous market participants. According to relevant reports by Biaodian Information, there are currently approximately 370 manufacturers in China’s orthopedic medical device market, including about 270 domestic enterprises.

In this fiercely competitive arena, Double Medical has distinguished itself through its robust capabilities, emerging as one of the leading enterprises in the field of orthopedic implant medical consumables.Among domestic brands, it ranks first in market share for orthopedic trauma implant consumables and among the top three for orthopedic spinal implant consumables.According to Double Medical's financial report, its operating revenue in 2020 was RMB 1.58 billion, representing a year-on-year increase of 26.21%.

In fact, in addition to its core business of orthopedic implant consumables, Double Medical has been cultivating new growth drivers across general surgery since 2013, expanding into high-value medical consumable segments such as craniomaxillofacial surgery, general surgery, minimally invasive surgery, and dentistry. Currently, minimally invasive surgical products have become Double Medical’s fastest-growing business segment; in the dental field, Double Medical’s dental implant system obtained Class III medical device registration certification in 2019.

Double Medical Technology Inc. was established in 2004. Over the past two decades, Double Medical has achieved the largest market share in its niche segment within a market once nearly monopolized by imports. New circumstances bring new challenges. As volume-based procurement (VBP) for high-value orthopedic consumables draws nearer, it will inevitably accelerate industry consolidation, making competition in the orthopedic sector more comprehensive. Standing among the industry’s top tier, how can Double Medical break through? How will it seize new opportunities? VCBeat (WeChat ID: vcbeat) conducted an exclusive interview with Lin Zhixiong, Chairman of Double Medical.

During Double Medical’s growth trajectory, several strategic decisions determined its current position as an industry leader. Lin Zhixiong’s pioneering choices consistently diverged from the prevailing business models of orthopedic companies in the market at that time. The first such decision occurred at the company’s inception, when Lin chose to break away from the then-dominant pattern of Chinese-made orthopedic consumables relying primarily on imitation, opting instead for a path of independent technological innovation. This pivotal decision provided Double Medical with the opportunity to overtake competitors among domestic high-value orthopedic consumables, resulting in a strong upward growth trajectory.

Double Medical was founded in 2004. The year before, Lin Zhixiong was admitted to the doctoral program at the Orthopedics Research Laboratory of Chiba University, a national university in Japan. In the early 21st century, it was quite unusual for doctors in China to start their own businesses. Drawing on years of clinical practice and enhanced professional expertise and broader perspectives gained through advanced studies in Japan, Lin Zhixiong decided to carve out his own path. He stated, “As an orthopedic surgeon, I frequently interacted with these products and recognized the market potential. During my advanced training, my mentor’s experience revealed to me the opportunity to commercialize physicians’ ideas. Meanwhile, my in-depth involvement in production familiarized me with the manufacturing processes and workflows of orthopedic implants. At that time, I felt confident that I could accomplish this.”

After deciding to start a business, the first thing Lin Zhixiong did in 2004 was to conduct research on China’s orthopedic industry chain. At that time, there were already several orthopedic implant manufacturers in China, all of which were concentrated in Changzhou, where talent specializing in high-value orthopedic consumables was also clustered.

After visiting several companies in succession, he found that while the orthopedic implant market was not short of participants, it consistently lacked players with professional innovation capabilities. Domestic orthopedic companies had weak technical strength and their products were relatively crude. At the time, practitioners in the orthopedic field were aware of the rapidly growing market for high-value orthopedic consumables in China, but they lacked sufficient professionalism.

Lin Zhixiong stated to VCBeat, “If you had the opportunity to observe the state of China’s orthopedic industry during that period, you would find that the sector was highly disordered. It was impossible to determine which company had the potential to emerge as the industry leader, as the entire industry was still in its nascent stage. Double Medical has the opportunity to become a specialized force in domestically produced orthopedic solutions.”

During his tenure as an orthopedic surgeon, Lin Zhixiong specialized in joint and sports medicine; when launching his venture, he chose to focus on trauma-related implantable consumables.

By choosing to enter the market through trauma implants, Lin Zhixiong’s primary consideration was market size. At that time, China’s trauma implant market was the largest, while the joint and spinal markets had not yet matured. Secondly, Lin observed that in the United States, the trauma sector exhibited high market concentration, with Johnson & Johnson holding over 50% market share, reaching as high as 70% at its peak. In contrast, even the leading companies in the spinal and joint sectors struggled to exceed a 30% market share. By focusing on trauma implants, Double Medical aimed from the outset to become an R&D-driven orthopedic high-value consumables company with international competitiveness.

In the early days of Double Medical’s founding, the company focused on only one thing: R&D.

At that time, the industry landscape was characterized by a scarcity of domestic brands engaging in independent research and development (R&D). The high barriers, long cycles, and substantial investments required for independent R&D meant that few companies possessed robust R&D and design capabilities. On the other hand, doctors and patients in China needed products better suited to the Chinese population. However, Chinese orthopedic surgeons still lacked sufficient influence in the design and R&D of implants and surgical instruments. Meanwhile, the persistently high prices of imported products placed a significant financial burden on patients.

Against this industrial backdrop, Double Medical Technology has chosen to forgo the traditional path of imitation and instead pursue independent research and development. Lin Zhixiong stated, “The defining characteristic of trauma products is their extensive variety. Product design extends beyond individual screws or plates; each product is accompanied by its own set of instruments. The use of these instruments is closely tied to surgical techniques, and their design requires a thorough understanding of surgical procedures. While some domestic products may superficially mimic imported counterparts, they often reflect an inadequate comprehension of many such products.”

After four years of dedicated research and development, Double Medical’s products finally obtained registration certificates and were officially launched in 2008. Demonstrating unwavering commitment, Double Medical has consistently adhered to the development philosophy of independent research and technological innovation.In 2020, Double Medical Technology invested RMB 128 million in research and development (R&D), representing a 27.5% year-on-year increase. Both the total R&D expenditure and the R&D intensity ranked among the top of domestically listed orthopedic companies.

For Lin Zhixiong, the most difficult part was not the initial investment, but the market challenges that would arise after the product’s launch.

After the product launch, how to penetrate the market has become a major challenge for Double Medical.

Lin Zhixiong recalled, “When we first started out in 2008, we faced certain challenges. The orthopedics industry already had numerous established brands, and Double Medical, headquartered in Xiamen, did not enjoy significant geographical advantages. To build the Double Medical brand, we chose to carve out a unique path.”

Lin Zhixiong still recalls a pivotal moment in 2009, when the National Orthopedic Annual Conference was held in Xiamen. Breaking away from the common practice of domestic companies showcasing generic products, Double Medical exhibited more than ten innovative products, immediately capturing the attention of physicians. Since then, Double Medical has launched new products every year, continuously strengthening its market presence and brand recognition.Lin Zhixiong told employees that existing products on the market need not be exhibited; only our innovative products should be showcased.

By adhering to the strategy of highlighting innovative products until around 2014, Double Medical gradually established a strong market reputation for its robust innovation capabilities.

In terms of product positioning, Double Medical Technology has chosen to focus on innovation, while in terms of market positioning, it has adopted a strategy of first penetrating lower-tier markets to gain market access.

Lin Zhixiong stated bluntly, “We first entered primary-care hospitals, such as county-level hospitals and township health centers, to help physicians at these facilities develop their professional capabilities. We then expanded our presence to tertiary hospitals.”

After 2011, Double Medical appointed Luo Jiong, the former General Manager for China at a global giant in high-value orthopedic consumables.

What impressed Luo Jiong most about joining Double Medical was seeing its potential to become a specialized orthopedic implant company. Having professional managers from leading multinational corporations in this field oversee channel operations undoubtedly played a significant role in enhancing Double Medical’s influence in first- and second-tier cities.

With product quality benchmarked against top international brands, a comprehensive sales network, extensive clinical education initiatives, and an excellent management team, Double Medical has steadily expanded its market presence and captured market share from imported brands. Currently, Double Medical’s products are available in more than 5,000 hospitals across China, including over 1,100 Grade III Class A hospitals, accounting for more than 80% of all such hospitals nationwide.

Through continuous growth, Double Medical has emerged as the leading domestic orthopedic company, ranking first among Chinese brands in trauma implant consumables and within the top three in spinal implant consumables. Double Medical holds the largest number of Class III medical device registration certificates among orthopedic enterprises and is one of the few companies in the industry to offer full product line coverage in the field of orthopedic implant consumables.

Over the nearly two decades since its founding, Lin Zhixiong has led Double Medical from a startup conducting R&D in a single room to becoming a leading orthopedic company in China. Lin Zhixiong, Chairman of Double Medical, has navigated challenges across two distinct phases. The first phase occurred around 2013, when he faced the significant challenge of domestic orthopedic brands being weak and seemingly unable to compete against foreign giants. Through its performance, Double Medical has proven in this first phase that imported brands are not insurmountable.

The second phase is the present; how to lead Double Medical Technology to achieve a leap forward and become a world-class comprehensive supplier of high-value medical consumables has become his most pressing priority.

Regarding the challenges of the second phase, Double Medical has already developed a strategic framework, formulating a “Four-Modernizations” development strategy:Specialization—Specializing in medical products, aiming exclusively for the top three in the industry, and consolidating its leading position in the niche markets of trauma care, spinal surgery, minimally invasive surgery, and neurosurgery;Diversification—Achieve product diversification within the medical sector, establish ourselves as a comprehensive supplier of high-value medical materials, and vigorously develop products suitable for joint surgery, general surgery, maxillofacial surgery, and dentistry;Internationalization— Internationalization development strategy, with product R&D and sales all oriented toward the international market;Innovation——Product R&D and corporate development are grounded in innovation, with a commitment to launching innovative medical products and adhering to an innovation-driven growth strategy.

In consolidating its existing advantages, Double Medical will continue to focus on high-end products in the trauma and spine categories, thereby increasing its penetration rate in the high-end market for high-value medical consumables at tertiary hospitals. Double Medical has completed the research, development, and upgrading of its original product lines.

Joint implant consumables and sports medicine products are also key focus areas for Double Medical. Artificial joints represent the fastest-growing segment within the domestic orthopedic implant market, holding substantial market potential. In 2019, the market size for joint implant devices in China was RMB 8.6 billion, and it is projected to reach approximately RMB 18.7 billion by 2024, representing a compound annual growth rate (CAGR) of about 16.87% from 2019 to 2024. Meanwhile, the market share of domestically produced artificial joints remains relatively low.

In the joint sector, Double Medical’s hip and knee prostheses have obtained regulatory approval, making joint implant consumables another major business pillar alongside its trauma and spine product lines. In line with its strategic layout, Double Medical will continue to leverage its competitive advantages—honed over many years of deep engagement in the orthopedic industry—in product R&D, marketing and service networks, and comprehensive brand strength. By closely aligning with market trends, the company is committed to increasing the market share of its joint implant consumables.

Sports medicine is the fastest-growing segment within China’s orthopedic market, yet it remains a market where domestically produced products account for less than 2% of the share. Currently, Double Medical has obtained registration certificates for its non-absorbable suture anchors and button plate systems in the sports medicine category, marking the commencement of its long-term strategic layout in this field. The company expects to complete its full product portfolio within the next two to three years.

In terms of diversification strategy, dental care is a key focus of Double Medical’s layout. China’s dental implant market holds immense potential. South Korea has the highest penetration rate for dental implants, with approximately 500 procedures per 10,000 people; in contrast, China’s current penetration rate remains low, with fewer than 10 procedures per 10,000 people. Driven by an aging population and rising consumer spending, Haitong Securities predicts that the compound annual growth rate (CAGR) of China’s dental implant market will exceed 20% from 2017 to 2024.

Double Medical has obtained the registration certificate for its dental implant products and will aggressively expand into the dental implant market to enhance the market influence and share of its dental implant products. According to the announcement, Double Medical plans to raise RMB 1 billion through a private placement, with RMB 365 million allocated to the construction of a dental implant production line.

In terms of internationalization, Double Medical places significant emphasis on overseas markets, with the expansion of these markets personally overseen by General Manager Luo Jiong. Data disclosed in the 2019 annual report indicates that Double Medical’s products are exported to more than 50 countries and regions, including Australia, Switzerland, Russia, Ukraine, and Chile.

Lin Zhixiong also acknowledged that expanding into overseas markets has presented numerous challenges. Going global with high-value medical consumables is not a simple replication of the domestic model; competing in the global marketplace imposes higher-dimensional requirements on a company’s market responsiveness and product R&D capabilities. The orthopedics sector places stringent demands on distributor management, inventory optimization, and surgical instrument allocation. Implementing refined management across vast overseas markets remains a significant challenge, which Double Medical Technology continues to explore and strive to overcome.

Meanwhile, China’s orthopedic medical device industry remains at a lower-middle level of technological sophistication. A hallmark of medical R&D is that product design involves numerous cross-disciplinary technologies; in terms of integrating such multidisciplinary knowledge and supporting industrial innovation, there is still a notable gap between China and foreign countries.

Double Medical will also strengthen its overseas investments at appropriate times to enhance its global operational capabilities and provide external growth drivers for the company. Meanwhile, it is committed to further improving its investment decision-making mechanisms, risk management and control systems, and post-investment follow-up processes, thereby controlling investment risks and promoting the healthy development of its investment business. In addition, the company will continue to focus on forward-looking and innovative high-quality projects in the field of high-value consumables, exploring opportunities for investment, mergers and acquisitions, and incubation in areas such as orthopedic, surgical, dental, and IVD devices, as well as medical aesthetics.

Adhering to innovation and upholding quality have been the keys to Double Medical’s success over the years, a strategy that has stood the test of time. In recent years, policies such as volume-based procurement and the two-invoice system have demonstrated that innovation remains the only sustainable competitive barrier. While volume-based procurement may lead to significant price reductions for certain products, it cannot alter the fact that the orthopedic sector represents a market with over 3.5 million surgeries performed annually. Nor can it change the inevitability that China will produce world-class enterprises in the field of high-value orthopedic consumables.

For the orthopedics industry, the significance of volume-based procurement may lie in ushering in a new era of competition. Lin Zhixiong stated, “Competition in the orthopedics field will become more comprehensive.”