Hocer Medical Advances Domestic Substitution with Proprietary Ultrasonic Surgical Devices in Minimally Invasive Surgery

According to data from the National Bureau of Statistics, the number of hospital admissions in China reached 254 million in 2018, with the number of surgical procedures performed on inpatients at medical and health institutions totaling 61.7158 million. Over the past decade, the volume of surgical procedures has continued to grow steadily, which will directly drive the development of companies specializing in various types of surgical instruments within the medical device industry.

Shengang Securities also pointed out in its recently released “In-Depth Report on the Medical Device Industry: Strong Growth Persists, with Technology and Channels Determining Success,” that “there remains significant room for growth in mid-to-high-end healthcare consumption in China. In terms of basic medical resource allocation, China still has considerable scope for improvement compared to major countries worldwide. Furthermore, there is substantial potential for expanding the deployment of mid-to-high-end clinical diagnostic and therapeutic equipment. The ratio of pharmaceuticals to medical devices in China is far above the global average. As the model of ‘supporting hospitals through drug sales’ is phased out, the proportion of income derived from physicians’ technical services will continue to rise, and medical devices, as the direct carriers of such technical services, will be core beneficiaries.” It is evident that within the medical device sector, surgical instruments present notable opportunities for development.

Hocer Medical is a company dedicated to minimally invasive surgical instruments. Their products are mainlyUltrasonic Surgical Scalpel for Open or Minimally Invasive Surgery. According to Shi Wenyong, CEO of Hocer Medical, the field of minimally invasive surgical instruments is a potential gold mine yet to be fully exploited.

China still lags significantly behind foreign countries in the field of medical devices, particularly high-end ones. However, with the rise of the trend toward domestic substitution, a large number of Chinese medical device companies have emerged to address the shortcomings in this sector. Hocer Medical entered the field of ultrasonic surgical instruments with this very mission in mind.

For Shi Wenyong, Chairman of Hocer Medical, this market is far from unfamiliar. Holding a postdoctoral degree from Tsinghua University, heFocused on the research of ultrasonic surgical products since my academic years.His doctoral dissertation further focused on this subject. As early as 1998, he and his supervisor undertook a project under the National High-Tech R&D Program (863 Program) to develop domestically produced ultrasonic surgical products as substitutes for imports. Upon completion of the project’s research outcomes, they established their own company. This initial venture revealed to him the broad application prospects in the field of ultrasonic surgical products.

For Shi Wenyong, his second entrepreneurial venture was considerably easier. During his first startup, the supporting infrastructure was inadequate, with supply chains in mechanical processing, electronic technology, and materials being particularly weak. Today, such concerns are no longer an issue. Both raw materials and outsourced processing can be sourced domestically within China.Localized solutions have further reduced corporate operating costs.This entrepreneurial venture gave rise to Hocer Medical. As Shi Wenyong was abroad, Hocer Medical, established in 2010, did not commence operations until his return to China in 2014. He was involved in every stage, from early-stage product development and the establishment of production systems to the subsequent construction of manufacturing facilities.Received CFDA (now NMPA) certification in 2017Subsequently, the pace of advancement accelerated. In 2018, the company began to steadily promote sales through both domestic and international channels, gaining acceptance and recognition from hospitals within the industry.

After achieving a certain level of development, to better facilitate the company's operations, Hocer MedicalIt has also recruited a group of senior industry professionals, all of whom have work experience at Fortune 500 companies., thereby alleviating concerns for Hocer Medical's development.

In the interview, Shi Wenyong reminded us more than once that Hocer Medical is not merely manufacturing ultrasonic scalpel devices, but is instead attempting toBecome a Minimally Invasive Surgical Instrument Platform Company. In the field of minimally invasive surgical instruments, there are also products such as staplers and trocars. However, given the larger market share of ultrasonic scalpels, Hocer Medical’s current focus remains on ultrasonic scalpels, covering both ultrasonic scalpel devices and consumables. Hocer MedicalThe plan is to further extend and expand into minimally invasive surgical instruments and high-value consumable products in the later stages.

Currently, Hocer Medical offers the USG10 Ultrasonic Hemostatic Scalpel, ultrasonic cutting and hemostatic blades such as the USE23, USE14, and USE36, and the HP25 handle for ultrasonic cutting and hemostatic scalpels.and plans to launch the USG20 ultrasonic scalpel and the USS scissor-type handpiece to meet the needs of different departments.

For Hocer Medical,The Advantages of Ultrasonic Scalpel Are Very Obvious. In the history of surgical instruments, early steel scalpels, although sharp, required gauze, sutures, and other materials to achieve hemostasis. Furthermore, they could only be used in open surgeries, resulting in significant surgical trauma. Subsequently, high-frequency electrosurgical units were introduced, enabling intraoperative hemostasis. However, the excessively high temperatures generated by these devices easily caused tissue burns, leading to postoperative infections and other complications. After more than a century of widespread use of high-frequency electrosurgery, the ultrasonic scalpel emerged. By utilizing acoustic energy to perform surgical procedures, it offers the advantages of lower operating temperatures and cleaner surgical fields.Smoke-free, non-charring, and superior hemostatic efficacy, making the ultrasonic scalpel an ideal surgical instrument for surgeons. Foreign companies have been present in the Chinese market for over two decades, rendering the ultrasonic scalpel a relatively mature tool.

Hocer Medical’s ultrasonic surgical devices are used in many large tertiary hospitals, achieving near-nationwide coverage across China, with the exception of the Tibet Autonomous Region, Xinjiang Uygur Autonomous Region, and Qinghai Province. Overseas, it has obtainedCE MarkingSubsequently, it has also established collaborations with some leading hospitals in European countries. They expected to obtain FDA certification in 2022. In fact, some secondary Class A hospitals and primary care hospitals have also adopted Hocer Medical’s equipment, butSales focus remains on Grade 3A hospitals.. To a large extent, the emphasis on Tier 3A hospitals stems from national medical insurance cost-containment policies that encourage the substitution of imported products with domestically produced ones. However, the fact that these domestic products meet quality standards is also a key reason why Tier 3A hospitals choose them.

Regarding the company’s competitive advantages, Shi Wenyong highlighted two key aspects. First, grounded in his long-term research and deep academic expertise, the company’s products significantly surpass those of competitors in terms of quality and technological sophistication. Second, the team possesses strong sales and management capabilities. Shi Wenyong believes these factors have enabled the rapid market launch of its products following the acquisition of regulatory approval.

Shi Wenyong has a very clear understanding of the domestic market. In the field of ultrasonic scalpels, Johnson & Johnson basically occupies 80% of the market share, holding an absolute monopoly position. Coupled with other imported ultrasonic scalpel companies,Domestic enterprises account for less than 10% of the market share.. Currently, the domestic substitution rate remains very low, but there is significant room for future growth.

Shi Wenyong stated that Johnson & Johnson’s presence can be viewed dialectically. From another perspective, Johnson & Johnson has effectively promoted its ultrasonic scalpel in the Chinese market,Demonstrated the Utility of Ultrasonic Scalpels as Surgical Instruments to Hospital Physicians. On the other hand, Johnson & Johnson has also helped cultivate this market,Resolved the issues of usage and training for hospital physicians.. In the process of domestic substitution, leaving for Chinese companiesA greater obstacle is conceptual., it is necessary to address their lack of confidence in domestically produced medical devices.

Johnson & Johnson’s high-priced ultrasonic scalpel has led to its primary deployment in Grade A tertiary hospitals. Since these physicians are already experienced with ultrasonic scalpels, they readily accept domestically produced alternatives upon discovering that their performance is nearly comparable to Johnson & Johnson’s while offering a significantly lower price. To foster this positive cycle, Hocer Medical is intensifying its promotional efforts.

Shi Wenyong believes that the currentThe market size is approximately over RMB 2 billion., but it will continue to grow steadily in the future. This judgment is based on the expectation that, under the policy promoting domestic substitution, hospitals will increasingly adopt domestically produced equipment to replace imported devices. As perceptions shift, a virtuous cycle will emerge. Furthermore, while the use of ultrasonic scalpels has previously been concentrated mainly in abdominal surgery, other specialties such as thyroid and breast surgery, urology, and beyond are likely to embrace this technology in the future. Primary-care hospitals will also be more receptive to cost-effective ultrasonic scalpel devices. These factors will collectively contribute to the expansion of the overall market.

Hocer Medical believes that, compared with other medical devices and equipment, the pace of domestic substitution in the field of minimally invasive surgical instruments remains relatively slow.Currently, imports remain dominant, with domestically produced products playing a supplementary role, due to the relatively high technical barriers in this field.In terms of market expansion, it is also necessary to address the issues and pain points users encounter during product usage. Although the pace of domestic substitution remains slow, the industry as a whole is still an untapped gold mine, with relatively few domestic companies currently operating in this sector.

Hocer Medical has completed two rounds of financing and is currently undergoing its B+ round.This round of financing will be used for market expansion and product development.In terms of market expansion, the focus is primarily on customer training and product trials. Additionally, Hocer Medical aims to build a robust sales and R&D team to compete effectively with both domestic and international manufacturers. In the short term, Hocer Medical aspires to become the leading Chinese manufacturer of ultrasonic scalpels, while its long-term goal is to evolve into a platform company for minimally invasive surgical instruments. Consequently, subsequent product development will be a key area of focus. Hocer Medical is committed to steadily advancing the research, development, and introduction of new products while ensuring product quality.