Sisram Medical Ltd, a Fosun Pharma-Backed Aesthetic Medical Device Company, Successfully Lists on HKEX Main Board

Group Photo of Fosun Group, Fosun Pharma, and Sisram Med Management at the Listing Ceremony

VCBeat (WeChat: vcbeat) has learned that on September 19, Sisram Medical Ltd. (“Sisram Med,” 1696.HK), a global leading supplier of laser-based aesthetic and medical devices, commenced trading on the Main Board of The Stock Exchange of Hong Kong Limited (the “HKEX”).

In 2013, Fosun Pharma (600196.SH, 2196.HK) established its subsidiary Sisram Med in Israel, primarily to prepare for the acquisition of the Israeli medical aesthetics device manufacturer Alma. In May of the same year, Fosun Pharma successfully acquired Alma through Sisram Med. Today, Sisram Med is the first listed company spun off from Fosun Pharma.

On September 5, Sisram Med released its prospectus. The IPO offered a total of 110 million shares, comprising 88 million new shares and 22 million selling shares. Of these, 11 million new shares (10%) were allocated to the Hong Kong public offering, while 99 million shares (90%) were allocated to the international offering. The offer price was set at the lower end of the indicative offer price range of HK$8.88 to HK$12.35, i.e., HK$8.88 per share, resulting in a post-listing market capitalization of HK$3.907 billion. If the over-allotment option is not exercised, the offered shares will account for 25% of the total share capital; if the over-allotment option is fully exercised, they will account for 27.71%. There were three cornerstone investors in this listing: Shanghai Free Trade Zone Fund, Shengtai Limited, and Newton Medical Aesthetics Group Limited.

On its first day of listing, the stock opened lower and continued to decline, closing at HK$8.12 today, down 8.56%, with trading volume reaching HK$330 million. The latest total market capitalization stands at HK$3.572 billion.

Sisram’s involvement in the field of non-invasive and minimally invasive devices. The global market size for non-invasive and minimally invasive medical aesthetic devices reached $8.4 billion in 2016 and is projected to reach $13.9 billion by 2021, representing a compound annual growth rate (CAGR) of 10.5%.

According to research data from Medical Insight, global direct sales revenue of energy-based medical aesthetic devices is projected to increase from USD 2.7 billion in 2016 to USD 4.4 billion in 2021, representing a compound annual growth rate (CAGR) of 10.4%.

The energy-based medical aesthetics device market was the largest segment of the medical aesthetics device industry in both 2014 and 2016, with revenues reaching $2.7 billion last year. It is projected to remain a rapidly growing segment through 2021, with significant industry growth anticipated in the coming years—a sector in which Sisram is actively engaged.

Based on 2016 sales revenue, Sisram ranked fifth among global medical aesthetics device suppliers. The top four—Cynosure, Inc., Zeltiq Aesthetics, Inc., Syneron Medical Ltd., and Lumenis Ltd.—have all undergone significant mergers and consolidations in recent years.

The industry is in a period of continuous M&A consolidation, which will further intensify competition. This may be one of the reasons why Fosun Pharma intends to spin off Sisram for financing.

Following Sisram’s listing, Fosun Pharma held an indirect stake of approximately 52.96% (through its wholly-owned subsidiaries Fosun Industrial, Nengyue, and CML), while Fosun’s fund management arm, Fosun-Prudential Fund, held a 22.04% stake through its wholly-owned subsidiary Magnificent View.

At the inception of Sisram, Nengyue Capital invested USD 44.42 million, CML invested USD 53.5 million, and the Magnificent View Fund invested USD 50 million, totaling USD 148 million (approximately HKD 1.156 billion). In the acquisition of Alma Lasers, a consideration of USD 222 million (approximately HKD 1.734 billion) was paid to acquire a 95.2% equity stake in Alma. Sisram initially functioned essentially as a shell company; following the acquisition of Alma Lasers, its asset base gradually expanded. As the company’s core subsidiary, Alma has contributed cumulative profits of USD 64.3 million to the group over the past three years.

Sisram Med’s portfolio of aesthetic medical products primarily consists of non-invasive and minimally invasive aesthetic treatments. Non-invasive aesthetic procedures refer to treatments that do not involve surgical incisions, including hair removal, skin rejuvenation, skin brightening, vascular and pigmented lesion treatment, tattoo removal, acne treatment, fat reduction, body contouring, and skin tightening. Minimally invasive aesthetic procedures mainly include intimate aesthetic treatments, laser sebaceous gland therapy, varicose vein treatment, and hyperhidrosis management.

According to data from Medical Insight, Sisram Med was the largest supplier of energy-based medical aesthetic devices in the Chinese market in terms of 2016 revenue. It also ranks among the top players globally in the energy-based medical aesthetic device market and currently sells its products in 80 countries and regions worldwide.

Sisram Med’s primary asset is Alma Lasers, which it acquired in 2013. Since launching its first commercial product in 2002, Alma has cumulatively sold 27,300 console units and 118,000 application handpieces.

Sisram’s product portfolio is clearly defined, primarily comprising four major series: 1) the Soprano series for hair removal; 2) the Harmony series, a versatile multi-application platform approved by the FDA for up to 65 indications; 3) the Accent series for body contouring and skin tightening in medical aesthetics; and 4) the FemiLift series, a minimally invasive medical aesthetic line designed for female intimate rejuvenation.

Sisram’s business model is straightforward, centered on the sale of non-invasive and minimally invasive medical aesthetic products, as well as the provision of services and other offerings. In 2016, Sisram recorded revenues of $118 million, a year-on-year increase of 7%, primarily driven by revenue growth in its minimally invasive medical aesthetics line, although sales in its lifestyle beauty product line declined. In Q1 2017, it recorded revenues of $32.6 million. Profit for 2016 amounted to $8.5 million, remaining essentially flat compared with 2015 and accounting for 7.2% of total revenues; in Q1 2017, profit was $5.1 million, representing 15.5% of total revenues. Net profit for 2016 reached $20.4 million, up 22.9% year on year and accounting for 17.2% of revenues for the same period; in Q1 2017, net profit was $7.1 million, representing 21.9% of revenues for the same period.

As a supplier of medical aesthetic devices, our sales model is straightforward, comprising two channels: direct sales and distribution. In the United States, Canada, Germany, Austria, and India, we primarily sell directly to medical aesthetic institutions. In other regions worldwide, we mainly sell to distributors, who then resell to medical aesthetic institutions. As of the end of 2016, total revenue was derived as follows: 26.2% from North America, 27.7% from Europe, 21.8% from China, 11.4% from the Asia-Pacific region (excluding China), 7.6% from Latin America, and 5.3% from the Middle East and Africa.

Sisram’s revenue is primarily derived from distributors, while the proportion of revenue from direct sales customers has been gradually increasing. This indicates that alongside rising selling prices, gross profit margins are also expanding, thereby exerting a highly positive impact on overall revenue. Additionally, the company is progressively shifting its product portfolio toward higher-margin products, such as FemiLift. 

Mr. Liu Yi, Chairman and Executive Director of Sisram Med (first from left), and Mr. Lior M Dayan, Chief Executive Officer (first from right), struck the gong to mark the market opening.

At the listing ceremony, Mr. Guo Guangchang, Executive Director and Chairman of Fosun Group, stated, “We are honored to collaborate with outstanding Israeli technology enterprises and successfully achieve a listing on the Main Board of the Hong Kong Stock Exchange. Sisram Med closely follows market demands and maintains a customer-centric approach, boasting strong R&D capabilities that align with Fosun Group’s strategic direction. We believe that following its listing, Sisram Med will benefit from greater operational transparency, which will further facilitate the development of its business in China. The cooperation between the Chinese and Israeli economies exhibits strong complementarity. Guided by the Belt and Road Initiative, we hope Sisram Med will become a model for future China-Israel collaboration.”

Mr. Chen Qiyu, Co-President of Fosun Group and Chairman of Fosun Pharma, stated, “As the first Israeli company to list in Hong Kong, Sisram Med will undergo a period of investor and market recognition. As a major shareholder, we are optimistic about the industry prospects, sustainable R&D advantages, and profitability of Sisram Med, and we are confident in its future development.”

Mr. Liu Yi, Chairman and Executive Director of Sisram Med, stated at the listing ceremony: “Today marks a significant milestone for the Company. Our official listing signifies our successful entry into the international capital markets. Sisram Med aims to become the world’s largest supplier of laser-based medical aesthetic devices. We boast a robust technology platform and a comprehensive, diversified product portfolio, which have earned positive recognition from industry experts as well as numerous awards and honors. Moving forward, we will continue to strengthen our R&D capabilities to drive the development of more innovative products, thereby meeting the ever-evolving demands of the market. Meanwhile, we will strive to further increase our market share, particularly by leveraging the cooperation and support of our parent company, Fosun Pharma, to maintain our position as the leading supplier in the Chinese market.”

References:

The First Israeli Company Listed on the HKEX: How Beautiful Is Sisram (1696.HK) in the Aesthetic Medicine Industry?