Beijing's Emerging Unicorn XinYun Medical Secures New Funding to Tap into the $70B Chronic Pain Management Market

This is a joint column opened by Daotong Investment and Pencil.com to report on the unicorns of the new era. Daotong Investment, established in 2015, is a venture capital company focused on early-stage investments in the life sciences field.

Interview | Pencil News Zou Wei Song Ge

Pain is not only a physiological sensation, but also a complex experience shaped by emotions, memory, and the social environment. It is like a dark silence that isolates people on a lonely island.

Philosopher Nietzsche suffered from migraines, gastrointestinal diseases, and neuralgia for many years, being tormented by his body almost every day. He wrote in his notes: "Pain is my most faithful companion."

The struggle between humans and pain has almost spanned the entire history of civilization. From witchcraft, herbs, to opium, alcohol, and then to anesthetics and modern medicine. Humanity hopes to find a way to quickly and effectively suppress chronic pain.

It was not until the end of the 20th century that humanity began to explore an alternative approach: instead of continuing to search for more potent drugs, directly intervening in the nervous system itself. Spinal Cord Stimulation (SCS) is a product of this mindset. By placing electrodes within the spinal canal, it uses weak electrical pulses to interfere with pain signals, causing the brain to "misinterpret" messages from the body, thereby alleviating chronic pain that has long plagued patients.

New Cloud in BeijingMedicalEmerging in the SCS treatment field. Zhao Yun, the founder of the company, worked in a hospital for eight years. Based on his accumulated work experience, he keenly foresaw the future development of chronic pain management. In 2016, at a time when China was promoting the establishment of specialized pain management medical consortiums, he chose to enter the chronic pain treatment sector and gradually moved into niche areas such as closed-loop SCS, making New Cloud Medical one of the few companies in China focused on the research and development of innovative devices for chronic pain.

New Cloud Medical hopes to implant novel neuromodulation devices into patients through technological innovation, providing precise pain-relief stimulation around the clock, so that they no longer have to endure intractable pain such as postherpetic neuralgia for a long time.

"A well-known retired athlete, who had excellent conditions in all aspects, but was plagued by pain for a long time. The sports injuries left from a young age became more and more obvious as he aged. Later, he came to us and learned about a specialized discipline for pain diagnosis and treatment. After identifying the cause through diagnosis and implementing targeted treatment, the pain was quickly alleviated. He said he felt like he had regained the feeling of 20 years ago." Zhao Yun talked about the significance of pain treatment.

At the same time, chronic pain is not only an individual's plight but also a societal challenge. It was estimated that this issue imposed an annual economic burden of approximately $722.8 billion on the United States in 2021.

Healthcare systems around the world are increasingly emphasizing pain management. In China, the former Ministry of Health (now the National Health Commission) designated "pain departments" as a first-level clinical discipline as early as 2007, a move that has driven systematic development in major hospitals. Today, public tertiary hospitals generally have pain departments, with services covering conditions such as trigeminal neuralgia, post-herpetic neuralgia, cancer-related pain, and chronic lower back and leg pain. However, the industry still faces challenges such as insufficient patient awareness and limited treatment options. With the accelerating aging population, China sees an annual increase of approximately 10 to 20 million chronic pain patients, further intensifying this pressure.

Zhao Yun believed that in China, with the widespread establishment of pain departments, the coverage of medical insurance for diagnosis and treatment projects, and the strong demand from patients, there is a significant market gap. In the U.S. market, patients have a widespread understanding of pain treatment and are willing to pay for new products. The export of advanced SCS devices will usher in new opportunities.

By 2025, the global chronic pain treatment market will grow to 500 billion yuan.

Recently, New Cloud Medical completed its B+ round of financing, led by Daotong Investment, with follow-up investments from Taizhou Angel Fund, Qianfeng Investment, and others. Since its establishment, New Cloud Medical has completed a total of six rounds of financing.

The following is the essence of the dialogue between Pencil Path and Zhao Yun.

Statement: The interviewee has confirmed that the information in the article is accurate, and Pencil Dao is willing to endorse its content.

- 01 -PainPain Treatment: From Relying on Drugs to Relying on Devices

Pencil Road: Why did you start a business in the field of pain medicine?

Zhao Yun:I entered the hospital by chance, responsible for clinical pathway design and the introduction of overseas medical devices, and I have a good understanding of hospital operations.

Later, I collaborated with some pain management experts and was introduced to pain medicine. In 2016, the country was in the process of establishing a specialized pain management medical consortium, and I also participated, which was an important opportunity.

Pain not only affects sleep and mood, but also work and income, thereby impacting the overall quality of life for the entire family. Leaving it untreated for a long time may even lead to serious consequences. Pain is divided into acute and chronic; we focus on chronic pain—patients experiencing continuous or recurring pain for more than three months. Compared to chronic diseases like diabetes, the treatment outcomes for pain are more direct, and patients can more easily feel the effects.

Europe and the United States have made significant progress in this area, as they have high demands for quality of life and a low tolerance for pain. With the improvement of living standards in China, pain issues are also gradually gaining attention.

In the past, Europe and America relied on painkillers, which were highly addictive and had significant side effects. Later, they shifted towards minimally invasive or physical treatments, driving the development of related medical devices. In 2016, the United States estimated that the social burden caused by pain was as high as seven to eight hundred billion US dollars.

In China, statistics show that there are approximately 300 million patients with chronic pain. The earliest treatment may rely on medication. If ineffective, alternative methods such as acupuncture, massage, physical therapy, massage devices, and psychological therapy may be used. Beyond that, the focus shifts to our key areas: minimally invasive interventional surgeries and implantable devices, primarily involving neuromodulation.

Pencil Road: At that time, were there any relatively mature companies or teams in China?

Zhao Yun:There is a large gap. In the early days, when there was no pain department, patients might be diverted to departments such as orthopedics, neurosurgery, and rehabilitation. Most doctors in the pain department came from the anesthesia department, and the treatment plans were basically gathered from various departments. Therefore, for a long time, people did not think there was a market here. There were very few diagnoses or treatments, scientific research, and products.

Founder of New Cloud Medical, Zhao Yun

Pencil Road: What "pain relief" products do you have?

Zhao Yun:Our core product lines are mainly divided into two categories: minimally invasive interventional and active implantable devices.

Let's talk about minimally invasive interventions. A very common type of pain in clinical practice is spine-related pain, such as lumbar spinal stenosis. Minimally invasive intervention is an effective solution for this kind of condition.

The second category is active implantable products, namely neuromodulation devices. These are primarily aimed at neuropathic pain, such as post-herpetic neuralgia, diabetic neuropathy, phantom limb pain, and so on.

The department of pain medicine treats many patients, but its development time has been too short, lacking an exclusive ecosystem of medical devices. Orthopedics has orthopedic robots and various instruments, but the field of pain medicine has never had dedicated devices. This is precisely the gap we aim to address.

- 02 -Market Education in Pain Management

Pencil Road: As a startup, what is the difference from large factory products?

Zhao Yun:This is the key question. Many people will ask, since there are similar products in the industry, why do we need a new solution? The reason lies in the obvious limitations of traditional products.

Let me give you an example: After the electrode is implanted into the epidural space of the spinal cord, traditional systems provide a stimulation protocol with fixed parameters. It may work well and satisfy the patient in a stationary state. However, people need to move; once they walk or run, the position of the electrode will shift, causing overstimulation or insufficient stimulation, leading to abnormal sensations and reduced effectiveness. Worst of all, when coughing or squatting, the electrode may move, resulting in "stimulation dropout," which could lead to failure. Since pain persists 24 hours a day, this makes the effective rate (pain relief rate) of traditional solutions around 50%.

Our closed-loop system is designed to address this issue. It uses AI to collect spinal nerve signals in real time and adjusts the stimulation intensity and area within milliseconds. Patients can barely perceive it, yet they remain in an optimal state of pain relief.

According to existing literature data, the efficiency rate (pain relief rate) of the closed-loop system has increased from 50% to 80%, and in some cases, it can even reach 90%. It’s like autonomous driving: the system always stays on the optimal trajectory, automatically adjusting when deviations occur to avoid going "off track." Additionally, since our electrodes have 24 contacts, there are multiple combination possibilities, avoiding the tolerance issues associated with drugs.

AI Closed-loop Rechargeable Spinal Cord Stimulation System NewStim

Pencil Road: New Cloud Medical's popularity is not as high as Abbott and Medtronic. How to cultivate its advantages in the market?

Zhao Yun:This is where our late-mover advantage lies.

First, we collaborate with the pain departments of many well-known hospitals both in China and internationally, ensuring our products meet clinical needs.

Second, our product project has entered the Beijing Science and Technology Plan, as one of the few hardware innovation devices in the 2024 "AI + Health" special program.

Third, our products have independent intellectual property rights, and the key technologies are independently controllable.

Our R&D model – integrating research, academia, and training – is called the "Industry-Academia-Research-Medical Application" integrated innovation model. This way, even before the product hits the market, the medical community may already be well-acquainted with it. Future clinical trial results can also be quickly presented to the entire industry.

One more thing, innovative devices in China have a green channel. For example, after entering the Zhongguan Village Innovation Catalog, hospitals may give priority to these devices during their initial procurement. Additionally, such products are already included in the medical insurance reimbursement catalog, and we are upgrading their functions based on this catalog. You can think of it as an evolution from feature phones to smartphones—while maintaining existing pricing structures, the therapeutic effects might be better, which is conducive to clinical promotion.

Pencil Road: What is the current coverage in the market?

Zhao Yun:Our minimally invasive surgical instruments (PILD surgical instruments) have just entered the clinical stage, with a focus on covering top-tier hospitals. Basically, many of the top 10 hospitals in the Fudan Ranking (Editor's note: referring to the reputation ranking of pain management departments in Chinese hospitals) are our clinical cooperation units. We start by entering large tertiary hospitals so that the surgical methods and efficacy can be validated before gradually expanding to smaller hospitals. At the same time, we will organize academic conferences in various regions, mainly for training and surgical teaching, allowing more doctors to master this type of surgical procedure. The introduction of new surgical techniques in the pain department itself represents an enhancement in the department’s diagnostic and treatment capabilities.

Pencil Road: What market education still needs to be done in the field of pain treatment?

Zhao Yun:There is still a long way to go in terms of market education. However, the concept that "chronic pain is a disease and must be treated" is becoming widespread, with a promotional slogan on CCTV stating, "Enduring pain is not a virtue."

Changes are also taking place at the doctor level. In the past, pain management was often handled by anesthesiologists, who are most skilled at lumbar punctures—a key foundation for minimally invasive spinal surgery. All of our techniques are minimally invasive, without any open surgeries. The training threshold has been significantly lowered, and these skills can be mastered in a relatively short period.

The status of the pain department in hospitals is getting higher and higher. For example, in some hospitals, the pain department has the entire building as office resources, some have two wards and 92 beds, and some even have an independent pain department operating room.

Another aspect is the hospital revenue structure. The pain department can adapt to the DRG/DIP payment model, which is more conducive to its development. With the promotion of policies such as the tertiary hospital evaluation, the pain department has become a standard feature in many hospitals. In the current appointment system, many hospitals have pain clinics, and they are very detailed in categorization: low back and leg pain, cancer pain, trigeminal neuralgia, neck and shoulder pain, diabetic neuropathy, etc. These conditions almost cover pain throughout the entire body, offering a very broad range of application scenarios.

Pencil Road: What is the approximate cost of the treatment? Will there be situations where patients want to use it but can't afford it?

Zhao Yun:Our minimally invasive surgical instruments are basically not priced higher than existing similar surgical products. Our charges are also based on the latest clinical standards and economic conditions, so the pricing is reasonable and scientific.

The medical insurance also has a clear guideline price, fully covered within the range of the medical insurance guideline price, so there is basically no issue of "unaffordable" for minimally invasive surgical instruments. Compared with AI software products, the charging path for hardware products is relatively clear.

- 03 -New Opportunities in Pain Treatment

Pencil News: What New Opportunities Have Emerged in the Pain Treatment Sector by 2025?

Zhao Yun:Opportunities have always been there, but now they are clearer. First, the demand brought by the aging population, with an increase of 10 to 20 million new patients every year, represents a huge patient group.

Secondly, there is the choice of treatment methods. Many companies are already in the pharmaceutical track, so we chose the path of medical devices. Pain treatment remains a "practice-based science," meaning its efficacy is validated through clinical practice before the underlying mechanisms are inferred. Globally, the interpretation of spinal cord signals is still in its infancy and has yet to be fully explained.

Our company has added an extra layer to our development path: In addition to the common product iterations (R&D generation, clinical generation, and market launch generation), we have also introduced a "Mechanism Research Generation," hoping to drive the next generation of treatment solutions through more in-depth fundamental research.

The future of pain treatment will move towards personalization and long-term management. For example, AI models can help patients manage postoperative pain independently. Overseas, this is a chargeable service, so we are also planning international products, such as dual registration in China and the U.S. This will allow us to accumulate more data and further promote personalized treatment.

Looking ahead, we will not only upgrade our existing electrical stimulation technology but also explore various neuromodulation methods such as sound, light, and heat to launch entirely new products for different indications.

Pencil Road: How is the preparation for going overseas?

Zhao Yun:We are preparing to register in the United States. The overseas markets are mainly Europe and America, especially the United States.

Pencil Road: In the European and American markets, how to compete with large medical device enterprises?

Zhao Yun:First, intellectual property is not an issue, as we have passed the FTO (Freedom to Operate, which confirms that our product will not infringe on existing local patents). Second, what we are doing is not simple replication but entering new niche markets to provide differentiated and competitive products.

Overseas, two scenarios may arise: one is collaborating with large enterprises, and the other is that they explore new treatment methods based on our technical concepts, but direct replication is unlikely. Unlike the "competitive" logic in China, the U.S. market respects differentiation and localization more.

In addition, overseas promotion must be localized. In the future, we will establish a research and development team locally to create products that combine cultural and clinical needs. For them, this is actually a new job and option. When Chinese companies go abroad, cost-performance is naturally an advantage. Our price may not necessarily be low, but our product performance is better at the same price.

Currently, there is no Chinese company that has truly established a brand in the field of pain electrostimulation therapy overseas. If we are the first to go abroad, we have the opportunity to become one of the first-tier companies.

Pencil Road: What Help and Improvements Has Artificial Intelligence Brought to Pain Treatment?

Zhao Yun:For example, remote management. Our devices are implanted in the body, meaning patients will be closely tied to us for the next ten years or even longer. In the past, we had no way of knowing the real situation of patients after surgery, but AI has enabled real-time connectivity between us and the patients. Through the transmission of desensitized data, patients can have a better experience, and we can receive continuous feedback, allowing us to optimize our products constantly. In the past, iterations for this kind of implanted product were infrequent, but in the future, with AI learning and analyzing feedback, the iteration process will become much more efficient.

AI Makes Pain Management a Reality. Pain is a subjective experience, and in the past, it relied on patient ratings, such as the happy face or crying face scale. But for the same pain, some people might rate it as level three, while others might say level six—there’s a lot of subjectivity involved. Now, with AI, we can not only get patients' subjective feedback but also adjust it using objective data. Through large-scale data modeling and automated analysis, AI transforms this information into objective indicators, allowing doctors to make more accurate judgments and adjust treatment plans accordingly.

As the number of implants increases, the data becomes richer, and the treatment outcomes will improve progressively. This was unimaginable in the past.

Pencil Road: Can you share a story about pain?

Zhao Yun:There are many stories about pain. Two of them left the deepest impression on me.

The first is the Nobel Prize. In 2021, two American scientists were awarded the Nobel Prize for their research on pressure pain receptors and capsaicin receptors. What seems like an ordinary phenomenon of pain, when scientifically explained, becomes a Nobel-level breakthrough. This shows that in the mechanism of pain, every discovery has the potential to change the world.

The second is the patient's story. A retired well-known athlete, who had excellent conditions in all aspects, but was plagued by pain for a long time. The sports injuries left from his youth became more and more obvious as he aged. Later, he came to us and learned about a specialized discipline for diagnosing and treating pain. After confirming the cause through diagnosis and implementing targeted treatment, the pain was quickly relieved. He said he regained the feeling he had 20 years ago. This is the true value of pain treatment.

Some patients, due to pain, cannot sleep at night and dare not move their bodies. This is not only an individual issue but also has a significant impact on the entire family. Improvement in mental state is crucial for both patients and their families. Even those who have access to many high-quality medical resources may still find themselves trapped in a situation where pain remains unresolved.

This article does not constitute any investment advice.

       Title: Beijing's Future Unicorn New Cloud Medical Technology Co., Ltd. Explores 500 Billion Pain Treatment Market, Secures New Round of Financing