ChenTai New Materials Completes Over RMB 100 Million Equity Financing to Break Import Monopoly in Hip Joint Ceramic Materials, WinX Capital as Exclusive Financial Advisor

Dec 16, 2024 09:33 CST Updated 09:33

Vivo Capital

Global Healthcare Investment Company

CICC Capital

Private Equity Investment Management Firm

TrendTec

Orthopedic Artificial Joint R&D and Manufacturer

VCBeat learned that,TrendTec (referred to as "TrendTec"), announced the completion of an equity financing round exceeding 100 million yuan. This round of financing was led by Vivo Capital, with participation from funds under CICC Capital Operation Co., Ltd., and WinX Capital serving as the exclusive financial advisor.This round of funding will be used for the construction of production lines and the iterative R&D of subsequent products.

TrendTec, formerly known as Suzhou TrendTec Medical Device Co., Ltd., was established in 2020 and is primarily dedicated to the research, development, production, and sales of ceramic materials for hip joints. Relying on the technical accumulation of over 30 years by two Tsinghua University doctoral graduates in Materials Science, TrendTec has completed the R&D and production of ceramic femoral heads and liners (the core components of hip joints), with product performance fully comparable to leading international companies. The company has been approved for the 2023 Ministry of Industry and Information Technology and National Medical Products Administration "Challenge Project," the 2023 Jiangsu Province Major Achievements Transformation Project, and has received titles and qualifications such as Jiangsu Province Double Innovation Talent, Double Innovation Doctor, Gusu Entrepreneurship Leading Talent, Suzhou New District Entrepreneurship Leading Talent, National Technology-based and Innovative Small and Medium-sized Enterprise.

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As a joint disease that typically reflects aging, the patient base in China continues to expand. To date, the annual number of hip surgeries in China has exceeded 700,000. However, even so, the hip implant rate in China is still less than one-third of that in the United States. Therefore, the projected number of hip implants is expected to continue growing rapidly as aging further progresses.

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After the introduction of the national volume-based procurement policy in 2022, ceramic hip joints became the dominant product in the market, with their market share surging to around 95%. However, in China, whether for imported or domestically produced manufacturers, the core components of the joints—ceramic femoral heads and liners—are all sourced from a foreign company. This company holds an absolute monopoly, possessing a 100% market share in China and occupying approximately 95% of the global market share. China's "ceramic hip joint prostheses" are entirely in a situation of being "strangled" by this company. The national volume-based procurement policy has significantly reduced the end-market price of joints, leading to substantial price cuts across all joint manufacturers. For Chinese joint manufacturers, the cost of importing ceramic femoral heads and liners from abroad already accounts for 50-70% of total production costs, placing them under immense cost pressure.

In response to this situation, the Ministry of Industry and Information Technology and the National Medical Products Administration jointly launched the "Open Challenge" initiative for innovative tasks in biomedical materials in 2023, supporting the research, development, and application of biomedical materials from multiple dimensions such as policy, financing, and commercialization. TrendTec, as the winning unit responsible for undertaking the bioceramics (powdered ceramics) project, fully demonstrates its strong R&D capabilities. The company owns more than thirty independent intellectual property rights, filling the gap in China's medical ceramic production field, breaking the monopoly of foreign enterprises, and accelerating import substitution.

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As of August 2024, TrendTec's powder ceramic materials have completed the main document registration with the NMPA (National Medical Products Administration), meeting the conditions for downstream manufacturers to register. TrendTec is also among the first batch of material manufacturers in China to complete the main document registration. In terms of pricing, due to fully localized production processes, the cost is less than 50% of similar products from foreign companies, offering a significant price advantage. TrendTec can provide downstream manufacturers with more cost-effective material products.

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In addition to powdered ceramics, TrendTec has developed a variety of innovative material products, committing to provide higher-quality upstream raw materials for more manufacturers. With the support of capital, TrendTec's development is expected to proceed more smoothly.

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Dr. Zhang Lin, Founder of TrendTecTrendTec is committed to providing China's medical product manufacturers with more competitive and cost-effective upstream medical ceramic materials. Currently, our medical ceramics (powdered ceramics) have gained recognition from multiple sectors of the market. In terms of core indicators, they meet or even surpass the standards set by imported products. We are grateful for the high recognition of TrendTec’s platform and products by Vivo Capital and the fund under CICC Capital Operation Co., Ltd., as well as for the long-term support from our existing shareholders. With this capital boost, we will rapidly enhance and optimize our production system, contributing our efforts towards achieving the nation’s strategic goals.

Shan Fu, Managing Partner of Vivo CapitalBiomedical materials industry is an important foundation supporting the development of innovative medical devices, and has often been a "bottleneck" in the development of medical devices in China. Dr. Zhang Lin and her team have achieved significant breakthroughs in the field of orthopedic medical ceramic materials through more than 20 years of technical accumulation, which will bring great value and impact to the development of global and Chinese medical ceramic materials and orthopedic industries. TrendTec's products help a wider range of patients access the most advanced products and reduce their medical burden; at the same time, they also achieve significant cost savings for the orthopedic medical device industry. Vivo Capital has long been optimistic about companies like TrendTec that have important social performance and commercial value and will firmly support the development of TrendTec.

Xu Zhongchao, Managing Director of CICC Capital Operation Co., Ltd.With the aggravation of aging in China's society and the improvement of medical technology, the volume of joint replacement surgeries continues to increase. At the same time, the national "volume-based procurement" policy for artificial joints has a significant impact on the restructuring of the industry landscape. The domestic substitution of ceramic femoral heads and liners has become an inevitable trend with considerable market potential. TrendTec has launched its proprietary artificial hip joint prosthesis products — zirconia-toughened alumina (ZTA) ceramic femoral heads and liners. These products can fill the domestic gap, rival global benchmarks in technology, and are expected to gradually break the long-term monopoly of foreign enterprises, becoming a more cost-effective choice for domestic and international joint manufacturers. CICC Capital Operation Co., Ltd. is optimistic about the development prospects of TrendTec and is willing to provide long-term support.

Founder of WinX Capital, Guowen ZouComment: WinX Capital has always been optimistic about the development of the medical materials industry. It has been proven that only by achieving quality control and cost control from the source can our patients receive better treatment at a lower price. On one hand, the centralized procurement in orthopedics has effectively reduced the medical burden for patients, but it has also caused some joint companies to lose their profit margins. TrendTec can very effectively solve this problem, truly creating more profit space for joint enterprises and restoring industry confidence for many joint companies, enabling them to develop more and better products for the benefit of the public. With the support of star investors this time, TrendTec is believed to accomplish this great mission even faster.

Vivo Capital

Vivo Capital, established in 1996, is a globally leading healthcare investment firm dedicated to strategic empowerment and resource integration through an ecosystem approach. Vivo Capital operates a multi-fund investment platform across venture capital, growth private equity, buyouts, and public markets, managing a total of 16 USD and RMB funds with assets under management reaching $7.5 billion. The firm has invested in over 420 companies globally. All fund strategies under Vivo Capital focus broadly on the healthcare sector, including biotechnology, pharmaceuticals, medical devices, and healthcare services, with a particular emphasis on the world's largest healthcare markets. Vivo Capital boasts a team of more than 70 professionals, with its headquarters in Palo Alto, California, and offices in Beijing, Shanghai, Hong Kong, Taipei, and Singapore.

CICC Capital

CICC Capital is the private equity investment fund business operation platform of China International Capital Corporation Limited (referred to as "CICC"), managing CICC's domestic and overseas private equity investment fund businesses, and has developed into one of China's leading private investment management institutions. Currently, the types of funds managed by CICC Capital cover RMB corporate equity investment funds, fund of funds, infrastructure funds, USD corporate equity investment funds, etc.

WinX Capital

WinX Capital is a leading investment bank in China's healthcare sector, headquartered in Beijing and Shanghai, covering over 3,000 active investment institutions and industry groups. It has been awarded "Top 1 Financial Advisor in the Healthcare Sector for 2022 and 2023" by First Sino Voice, "Top 2 Best Financial Advisor in the Healthcare Sector for 2021-2022" by Qimingpian & New Voice Venture Services, and "Top 100 Future Healthcare Financial Advisor for 2022-2024" by VCBeat, among many other honors.