The leading company specialized in minimally invasive interventional medical devices for cardio-cerebrovascular and peripheral vascular diseases —LifeTech Scientific Corporation (the “Company”) and its subsidiaries (the “Group”) announced the audited consolidated results for the year ended 31 December 2020 (the “Reporting Period”).
Financial Review
During the Reporting Period, affected by the outbreak of COVID-19, certain non-emergency procedures were postponed and treatment demand was suppressed. As a result, the revenue of the Group recorded a decrease of approximately 4.0% to approximately RMB642.3 million. China is still our largest market, and the sales generated from the Chinese market accounted for approximately 83.9% of the Group’s revenue. During the reported period, the COVID-19 epidemic has been gradually contained in China. Therefore, the Company’s domestic sales gradually return to a normal level with an increase of 7.0% comparing to the Year of 2019. However, as the epidemic spreading in overseas, the revenue contribution from the overseas market decreased by approximately 37.4%, comparing to the Year of 2019.
During the Reporting Period, the performance of the Group’s three core business segments shown as below:
Peripheral Vascular Diseases Business
The major products of the Group’s Peripheral Vascular Diseases Business mainly include Thoracic Aortic Aneurysm Stent Graft, Abdominal Aortic Aneurysm Stent Graft and Vena Cava Filter. During the Reporting Period, the business segment increased by approximately 10.4% to about RMB411.3 million, among it, the sales of Stent Grafts achieved a growth of approximately 17.3%. While the sales of Vena Cava Filters decreased by approximately 3.9%, comparing with the corresponding period of last year.
Structural Heart Diseases Business
The Group’s Structural Heart Diseases business mainly includes the first domestic branded Left Atrial Appendage Closure (“LAAC”) device with CE Mark and NMPA approval, LAmbre™; and the three generations of Congenital Heart Defect Occluders, namely HeartR™, Cera™ and CeraFlex™. Due to the non-emergency characteristic of the diseases, the sales of Congenital Heart Defect Occluders and LAAC device suffered a greater challenge under the COIVD-19 outbreak. During the Reporting Period, the Structural Heart Diseases business contributed approximately RMB206.4 million with a decrease of approximately 24.8%. The revenue generated from the sales of HeartR™, Cera™ and CeraFlex™ decreased by approximately 37.2%, 17.3% and 30.7% respectively. The revenue generated from the sales of LAmbre™ LAA occluder represented a decrease of approximately 18.8%.
Cardiac Pacing and Electrophysiology Business
The core product of the Group's Cardiac Pacing and Electrophysiology business is HeartTone™ Implantable Cardiac Pacemaker. During the Reporting Period, the Group constantly supported and accelerated the tendering and hospital access process of the product in the Chinese market. The revenue contributed by the business segment was approximately RMB24.6 million, representing a growth of approximately 11.8%.
Operating Performance
During the Reporting Period, the gross profit of the Group decreased by approximately 4.1% to approximately RMB513.1 million. While the gross profit margin decreased by approximately 0.1p.p to approximately 79.9%. The operating profit up 40.1% to RMB264.5 million, and the net profit attributable to owners of the Company recorded about RMB216.1 million, representing an increase of approximately 67.3%. Besides, the basic EPS achieved RMB5.0 Cents, representing an increase of 61.3%.
Globalization and Innovation Development
In the Year of 2020, the Group actively responded to the changing and challenging environment. We continued to expand the international influence of the Group and its innovative products with holding various online and on-site borderless academic exchanges, training workshops and other academic activities. Currently, the sales of the Group has covered over 100 countries and regions all over the world, and we have set up subsidiaries and sales offices with local recruited sales and technical supporting team in core overseas markets, constantly promoting the localization process in overseas market.
During the Reporting Period, we have achieved breakthrough in North American market. LAmbre™ LAAC device and KONAR-MF™ Multi-functional Occluder and Ceraflex™ Congenital Heart Defect Occluder were successively implanted in the North America. In addition, LAmbre™ obtained approval by the US Food and Drug Administration (“FDA”) for the commencement of clinical trial initiated by researchers in the US, and the Group will charge a reasonable price for the devices, which will provide additional clinical data to support the market-entry process of the device in the US. It indicates that the Group has taken a greater step in the development of the internationalization.
Meanwhile, the Group constantly optimized resources allocation to promote the R&D and commercialization process of its innovative products. Currently, we have developed nearly 40 innovative pipeline products, covering cardio-cerebrovascular diseases, peripheral vascular diseases, neurological diseases, tumor and respiratory diseases and etc., of which nearly 20 have entered into different clinical stages. In January, 2021, our G-iliac™ Iliac Artery Bifurcation Stent Graft System obtained official registration approval from the NMPA. G-iliac™ is the first internal iliac artery reconstruction device independently developed in China to obtain registration approval, which is an exclusive product in the China market; In addition, during the Reporting Period, Fustar™ mini Steerable catheter, FiQure™ Vena Cava Filter Retrieval System and ZoeTrack™ Guidewire and etc. also obtained the official registration approval from the NMPA; Futhrough™ Endovascular Needle System, which is the relevant products of our Artery Stent Graft System (Chimney Technology), obtained the official registration approval in Europe.
Four innovative products of the Group, including IBS Angel™ Iron Bioresorbable Scaffold System, IBS Titan™ Sirolimus-Eluting Iron Bioresorbable Peripheral Scaffold System, Artery Stent Graft System (Chimney Technology) and Futhrough™ Endovascular Needle System, were approved as innovative medical devices in China. At present, thirteen products of the Company have been approved as innovative medical devices by the NMPA and it could effectively optimize the registration process and facilitate the commercialization for the innovative medical devices domestically.
Moreover, the follow-up results initially proved the safety and effectiveness of the IBS™ Sirolimus-Eluting Iron Bioresorbable Coronary Scaffold: the six-month follow-up results showed that the IBS had begun to degrade and the blood vessel lumina of the patients were open. And the two-year follow-up results showed good vessel lumen of the patients with most of the scaffold struts had been degraded. Moreover, the IBS Titan™ Sirolimus-Eluting Iron Bioresorbable Peripheral Scaffold to treat inferior knee artery occlusion was successfully implemented in the human body.
The Group regards innovation as its internal core driving force, it adheres to a rigorous intellectual property management for the product within its whole lifecycle. As at 31 December 2020, the Group had filed a total of 1,306 patent applications, of which 434 were registered. During the year ended 31 December 2020, the Group had filed 232 patent applications while 152 patents were registered.
Future Prospect
Facing the challenges from the epidemic outbreak, the healthcare industry attracts a great attention. Meanwhile, the market demand arising from the aging of population, urbanization and the increase of health awareness of the public is the force driving the steady growth of the industry. We believe we will continue to benefit from it with our strong innovative capability in medical devices industry as well as the extensive global network coverage.
Looking forward, we will continuously devote ourselves into the improvement of technology, automation and product quality. We will strive to enhance our innovation capability and standard, continue optimizing the production and sales model, and constantly solidify and strengthen our global market share and brand influence. In addition, we will continue to evaluate and explore investment and corporation opportunities with great market potential in the global healthcare industry. It will efficiently expand our business scope with the integration of internal and external advantages resources, further deepening the globalization layout of the Group. While we will actively promoting the overseas localization development, ultimately realize the Company’s strategic target in the global health industry, creating a better value for doctors, patients, shareholders and all relevant parties in the society.
