◆ In 2021, the capital activity of medical endoscopes reached its peak, and top companies in various sub sectors emerged

In the past two years (2021 and 2022), the financing frequency has significantly increased, and the total number of financing events is nearly twice the total of the four years from 2017 to 2020, and the total amount has increased to nearly three times. In addition, the single financing amount is relatively large, ranging from tens of millions to billions.

The field of reusable endoscopes and supporting medical devices started the earliest, with the financing round being the least advanced and the track maturity being relatively the highest. Established companies such as Medical and Mindray Medical have already completed their IPO. In the past three years, companies such as Kangji Medical, Haitai Xinguang, and Aohua Endoscopy have also joined the queue of listed companies。

In addition, companies in the industry that focus on the research and development of minimally invasive surgical medical devices in specific fields are also favored by capital, such as Sanofi, which focuses on minimally invasive surgery, and Yingzi Medical, which focuses on gynecological minimally invasive surgery, both have good financing performance。

Since its inception, disposable endoscopes have maintained a high ability to attract funds. After rapid development in recent years, the industry has also seen companies such as Ruipai Medical and Huaxin Medical with lower financing rounds, and the competitive landscape of the industry has begun to emerge。

At the same time, enterprises that combine reusable endoscopes and disposable endoscope research and development are undoubtedly favored by capital, such as Xin Guangwei, which completed Series A and Series B financing consecutively in 2021。

In the earlier stages of technological innovation, capital has also given high attention, such as Precision Vision, which focuses on confocal microscopy, and Qiaojieli Medical Robot, which focuses on endoscopic surgical robots. Both have completed large-scale early financing of tens of millions to billions of yuan in 2022。

It can be seen that in each sub segment of the endoscope industry, although there may be differences in the overall financing rounds due to different starting times, capital has highly recognized and focused on investment, helping to promote the rapid development of each track。

Inventory of investment and financing situation of medical endoscope enterprises from 2017 to 2022

Source: Artery Orange Industry Think Tank (sorted by financing round, same round sorted by time, only showing the most recent round)）

◆ The country has increased its support for domestic substitution and technological innovation, while local governments have reduced their import product catalogs

In recent years, while the support for the development of domestically produced medical endoscopes at the national level has been increasing, policies have shown a trend of gradually refining and multi-dimensional approaches, focusing on multiple dimensions such as research and development, certification, sales, and standardized use。

Partial policies promoting the development of medical endoscopes at the national level

Source: Arterial Orange Industry Think Tank

From the list of imported products released in various regions in 2021, it can be seen that the support for domestic substitution is constantly increasing, and it is clear that various domestic medical endoscopes need to be purchased。

Partial policies promoting the development of medical endoscopes at the local level

Source: Arterial Orange Industry Think Tank

◆ The long-term monopoly in the domestic market has been broken, and domestic substitution is accelerating

Breaking monopolies with quality and replacing domestic products is timely. Quality has provided a solid and powerful stepping stone for domestic enterprises, opened the door to clinical practice, and continuously accelerated with the support of policies and other aspects。

According to data from Zhongcheng Medical Equipment Research Institute, from 2020 to 2022, the total sales amount and proportion of domestically produced medical endoscopes in medical institutions nationwide have been increasing year by year. The total sales amount of domestically produced medical endoscopes in 2022 was nearly 900 million, which increased to nearly 3.7 billion in 2022; The proportion has also increased from 10% in 2020 to 26% in 2022。

 Sales revenue of domestic and imported medical endoscopes from 2020 to 2022 (in billions of yuan)

Data source: Zhongcheng Medical Equipment Research Institute, Eggshell Research Institute Cartography

In addition, from 2020 to 2022, the total sales amount and proportion of domestically produced medical endoscopes in tertiary medical institutions in China have also shown an increasing trend year by year, and the average annual growth rate is higher than the national sales growth rate, reaching 65%. It is not difficult to see that domestic enterprises have broken the import monopoly with quality, and the process of domestic substitution for medical endoscopes is in full swing。

◆Parallel product strength and market capability, completing domestic substitution is only a matter of time

Product: The number of certified domestic medical endoscopes is growing rapidly。According to data from Zhongcheng Medical Device Research Institute, nearly 750 domestically produced reusable endoscopes have obtained NMPA medical device registration certificates, and have maintained an annual growth rate of over 24% for two consecutive years。

Approval status of domestically produced reusable endoscope products from 2015 to 2022

Data source: Zhongcheng Medical Equipment Research Institute, Eggshell Research Institute Cartography

This represents that domestic products can greatly meet clinical needs in terms of quantity and category, and also represents that domestic products have basically completed the "me too" stage in quality and are striving to enter the next "me better" stage。

Sales: Market capability is gradually valued。The path of domestic substitution is a systematic competitive process, and making products that meet clinical needs is a necessary and insufficient condition for domestic substitution. It also requires professional and comprehensive market sales strategies。

The process of replacing domestic endoscopes requires a combination of products and sales

In recent years, enterprises have begun to establish professional marketing teams, striving to do a good job in product positioning and academic education, and help achieve the final sales. In addition, after-sales service has also received more attention. In addition to fulfilling corporate tasks and establishing a good image in clinical practice, what is more important is that this is a good opportunity to capture clinical needs and provide valuable guidance for product development and design based on real clinical needs。

It can be seen that at the product level, domestic enterprises are continuously deepening their capture and understanding of clinical needs, and comprehensively improving their ability to transform needs into products and solutions in the design and production processes. At the sales level, enterprises have begun to focus on building professional market capabilities, increasing their systematic competitiveness in domestic substitution of reusable endoscopes through the combination of products and sales. For domestic enterprises that have both improved their product and market capabilities, it is only a matter of time before they can complete the domestic substitution of reusable endoscopes in clinical practice。

◆ Shouldering the mission of "exploration", focusing on technological breakthroughs and integration

It is worth noting that in the field of reusable endoscopes, although domestic substitution is the main theme, there are also innovative breakthroughs in the industry。

Although 4K endoscopes and 3D endoscopes started relatively late in China, they have developed rapidly and continuously narrowed the gap with overseas products; The strength level of endoscopic AI assisted diagnostic systems is also at the international level, and the progress in this segment of the track is quite significant both domestically and internationally。

Taking 4K medical endoscopes as an example, this is currently a highly popular sub segment of medical endoscopes, with Mindray Medical, Far Eastern Medical and others all located here. To bring a practical 4K experience to clinical practice, endoscopes need to have 4K level components from light sources, optical lenses, sensors, transmission, image processing, displays, etc. Any link that is not connected is difficult to achieve. This is a process that requires breakthroughs in multiple fields of technology and effective collaboration。

It is gratifying that in recent years, domestic enterprises have gradually broken the technological blockade, broken through the bottleneck technology, and caught up with the international level. Ru Yuan Sai Medical, based on its technological advantages in image processing, has created a full link 4K ultra high definition fluorescence endoscope camera system to accurately restore colors; Unique fluorescence management combined with self-developed image enhancement algorithms, segmentation boundaries, multimodal image fusion, and color development algorithms, making tissues and lesions clear at a glance。

The development trend of composite endoscopes is good, and multiple technologies are at the international leading level。Compared to traditional reusable endoscopes, composite endoscopes pose higher challenges for enterprises in technology research and development and production manufacturing。

China started relatively late in the development of ultrasound endoscopes, but there is a strong trend of domestic substitution. In recent years, with the continuous improvement of research and manufacturing capabilities of domestic enterprises, the industry has welcomed the first batch of domestically certified ultrasound endoscope products, breaking the import monopoly. For example, the establishment of medical ring array ultrasound endoscope EG-UR5 and convex array ultrasound endoscope EG-UC5T have successively obtained CE and NMPA device certificates, marking China as the second producer of ultrasound endoscopes in the world; And in 2020, participated in the formulation of the YY/T 1676 Ultrasound Endoscopy Standard for the Pharmaceutical Industry of the People's Republic of China, assisting in the independent research and development of high-end medical devices in China。

Application and Technical Level Analysis of Composite Endoscopy Assisted Diagnosis

In addition, China's technology strength in fluorescence endoscopy, EOCT, and confocal microscopy is at the forefront of the international market, and it has a certain say in the international market. Taking confocal microscopy as an example, with the first domestic confocal microscopy endoscope independently developed and produced by Jingwei Shida obtaining the NMPA registration certificate in 2019, China has become the second country in the world to have a certified confocal microscopy endoscope, marking China's technological level in the field of laser confocal microscopy imaging reaching international leadership。

In the future, with the parallel development of "domestic substitution" and "technological innovation", the strength and discourse power of domestic enterprises in the reusable endoscope market will gradually increase。

◆ The application of disposable endoscopes in urology has started well, and more scenarios need to be explored

Domestic disposable endoscopes are developing rapidly and have welcomed a large number of approved products。Around 2010, domestic endoscope companies focused on disposable endoscopes began to emerge. According to incomplete statistics, as of February 14, 2023, nearly 80 domestic disposable endoscopes in the industry have been approved by NMPA for listing, while only a few imported disposable endoscopes have been approved。

Approved inventory of domestically produced disposable endoscopes

Data source: Official website of the National Medical Products Administration (as of February 14, 2023) Eggshell Research Institute Cartography

From the perspective of approval time, 2022 is the peak year for the approval of domestic endoscopes, with at least 48 approved products, accounting for over 60% of the total approved quantity. In addition, as of February 14th, the number of approvals for 2023 has reached nearly 30% of the total for 2022, and it is expected that the number of one-time endoscopic certified products will explode in 2023。

Running the commercialization path, more fields of disposable endoscope applications need to be explored。The "essential" nature of disposable endoscopes in the field of urology is very significant, so many disposable endoscope companies prioritize entering urological application scenarios with a precise market positioning of "avoiding infection"。

The proportion of approved products for various application scenarios of disposable endoscopes

Data source: Official website of the National Medical Products Administration (as of February 14, 2023) Eggshell Research Institute Cartography

However, the market positioning of "avoiding infection" alone is insufficient to explain the rapid development of disposable endoscopes in the urinary system, which is also related to the existing fee system。

On the one hand, the cost of traditional cystoscopy and ureteroscopy is relatively high, usually around 1000 to 2000 yuan,; Surgical treatment, such as kidney stones, costs around 20000 yuan. Therefore, the urological application scenario has a greater ability to pay for disposable consumables and a price difference in place of reusable alternatives. Secondly, disposable endoscopes for urinary application scenarios have ready-made medical insurance catalogs that can be charged, greatly shortening the process of commercialization and monetization。

It can be seen that the entry of disposable endoscopes into the market for urological applications has received a good response, opening a good beginning for the commercialization of disposable endoscopes. Based on this experience, more application scenarios will gradually open up the commercialization process after solving the charging problem。

Balancing "single click through" and "comprehensive layout" is crucial。Focusing on one area seems like a good choice for startups. Once they create a "hot selling" product and gain a first mover advantage in that field, the survival problem of the startup company can be easily solved. But then it is necessary to quickly replicate the successful experience in this field, accelerate the coverage of other fields, in order to obtain a longer competitive advantage and broader development prospects。

Comparison of advantages and disadvantages between single click through and comprehensive layout modes

At the beginning of its establishment, a comprehensive layout tests the financial strength of the enterprise and the speed of completing commercialization verification. However, such enterprises may become more systematic in the overall research and development stage, laying a foundation for long-term steady development。

For example, Ruipai Medical, with a strong technical team and strong financial support, has comprehensively laid out since its establishment, covering departments such as urology, gynecology, respiratory, general surgery, and gastroenterology. Its products include both soft and hard lenses, including large and small endoscope types, providing a one-time electronic endoscope overall solution for clinical use。

However, regardless of which development strategy a company chooses at the beginning of its establishment, comprehensive coverage of more application scenarios is a common goal for one-time endoscopic enterprises. Founders need to balance the rhythm of deepening individual products and expanding product pipelines in order to gain a larger market based on their own advantageous genes。

◆ Not a substitute for reusable endoscopes, providing better clinical solutions based on their respective characteristics

What kind of endoscope to use in clinical practice is a comprehensive choice that involves multiple factors such as safety, product performance, operation, and cost。

Examples of factors that need to be comprehensively considered when selecting endoscopes in clinical practice

Disposable endoscopes and reusable endoscopes will not be a substitute relationship, nor will they be the main task of the birth of disposable endoscopes. The combination of the two is to provide better solutions for diverse clinical application scenarios。

Provide better choices for different application scenarios based on their respective characteristics。Due to differences in materials, research and development, and production processes, reusable endoscopes and disposable endoscopes have different characteristics to meet the clinical needs of different scenarios。

Comparison of partial performance between reusable endoscopes and disposable endoscopes

Our exploration of more and better treatment methods cannot stop, which makes the path of increasing investment in reusable endoscopes and iterating towards higher end endless. At the same time, it is crucial to make good exploration results accessible to more people, accessible and affordable to those in need, and reduce costs. This task may be undertaken by a one-time endoscope。

◆ Addressing pricing issues, focusing on specific techniques, and prioritizing mass production as the core competitiveness

Solving the issue of fees requires joint efforts from the industry。Although the industry has already received dozens of disposable endoscopes that have obtained the medical device certificate from the Drug Administration, there is still a long process of promotion and sales between obtaining the certificate and clinical use。

As a new clinical phenomenon, obtaining a medical device registration certificate for disposable endoscopes is like obtaining a "quasi birth certificate", and then requiring "birth certificate", "ID card" and other documents to truly circulate in the market, prolonging the investment cycle of enterprises. Enterprises that take the lead in this process will also gain a first mover advantage, prioritizing the establishment of usage habits and academic barriers in clinical settings.

The stages that disposable endoscopes need to go through from production to clinical use

Data source: Huaxin Medical, mapping by Eggshell Research Institute

At present, the immature charging environment overseas is one of the important reasons for the increasing sales market of domestically produced disposable endoscopes. However, in the survey, industry insiders expressed optimism about the prospects of disposable endoscopes in some application scenarios. They believe that once disposable endoscopes fully demonstrate their clinical value, relevant policies will also be optimized, which requires the entire industry to work together。

Positioning high-end manufacturing industry, mass production is the core competitiveness。The key to commercialization of disposable endoscopes lies in clinical volume, and a large number of market orders are the key to diluting costs, which also tests the production capacity of enterprises. In our research, we found that more disposable endoscope companies are positioning themselves in the high-end manufacturing industry, and the consideration of cost and production capacity has been running through a series of product strategy formulation processes such as research and development, market positioning, and sales promotion。

Like Huaxin Medical, while also investing heavily in product development, they have designed and put into operation an automated assembly production line for endoscopes, which can produce up to 400000 units annually. At the same time, the cost of disposable electronic bronchoscopes has been reduced by nearly 30% to better meet their needs in multiple application scenarios such as respiratory, ICU, and pediatrics。

In the future, on the starting line of meeting clinical needs, being able to obtain larger clinical orders at lower costs and complete automated mass production will be the core competitiveness of disposable endoscope enterprises。

Overall, disposable endoscopes currently have a strong development momentum, starting from the essential field of anti infection, and have been well applied in urology. In the future, disposable endoscope enterprises will need some time to jointly build a more friendly charging environment in China. At the same time, enterprises will also seize the advantage of high integration of disposable endoscopes, focus on more specific surgical methods, achieve cost control to the extreme, improve the core competitiveness of mass production, and lay a solid foundation for clinical scaling up.  

◆ Medical endoscopes, along with supporting instruments and equipment, jointly promote the development of minimally invasive surgery

In addition to the various medical endoscopes discussed in the previous two chapters, minimally invasive surgery under endoscopy also requires supporting surgical instruments and equipment. In recent years, the field of minimally invasive surgery has attracted many enterprises to enter this sub field with its huge clinical demand, laying out a full product pipeline of minimally invasive surgery covering endoscopes, surgical instruments, and equipment。

Development of the entire product line of equipment and instruments, promoting the development of minimally invasive surgery。With the continuous innovation of devices, due to considerations of security verification, clinical business barriers, and other dimensions, the device interfaces of various enterprises are becoming increasingly "specialized", that is, devices, instruments, etc. are paired one by one, and only connected between the same brand。

From a commercial perspective, this trend has certain advantages for enterprises that layout the entire product line of minimally invasive surgery, which is also the reason why most product interfaces are not open to the public. This trend forces powerful enterprises focused on device research and development to expand their product layout in device research and development。

However, in addition to commercial considerations, such "commercial barriers" also have certain benefits in terms of product performance and clinical performance. The layout of the entire industry chain can enable enterprises to have a unified consideration and coordination from the initial stage of research and development design, better ensuring the consistency of product performance in clinical practice and research and development testing, and providing better solutions for clinical use。

For example, based on this reason, Kangji Medical has started with minimally invasive surgical instruments and consumables. After 18 years, it has now become a comprehensive solution service provider for minimally invasive surgery that integrates endoscopes, surgical instruments, consumables, and equipment. It was launched in 2020 and is providing services to nearly 50 countries and more than 3500 hospitals nationwide, including more than 1000 tertiary hospitals。

In addition, many companies in the industry have also emerged, choosing to lay out their full product line of endoscopes, equipment, and instruments at the beginning of their entry. These companies often choose a segmented minimally invasive surgery field for deep cultivation, such as Yingzi Medical, which focuses on women's health. The first series of products they enter revolves around gynecological disease diagnosis, daytime and inpatient surgical treatment scenarios, improving electronic colposcopy The clinical popularization rate of hysteroscopy and minimally invasive cold knife series technology under endoscopy, improving the diagnostic and surgical skills of doctors。

With the joint iteration and innovation of endoscopes, endoscopic surgical instruments, and minimally invasive surgical related equipment, more and more surgeries are being minimally invasive, bringing safer and more comfortable treatment to patients。

◆ Innovative minimally invasive surgical techniques require a solid foundation of product technology

The purpose of clinical surgery is fixed, but with the continuous innovation of equipment and instruments, new surgical methods will be constantly empowered in clinical practice, which are safer, more accurate, smaller wounds for patients, and easier postoperative recovery。

The implementation of new surgical techniques requires joint technological progress and innovation in related supporting instruments, in addition to endoscopes。For example, in prostatectomy surgery, traditional surgery requires doctors to be highly concentrated throughout the entire process, and the surgical effect depends on the doctor's experience and techniques. The emergence of da Vinci robots greatly reduces the requirements of surgery for doctors, shortens the doctor's learning curve, and new surgical methods allow more doctors to operate the surgery, reducing the physical burden on doctors and making the surgery more accurate。

According to research, the purchased da Vinci surgical robots work almost 24 hours a day in medical institutions. On the one hand, due to the high procurement cost of da Vinci, it is difficult for hospitals to allocate multiple machines. On the other hand, it also reflects that there is still a large amount of unmet clinical demand for surgical robots。

With the expiration of the first batch of patent protection for da Vinci surgical robots, many domestic surgical robot startups have begun to enter the market, gradually bringing more affordable abdominal surgical robots to clinical practice; In the natural cavity robot and pan vascular robot tracks, there is an urgent need for approved products to emerge in China。

The proportion of surgical robots in different application scenarios in China

Source: Open Source Securities Research Institute, Eggshell Research Institute Cartography

According to the prediction of the Open Source Securities Research Institute, the market share of natural cavity surgical robots in China will rapidly expand. The core technical barriers involved in surgical robots that pass through natural cavities are: surgical instruments must break through the motion limitations caused by rigid joint structures; And strictly control the size of the tool to find a balance between strength and flexibility within the narrow and multi curved natural lumen of the human body, in order to smoothly complete diagnostic and therapeutic actions such as biopsy and resection. The flexible robotic arm carried by the natural cavity surgical robot also places high demands on the interaction between doctors and robot systems。

It is worth mentioning that in this track, China has gradually seen technology-based enterprises focusing on it. Like the medical technology company Qiaojieli Medical Robot incubated by the University of Hong Kong, its breakthrough patented technology creates a flexible robotic arm with a minimum diameter of only 2.5mm, which can pass through the working channels of the conventional digestive tract and urethral endoscopy, thereby achieving flexible diagnosis and treatment operations in narrow cavities such as the digestive tract and bladder。

I believe that once a successful approved product is successfully launched in the natural cavity robot, pan vascular robot and other tracks, it will gain a great first mover advantage。

Technological innovation serves as the foundation, and new surgical techniques are born under the close combination of medical and engineering。The birth of a new technique requires a two-way journey between clinical and corporate perspectives. The academic progress of doctors in clinical work, or just an idea, requires smooth channels to communicate with relevant enterprises. Enterprises evaluate their own research and development capabilities and ultimately achieve a new surgical approach through technological and product innovation。

Effective "medical engineering integration" should run through the entire lifecycle of product design and development, testing and experimentation at all stages of the product, and clinical application after the product is launched. Based on synchronous technological innovation and development in the field of equipment and instruments, continuously solving the clinical pain points captured, this process is the "cradle" of the birth of new surgical methods。

Overall, the birth of endoscopy has opened the door to minimally invasive surgery, but there is still a lot of room for development in clinical minimally invasive scenarios. This requires close collaboration between enterprises and clinical practice. On the one hand, enterprises continuously improve their product innovation design and production technology capabilities, enhance their ability to turn demand into products, and on the other hand, clinical practice will smoothly collide with innovative academic progress with enterprises. Under this "two-way rush", there will be more and more minimally invasive new surgical methods that are safer for patients and more convenient for doctors。