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 unaudited consolidated results for the six months ended 30 June 2020 (the “Reporting Period”)
In the first half of 2020, although the Group faced the challenge of the COIVD-19 epidemic directly, it continued to focus on the unmet clinical needs globally. We established a solid foundation for the future development through continuous independent R&D and technological innovation. With the diversified innovative product portfolio that meets the industry development trends, LifeTech is ready for the opportunities that the coming global economic recovery would bring.
Financial Review
During the Reporting Period, affected by the outbreak of COVID-19, the diagnosis and treatment services of some non-emergency departments in hospitals have been suspended, certain non-emergency procedures were postponed and treatment demand was suppressed. As a result, the revenue of the Group recorded a decrease of approximately 11.5% to approximately RMB273.0 million. The sales generated from the Chinese market decreased by 5.3%, while the revenue contribution from the overseas market decreased by approximately 31.2%, comparing to the corresponding period 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 maintained the leading position in the Chinese market, 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 4.4% to about RMB191.2 million, among it, the sales of Stent Grafts achieved a stable growth on a high base figure, representing a growth of approximately 11.2%. While the sales of Vena Cava Filters decreased by approximately 8.7%, comparing with the corresponding period of last year.
Structural Heart Diseases Business
The Group’s Structural Heart Diseases business offered a diversified products portfolio, mainly including the first domestic branded Left Atrial Appendage Closure (“LAAC”) device 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 challenging under the COIVD-19 outbreak. During the Reporting Period, the Structural Heart Diseases business contributed approximately RMB79.3 million with a decrease of approximately 35.7%. The revenue generated from the sales of HeartR™, Cera™ and CeraFlex™ decreased by approximately 40.5%, 40.0% and 36.4% respectively. The revenue generated from the sales of LAmbre™ LAA occluder was approximately RMB19.2 million, representing a decrease of approximately 25.9%.
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 RMB2.5 million, representing a growth of approximately 31.6%.
Operating Performance
During the Reporting Period, the gross profit of the Group decreased by approximately 14.4% to approximately RMB217.1 million. While gross profit margin decreased by approximately 2.7p.p to approximately 79.5%. The operating profit up 5.2% to RMB119.8 million, and the net profit attributable to owners of the Company recorded about RMB99.0 million, representing an increase of approximately 7.1%. Besides, the basic EPS achieved RMB2.3 Cents, representing an increase of 9.5%.
With continuous progress of the prevention and management of COVID-19, as well as the accelerated restoration of production and living order, the Group’s sales in Mainland China gradually return to normal. There are about 290 million cardiovascular disease patients in China, and the disease incidence is expected to increasing constantly with the growth of population and the aging population. Meanwhile, as the improvement of the residents’ health awareness and their affordability in medical care, the market demands are expanding, and it will drive the stable growth of the industry constantly.
For the overseas market, the Group owns several off-shore subsidiaries and sales offices in 6 countries, and we have built up a well-established sales network spreading many countries across Asia, Africa, North America, South America and Europe. During the Reporting Period, the Group constantly improved the brand awareness and influence of the Company as well as its innovative products in the global market by organizing or participating in domestic and international medical conferences, academic activities, seminars, live broadcasts of procedures and conducting doctor trainings.
As the COVID-19 epidemic continues to spread globally, in the second half of 2020, the Group might still face challenges. However, the Group believes the short-term adverse impacts caused by the COVID-19 epidemic could be minimized through effective and active measures. The medium and long-term development of the Group is still expected to be steady with good momentum.
Innovation Drives the Sustainable Development
Innovation is the soul of LifeTech. Innovative medical devices with independent IP not only could support the long-term competitiveness of the Company, but also could provide better treatment methods to the global patients. During the Reporting Period, the Group continuously strengthened its innovation capabilities and accelerated the R&D process of its pipeline products to maintain its leading position in the industry:
Cardio Temporary Pacemaker obtained the CE certification in Europe, and the clinical trial enrollment was completed in China;
FustarTM mini Steerable Catheter obtained the registration certificate from the National Medical Products Administration (“NMPA”), which means the product could be commercialized in the China market;
FuthroughTM Endovascular Needle System obtained the CE certification in Europe and it was also approved as an innovative medical device in China. At present, 10 products of the Company have been approved as innovative medical devices by the NMPA. It will significantly optimize the registration pathway of these products in the China market.
IBS™ Sirolimus-Eluting Iron Bioresorbable Coronary Scaffold (“IBS”) was successfully implanted in human body in March 2018 for the first time in the world. 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. The follow-up results initially proved the safety and effectiveness of the product, and more data in relation to the safety and effectiveness of IBS are still being collected.
The Group pays a great importance to intellectual property rights, we conduct a rigorous intellectual property management for the product within its whole lifecycle. As at 30 June 2020, the Group has filed a total of 1141 patent applications, of which 342 patents were registered.
Future Prospect
In the second half of 2020, The Group will still face the challenges under COVID-19 epidemic, and we will take effective measures to reduce the adverse impact by further expanding its global distribution network, continuously developing innovative products, and promoting resource integration. At the same time, the Group will consistently devote to the improvement of technological innovation ability, product quality and production automation, further enhancing its innovation capability and standard. While continued to optimize the production and sales model, to further consolidate and strengthen our leading position in the interventional medical device industry.
At the same time, the Group will seize the development opportunities generated from the medical device industry firmly, actively explore the opportunities that could meet the market demands with great potential. It is expected to leverage the synergy effect with the existing business while generating fresh exciting catalysts for the Group, creating a better value for doctors, patients, shareholders and all relevant parties in the society.
