In 2023, domestic CGM manufacturers will finally beat the ** of CGM (continuous glucose monitor) through "involution".
Two years ago, the price of domestic CGM products was generally 400 yuan to 600 yuan. Now, the unit price of CGM products has been about 50%. Even during the 2023 Double 11 promotion, the CGM unit price of Sinocare Biotech and Yuyue Medical has dropped to 100 yuan to 200 yuan.
Sinocare Biotech and Yuyue Medical are so aggressive because they want to enter the market quickly as players who entered the market later. It is reported that Yuyue Medical's CGM products were approved for marketing in March 2023; Sinocare's CGM products were launched in April 2023. Abbott's CGM was approved in 2016, Medtronic's CGM was approved in 2020, and Silicon-based Bionics, Wetech Medical, and Jiunuo Medical's CGMs were approved in November 2021.
With more and more CGMs approved for listing, the competition in the domestic CGM market has intensified significantly. Taking the 2023 Double 11 promotion as an example, Sinocare will increase advertising investment on the eve of Double 11, increase the number of CGM products through focus elevator advertising, and seize the minds of consumers. At the same time, it lowers the price of CGM products in the name of big promotions to gain users through the best advantages. The above measures, coupled with the brand and channel advantages accumulated by Sinocare Biotech in the past, enabled its CGM products to sell more than 100,000 boxes during the Double 11 period, and its online omni-channel sales exceeded 2100 million yuan.
Yuyue Medical also launched an offensive during the Double 11 period, with sales of its CGM products exceeding 10 million and blood glucose meters increasing by more than 30% year-on-year. Silicon-based bionic is a frequent visitor to 618, Double 11 and other big promotions, and its CGM sales exceeded 67 million yuan during the Double 11 period, a year-on-year increase of 110%.
Judging from the results, in the past two years, the sales of domestic CGM have risen sharply, and domestic companies have continued to grab the market from overseas giants such as Abbott and Medtronic, and improve the localization rate of CGM.
Nowadays, under the influence of multiple factors such as cost, brand, channel, profit, competition, etc., the pricing of CGM in the domestic market has stabilized, and relevant enterprises at home and abroad have also formed a tacit understanding: not to continue to fight the best war. After all, while winning the competition, you also need to make a profit.
In addition to the domestic market, companies such as Sinocare Biologics, Yuyue Medical, Silicon-based Bionics, Weitai Medical, and Jiunuo Medical are also setting their sights on the international market, hoping to follow the tide of medical devices going overseas and sell domestic CGMs to the world.
Looking back on the past, people can often see the key times, key places and key events that affected the direction of history. In the CGM field, October 2023 is a key time, Europe is a key location, and going overseas is a key event for China's CGM industry.
In October 2023, Sinocare's CGM products obtained the EU MDR certification, which is the first MDR certificate issued by TÜV Rheinland Greater China for domestic CGM products. At the end of October, Sibionics GS1, a silicon-based bionic CGM product, also obtained the EU MDR certification. Also in October, Yuyue Medical said in response to investors' questions that it was applying for MDR certification for CGM products.
After the product is approved, the next goal of Sinocare Biologics, silicon-based bionic and other companies is commercialization. "For the sales of CGM products in the EU, the company will learn from the sales experience of BGM in the past, and enter the EU market by developing cross-border e-commerce platforms and forming a local team in Europe," Sinocare said. ”
It is worth mentioning that before this, the CGM products of Jiunuo Medical, Weitai Medical, Queckey Technology and other companies have obtained the EU CE certification and have been widely sold in the European market. For example, Jiunuo Medical's CGM products have entered more than 30 overseas countries and regions, Wetech Medical's CGM product AIDEX G7 began to be commercialized in the European market as early as March 2021, and Quint's CGM products have entered the medical insurance systems of Denmark, Sweden, Italy, the Netherlands, the Czech Republic and other countries in 2018.
In order to accelerate their overseas expansion, domestic CGM manufacturers have increased their investment in exhibitions and academic promotion, hoping to quickly enter the European market. For example, the annual meeting of the European Association for the Study of Diabetes in October 2023 is the largest diabetes conference in Europe, attracting more than 15,000 delegates from more than 130 countries around the world, including domestic companies such as Silicon-based Bionics, Sinocare Biologics, Yuyue Medical, Quecyu Technology, Weitai Medical, and Jiunuo Medical. These companies hope to attract dealers from all regions of Europe through the exhibition of new products, and establish contacts and negotiate cooperation with these dealers, so as to quickly enter the European market.
In addition to the annual meeting of the European Association for the Study of Diabetes, companies also participated in conferences in different European countries according to the characteristics of different regional markets and company plans. In March 2023, Jiunuo Medical participated in the "Annual Meeting of the French Diabetes Association (SFD)", the largest diabetes conference in the French region, to showcase its calibration-free CGM products. In February 2023, Wetech participated in the 16th International Conference on Advanced Technology and ** in Diabetes (ATTD) attended by about 4,800 experts and scholars, and presented its products at the conference.
In addition, some domestic CGM manufacturers are also simultaneously deploying in other markets outside Europe. For example, Sinocare has a presence in the U.S. market, and its CGM products obtained FDA 510(k) certification in December 2023. In the same month, Sinocare completed the certification of the "Single Audit Procedure for Medical Devices" of the quality system and obtained the MDSAP certificate issued by SGS. This means that Sinocare has met the requirements of the regulatory authorities of Australia, Brazil, Canada, the United States and other countries for the quality management system of medical devices, laying the foundation for its global expansion.
Wetech Medical has a layout in the Middle East, Africa, and South America markets. In January 2023, Weitai Medical participated in the Arab International Medical Equipment Exhibition, the largest medical device event in the Middle East, with a one-stop blood glucose management solution. In May 2023, it will participate in the largest and most comprehensive medical equipment exhibition in South America, the Brazilian International Medical Equipment and Hospital Supplies Exhibition, with a new generation ......of products
Overall, Europe has become the most popular destination for CGMs on their way to the sea.
In the global medical device market, Europe is a market that cannot be ignored.
From an economic point of view, Europe is the most economically developed continent in the world, with a total GDP of about 16 in 202265 trillion dollars. At the same time, Germany, France, Belgium and other countries spend a relatively high proportion of medical and health care, such as Germany, which spent 440.6 billion euros on health care in 2020, accounting for about 13% of its GDP1%；France spends about 227.5 billion euros on health care, or about 10% of its GDP.
Perhaps benefiting from the developed economy and sufficient medical budget, Europe ranks high in the global medical device market. According to Medtec Europe statistics, the European medical device market size in 2022 will be about 135 billion euros, accounting for about 27% of the global market, making it the second largest medical device market after the United States.
In the CGM market, a report released by Debang** shows that the global CGM market will reach 5.7 billion US dollars in 2020, with the United States and Europe accounting for about 70% of the total. Therefore, the European market is a battleground that CGM manufacturers around the world are not willing to give up.
On the other hand, with the support of the medical insurance system, the growth rate of CGM in the European market will remain at 18%-20%. This has attracted the attention of global CGM manufacturers.
From a medical insurance perspective, many European countries have incorporated CGM into their reimbursement systems. For example, the United Kingdom and France will provide full reimbursement to eligible patients, which will be paid by the national medical security system; In Germany, patients who meet the reimbursement conditions are partially or fully reimbursed, paid for by private insurance companies. The well-established insurance system reduces the personal financial burden of patients and makes them more motivated to purchase and use CGM.
At the same time, CGM manufacturers such as Abbott have promoted a number of CGM real-world studies in Europe, hoping to use the data to persuade payers to recommend and encourage patients to use CGM.
For example, a retrospective study in France showed that patients with type 2 diabetes who used insulin once a day experienced a significant reduction in acute complications of diabetes and a 67% reduction in hospitalizations after using CGM. With clear clinical evidence to back it up, France announced in June 2023 that it had approved the expansion of reimbursement for CGMs from what used to be only available to patients with type 1 and type 2 diabetes who needed intensive insulin** to all diabetics on basal insulin.
For payers, CGM can help patients manage their condition, reduce complications, and reduce overall healthcare costs. As a result, it is expected that more countries (medical payers) will follow France's example in the future and expand the reimbursement of CGM.
An anonymous dealer said: "The inclusion of CGM in health insurance in the United States has contributed to its CGM penetration rate reaching 25 percent in 20208%, compared to 10% or less in the rest of the world. From this point of view, the inclusion of CGM in the scope of insurance reimbursement in France and other places may greatly increase the penetration rate of CGM in the European market. This is also an opportunity for domestic CGM manufacturers. ”
The market is large and fast-growing, but the European market is not easy to break through.
First of all, the European market is perhaps more competitive than the domestic market. Previously, Abbott, Dekang and other companies said in their quarterly reports that the European market will be the focus of future efforts. On the other hand, Abbott and Dekang have laid out the European market in advance and occupy a first-mover advantage; Medtronic's CGM products also obtained CE certification in September 2023 and began to enter the European market. Coupled with the influx of a number of domestic CGM manufacturers, it is expected that the competition in the European market will become more intense.
The above-mentioned distributor said: "The competition in the Chinese market is also very fierce, but silicon-based bionic and other companies can grab a part of the market share from overseas giants, which proves that domestic CGM meets clinical needs in terms of performance, and the company's strategy and playing style are recognized by the market." However, in the European market, thousands of miles away, domestic CGM manufacturers also need to consider local language, culture, market characteristics and other issues. ”
Secondly, there are huge differences in language and culture between the European market and the domestic one, with the EU alone having 24 official languages. Moreover, most of these countries have small populations, and the market size and product demand are relatively limited. This makes domestic CGM manufacturers need to carefully consider their overseas strategy: should they establish a direct sales team in each country? How many people are building a team? This difference also makes it difficult for domestic CGM manufacturers to publicize and sell.
Thirdly, there are nuances in the regulation of medical devices within EU countries. European countries outside the EU, such as the UK, Switzerland, and Norway, have more differences in EU regulations. Changing medical device regulations are complicating the sales environment for CGM manufacturers.
Finally, markets in different countries have different characteristics. For example, in the French market, public hospitals account for about 55% and private hospitals account for about 45%. Both rely on centralized procurement to purchase equipment. In the centralized procurement of public hospitals, the first place obtains the full market share, and the cycle is 2-4 years. In private hospitals, the group's procurement department is responsible for bidding, and each product is included in the list of 1-3 leading companies, and the doctor chooses independently in the list, and the group does not take the initiative to recommend a company's products.
In the Italian market, 75% of the market is public and 25% is private, and both rely on independent regional procurement. In the public hospital market, hospitals usually issue their own bids and have the absolute right to speak. The first place winner will receive a 50% share, and the other finalists will compete for the remaining share, with a cycle of 1-3 years. In the private hospital market, most of the Italian private hospitals are regional groups, and the group's purchasing department is responsible for bidding, mainly winning the bid at a low price.
On the whole, although the European market is a fragrant cake, it is difficult to develop, and relevant companies need to set a strategy, prepare and make steady progress.
In the face of the attractive but difficult to develop European market, which type of domestic CGM company is more likely to enter the market quickly?
From the perspective of the industry, leading companies such as Sinocare Biotech, Weitai Medical, and Yuyue Medical, which have overseas experience, master overseas channels, and overseas teams, have more opportunities to quickly open up the market.
For example, Sinocare has set up branches (subsidiaries) in Vietnam, the Philippines and other countries, established local sales teams, and established strategic partnerships with international partners to accelerate the development of overseas markets. Up to now, Sinocare's business covers more than 200 countries and regions such as Germany, France, Italy, Spain, Portugal, the United Kingdom, Russia, Canada, etc., and has rich experience in going overseas for blood glucose monitoring products.
In terms of channels, in addition to the traditional sales network, Sinocare has also built cross-border e-commerce. At present, Sinocare has independent self-built stores in German, French, Spanish and other European minor languages, and has opened stores on third-party international platforms such as eBay, Amazon, AliExpress, Shopee, Lazada, Cdiscount, Jumia, and Joom.
At the same time, Sinocare has also built cooperative overseas warehouses in 17 countries including Europe, North America and Southeast Asia to achieve logistics localization. Through e-commerce channels and better logistics services, Sinocare will open the retail market faster.
In addition, Sinocare will iteratively upgrade the original products according to the market demand in different countries to make the products more in line with the habits and needs of local users.
Similar to Sinocare Biotech, Weitai Medical and Yuyue Medical also have rich experience in going overseas. Among them, Weitai Medical has successfully sold the patch insulin pump system equil in more than 20 countries in the Asia-Pacific region, Europe, the Middle East and Africa. Yuyue Medical's export revenue in the first half of 2023 will reach 36.8 billion yuan, accounting for 7 percent of the company's operating income39%。
Compared with leading enterprises with advantages in talents, capital, experience, etc., innovative enterprises that have stepped on the door to go overseas for the first time also have the opportunity to quickly open overseas markets. With strong distributors, innovative companies are able to sell their products overseas quickly. However, in the long run, innovative enterprises also need to formulate a strategy to go overseas, move forward step by step, and finally realize the overseas of products, brands and academics.