After the restart of the fifth set, the first order "Artificial Heart" medical device company is sprinting for the Sci-Tech Innovation Board IPO

In July of this year, the Sci-Tech Innovation Board accepted the IPO application of Zhuhai Tenomai Bo Pharmaceutical Co., Ltd., an innovative drug company applying under the fifth set of standards, marking the official breakthrough of the fifth set of acceptance procedures that had been stagnant for over two years.

After the restart of the fifth set, the IPOs of innovative medical device companies have made significant progress.

Recently, the IPO application of Shenzhen Core Medical Technology Co., Ltd. (hereinafter referred to as "Core Medical") was accepted by the Sci-Tech Innovation Board, becoming the first innovative medical device company to be accepted under the restarted fifth set of listing standards.

Core Medical focuses on artificial hearts and has achieved a certain scale of revenue during the reporting period, with revenue reaching 94 million yuan in 2024, a year-on-year increase of over four times, but the net loss during the same period still reached 132 million yuan.

The exponential growth in revenue is mainly attributed to the continuous increase in sales of Core Medical's magnetic levitation implantable left ventricular assist device Corheart® 6 after its launch, which has brought considerable income.

For this IPO, Core Medical plans to raise 1.2 billion yuan for the construction of projects such as "circulatory support frontier products" and "artificial heart industrialization base."

However, Core Medical still faces numerous challenges.

On one hand, the price of Corheart® 6 remains above 200,000 yuan, with the overall terminal surgical cost reaching as high as 700,000 yuan. Given the limited payment capacity of the domestic terminal population, this may put pressure on the commercialization of Corheart® 6.

Moreover, the room for price reduction is relatively limited, as the current cost price of Corheart® 6 reaches 70,000 yuan per unit, which means that if Core Medical wants to open up growth space for Corheart® 6, expanding into overseas markets such as the United States remains an important avenue.

On the other hand, the heart failure sector is seeing the emergence of more new therapies such as atrial shunt devices, which may pose growth challenges for artificial heart products in the future.

Going Abroad is Key

In August 2022, Microelectrophysiology (688351.SH) became the first innovative medical device company to land on the Sci-Tech Innovation Board under the fifth set of standards.

Since then, although several innovative medical device companies have attempted to rush to the Sci-Tech Innovation Board under the fifth set of standards, there have been no successful challengers, and the "second stock" of fifth set medical device companies has stagnated.

According to incomplete statistics from the financial community, apart from Core Medical, only two other companies are still in the IPO process under the fifth set of medical device companies: Harbin Sizerui Intelligent Medical Equipment Co., Ltd. and Shenzhen Beixin Life Technology Co., Ltd.

Core Medical's products indeed possess a certain level of innovation.

Currently, Core Medical has laid out five implantable and six interventional artificial heart products, among which the implantable left ventricular assist system Corheart® 6, the implantable dual heart assist system DuoCor® 2, and the interventional ventricular assist systems CorVad® 4.0/6.0 series have all been included in China's special review procedures for innovative medical devices, mainly used for treating heart failure.

Among them, Corheart® 6 is Core Medical's first third-generation fully magnetic levitation artificial heart to be approved and commercialized, and it is currently the smallest and lightest commercialized magnetic levitation implantable artificial heart in the world, capable of reducing the burden on patients' hearts and the pressure and damage to tissues Currently, the weight of Corheart® 6 is 0.8kg, nearly 50% lighter than its competitor Abbott's HeartMate 3.

In June 2023, after being approved, Corheart® 6 achieved good commercialization results, generating a total revenue of 164 million yuan in the one and a half years from 2024 to the first half of 2025.

Based on the sales performance of HeartMate 3, Corheart® 6 still has significant growth potential.

Currently, the global artificial heart market is dominated by HeartMate 3. Abbott's financial report shows that the heart failure segment, centered around HeartMate 3, generated a revenue of 1.279 billion USD (approximately 9.1 billion yuan) in 2024.

However, there is still considerable uncertainty regarding how much market share Core Medical's Corheart® 6 can capture from HeartMate 3.

On one hand, Corheart® 6 faces competitors not only from Abbott but also from Chinese companies such as Tongxin Medical, Aerospace TaiXin, and Yongrenxin.

Among them, Tongxin Medical's fully magnetic levitation artificial heart, Cifu VAD, was approved for market launch as early as 2021, making it the first fully magnetic levitation artificial heart device independently developed and launched by a Chinese company.

On the other hand, Abbott's HeartMate 3 revenue primarily comes from the United States, where in 2024, over 70% of the revenue in the heart failure business segment was generated.

This means that if Core Medical's Corheart® 6 wants to expand its performance, it can only focus on the U.S. market.

However, in terms of overseas markets, Corheart® 6 has only obtained overseas market approval in Colombia and Ukraine, and has submitted a registration application for the European market, which is expected to be approved by 2027, while clinical trials have not yet been initiated in the U.S.

In contrast, Tongxin Medical has already promoted clinical trials for VAD in the U.S. and conducted a "head-to-head" experiment with Abbott's HeartMate 3, which is the first large-scale study comparing two fully magnetic levitation devices in the artificial heart field.

This may cast doubt on the future commercialization results of Corheart® 6.

However, this might also be part of Core Medical's market strategy.

Although Corheart® 6 has not yet started trials in the U.S., Core Medical's core products, the implantable dual-heart assist system DuoCor® 2 and the interventional ventricular assist systems CorVad® 4.0/6.0, have made certain progress in the U.S., with expected approval times around 2030.

Compared to Corheart® 6, which is an innovation based on HeartMate 3, these two products have certain exclusivity.

DuoCor® 2 can provide circulatory support for both the left and right hearts simultaneously and is expected to become the world's first integrated implantable dual-heart assist system with magnetic levitation; CorVad® 4.0/6.0 employs an interventional surgical method, allowing for higher blood flow rates, longer expected support times, and better blood compatibility through minimally invasive access at the same diameter, with expected approval in the first quarter of 2026 in China, potentially becoming the first approved interventional artificial heart product in the country However, based on the expected time to obtain certification in the U.S., Core Medical's performance will require a longer time to potentially be released.

Breakdown of "Artificial Heart"

With the recent disclosure of the prospectus by Core Medical, the external understanding of the cost of artificial hearts has deepened.

In 2024, the production volume of Core Medical's Corheart® 6 product is 403 units, with a corresponding operating cost of 28.4271 million yuan.

Based on this calculation, the average cost of each Corheart® 6 is approximately 70,000 yuan.

With high production costs, the ex-factory price of the Corheart® 6 in 2024 reaches 247,200 yuan per unit, with a gross profit margin close to 70% during the same period.

This price has significantly decreased from the 1.5 million yuan price tag of Abbott's HeartMate 3, but even so, it still deters many patients.

According to public information, including hospitalization fees and medical expenses, the cost of an artificial heart implantation surgery may reach 700,000 yuan.

Even the actual controller of Core Medical, Yu Shunzhou, admitted in a media interview that the price of artificial hearts in China exceeds the affordability of most patients.

The only way to "bring down" the price is to exchange volume for price: scaling production to share costs and reduce cost pressure.

However, in addition to limited terminal payment capabilities, the artificial heart business faces challenges beyond this.

On the surface, the population of heart failure patients is large, which provides a broad market space for artificial hearts. According to Frost & Sullivan analysis, the number of global heart failure patients in 2024 is 62.981 million, and it is expected to increase to 71.511 million by 2033.

However, not all heart failure patients necessarily require an artificial heart implantation.

According to the American Heart Association's "Heart Failure Management Guidelines 2022," for patients with advanced heart failure with reduced ejection fraction, New York Heart Association Class IV symptoms, and who are considered dependent on continuous intravenous positive inotropic agents or temporary mechanical circulatory support, long-term use of left ventricular assist devices is recommended to effectively improve functional status, quality of life, and survival rates, which is when artificial hearts are recommended at Level 1.

Moreover, different treatment options are emerging in the heart failure space.

For example, the emerging minimally invasive interventional treatment of atrial shunt devices primarily establishes a shunt between the left atrium and right atrium of the heart to relieve pressure on the left atrium, thereby alleviating heart failure.

To strengthen its layout in this field, Johnson & Johnson acquired atrial shunt manufacturer V-Wave for $1.7 billion in 2024.

All of this may bring more challenges to the market expansion of "artificial hearts."