Announces 2013annual Results Announcement(2014-03-26)




[26March2014, Hong Kong] PW Medtech Group Limited(“PW Medtech” or the “Company” and, together with its subsidiaries, the “Group”; stock code: 1358), a leading medical device company in China, today announced its annual results for the year ended 31 December 2013 (the “Year”).


The orthopedic implant and advanced infusion sets business maintained growth, providing a stable development for the Group. During the Year, total revenue amounted to RMB457.1million, representing an increase of 37.9%over last year. The adjusted net profit amounted to approximately RMB140.7 million, representing an increase of 40.4% over last year. During the Year, the Group recorded the gross profit of RMB310.4million, representing an increase of 41.9%over 2012. Basic earnings per share increased by 54.5%toRMB6.24centscompared with last year. During the Year, the two core business of the Group recorded continuous growth. Revenue of orthopedic implant and advanced infusion sets business wereRMB139.7million and RMB317.4millionrespectively, which contributed 30.6% and 69.4% to the Group’s revenue.


Mr. Jiang Liwei, Chief Executive Officer of PW Medtech said, “Along with the continuous process of urbanization, the government’s increasing investments into public healthcare sector, the increasing aging population and citizen’s booming demand for healthcare service brought growth opportunity for China’s medical device industry. As the leading company in orthopedic implant and advanced infusion sets industry, PW Medtech fully grasped the opportunity with its own competitive strength. With extensive product portfolio, strong research and development capabilities, he Group has successfully increased its overall revenue and created new growth driver for its business through strategic acquisitions and efficient integrations to diversify its product line and sales network.”


Diversify Product Portfolio

PW Medtech is one of the only two domestic companies with a full orthopedic product portfolio (including trauma and spine, as well as hip and knee implants). The Group’s trauma and spine products are sold under the ‘‘Walkman’’ brand and joint products under the “Bone (博恩)” brand. Meanwhile, in the fast growing segment of hip and knee implants, the major areas of joint implants, the Group had the second largest number of registration certificates among major domestic companies. In January 2013, the Group further expanded the orthopedic implants’ product portfolio through the acquisition of Shenzhen Bone Medical Device Co., Ltd., thus increasing a series of joints products.


The Group sold two advanced infusion sets, namely, precision filter infusion sets and innovative non-PVC-based infusion sets, under the “Fert (伏爾特)” brand through its subsidiary Beijing Fert Technology Co., Ltd. that the Group acquired in 2011. The Group’s infusion sets products have a broad range of products which have various functions to satisfy consumers’ demand for infusion safety, including precision filter, light-resistance, auto-air-venting and precise regulating.


Enhance Innovation and Research and Development

Technology innovation and R&D of new products are essential to ensure the Group’s continuous growth. Since 2010, the Group has successfully launched 25 orthopedic implant products, including bridge-link combined fixation system, which provides superior fixation stability and can be used in a significantly wider range of bone fractures. As the pathfinder in advanced infusion sets industry, the Group is among one of the first manufacturers in China which received CFDA approval to manufacture precision filter infusion sets and solved the problem of insoluble particles in infusion process. The Group is also the one of the only four PRC manufacturers approved by CFDA to manufacture non-PVC-based infusion sets and holds the exclusive patented double-layer tubing design for non-PVC-based infusion sets.


As the pioneer in developing innovative new product, the Group has an experienced R&D team with 88 members, that has maintained long-term and close cooperation with doctors, hospitals, university research centers and research institutes. As of 31 December 2013, the Group has obtained 46 patents, including 23 for orthopedic implant products and 23 for infusion sets products, and 26 patent applications.


Increase Production Capacity

Currently, the Group has three plants for orthopedic implants segment, which locate in Tianjin, Anyang (Henan province) and Shenzhen (Guangdong province) respectively, and three plants for infusion sets, which locate in Fengtai (Beijing), Shijingshan (Beijing) and Xuzhou (Jiangsu province) respectively. Except improving the capacity utilization rate in existing plants, the Group is also planning to add two additional plants in Linyi (Shandong province) and Pinggu (Beijing) to expand its production capacity for infusion sets.


Expand Distribution Network

The Group operates a widespread and fast-growing nationwide distribution network, which covers 30 provinces, municipalities and autonomous regions. China’s orthopedic implant market is experiencing a strong growth, particularly in tiers II and III cities. Therefore, the Group deploys its distribution network of orthopedic implants by taking advantage of its full-range orthopedic implant product line, with focusing primarily on Class 2 hospitals in tiers II and III cities, which helps to lay a foundation for the Group’s growth in the coming years. The Group’s distribution network of infusion sets primarily covered Class 3 hospitals in tiers I and II cities in China.


To support and consolidate the nationwide distribution network and strengthen product promotion, the Group established three experienced and dedicated sales and marketing teams which included two responsible for orthopedic implants (i.e., trauma/spine and joint implants), and another for infusion sets. Approximately 40% of the sales and marketing staff have medical background, which helps them to communicate with doctors and nurses in an effective and seamless manner. Meanwhile, the key sales persons in each business segment have an average of over 10 years’ experience in their respective areas.


Mr. Jiang Liwei, Chief Executive Officer of PW Medtech concluded, “Looking into 2014, the Group is well poised to seize the development opportunity of orthopedic market in China’s tiers II and III cities and advanced infusion sets market in tiers I cities. In the future, the Group will further increase the investment in R&D and strengthen the relationship with hospitals and research institutions, to develop new products, broaden and deepen the product mix and increase market penetration by enhancing the promotion efforts across the national distribution market. While maintaining rapid organic growth of the two core business including orthopedic implant and advanced infusion sets segments, the Group will leverage on its outstanding acquisition and integration capability, continue to implement the established core strategy of focusing on medical devise market that enjoys high-growth and high-margin. The Group will actively seek acquisition opportunities to support sustainable and rapid growth of the Group’s business. The Group believes that through continuous integration of its resources, it will effectively enhance the overall operational efficiency and profitability and bring satisfactory return to shareholders.”

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