LVAD Commercialization Prospects and STAR Market Medical Device Valuation

1. Huge Demand-Side Space
   
   Domestic heart failure patient base is huge: there are about 8.9 million patients aged ≥35 years, with nearly 2.97 million new cases of advanced heart failure each year; in contrast, heart transplant resources are extremely limited (only about 600 cases per year), making the LVAD market (which can be used as transitional or long-term support) still in its infancy [1]. The global LVAD market was about $970 million in 2019, expanding to $2.07 billion by 2024 with a CAGR of 16.4%, and is expected to exceed $9.82 billion by 2033; after domestic manufacturers gradually obtain registration and clinical validation, the size of the Chinese market is expected to exceed RMB 11 billion [1].
   Conclusion: The demand side is composed of high incidence rate and transplant resource bottlenecks, and the long-term growth logic is clear.

2. Product and Commercialization Progress
   
   Tongxin Medical’s CH-VAD has completed over 670 implantations in more than 80 medical institutions, indicating gradually increasing clinical acceptance; its sales revenue grew more than 7 times from 2022 to 2024 to RMB 67.0598 million, showing an initial commercial track. The product uses full magnetic levitation technology, similar to domestic competitors like Core Medical’s Corheart 6; the differentiation lies in indicators such as smaller size and low power consumption. If its long-term clinical safety and complication control are better than peers, it can consolidate its position as the “domestic first choice” [2].
   Conclusion: With early implantation cases and high-speed revenue growth, it has seized early market share and accumulated clinical data; further volume expansion still needs to strengthen regional promotion, doctor training and patient follow-up systems.

3. Volume Expansion Path and Key Variables

• Reimbursement and Medical Insurance Access
  : LVAD has high prices, complex consumables and postoperative maintenance; medical insurance coverage will determine the application depth in secondary/tertiary hospitals; actively promoting inclusion in the medical insurance catalog or regional pilots can significantly boost users’ payment willingness.
• In-Hospital Capacity
  : An implantation involves cardiac surgery/heart failure teams and postoperative management; expanding the “LVAD Center” network is needed to support sales.
• Supply Chain and Maintenance of Medicines/Spare Parts
  : The manufacturing yield of full magnetic levitation pumps and after-sales maintenance capabilities determine customer stickiness.
• Clinical Data
  : As follow-up time extends, if long-term survival rate/prognostic complication data are better than competitors, it will be a differentiated moat.

1. Growth (Revenue Growth & Adoption)
   
   STAR Market values high growth trajectories for medical devices, especially products like LVAD that rely heavily on technological breakthroughs. Currently, the penetration rate of the Chinese LVAD market is extremely low; if the company can maintain double-digit annual revenue growth and continuous growth in implantation cases, it can obtain a valuation premium higher than traditional consumable/electrical medical devices in indicators like PS (Price-to-Sales ratio).
   Valuation Judgment Points: Focus on year-on-year/quarter-on-quarter revenue growth, unit price (including accompanying consumables), and regional volume expansion rhythm.

2. R&D and Pipeline (Technological Barriers)
   
   STAR Market prefers R&D platforms with high technological barriers and sustainable innovation, such as full magnetic levitation bearing systems, low-power controllers, and portable auxiliary devices. If it can further expand to “second-generation” products and “wider patient groups” (e.g., right heart assistance, dual-chamber support, digital monitoring), the valuation can be extended to higher expected future cash flows.
   Valuation Judgment Points: Emphasize technology patent pools, cooperation with top cardiac surgery centers, and whether it has domestic firsts in STAR Market issuance materials.

3. Regulatory and Commercial Maturity
   
   Expanding to more than 80 hospitals and completing 670 implantations indicates that it has passed clinical registration and ethical review, with a certain commercial foundation. If it can obtain residency certificates in the future (e.g., passing consistency evaluation, entering medical insurance catalog, NMPA high-value consumables list), it can reduce clinical risk premiums and thus raise valuation.
   Valuation Judgment Points: NMPA certificate category, CPP plan, whether it participates in the national high-value medical device catalog/volume procurement; the more certain the relevant approvals are, the closer the valuation is to mature medical devices (PS ratio of 5+ or above).

4. Benchmark Valuation Framework (Refer to Peers/Industry)

• Comparable Companies
  : Early LVAD enterprises like Core Medical and Yongren Heart Medical can be used as benchmarks to analyze their post-fundraising valuation/revenue multiples.
• Multi-Scenario Valuation
  : Consider a dual-track valuation of “current-stage commercialization” + “future expansion products”; different scenarios can be set using PS (Sales), EV/Revenue combined with 3-5 year Discounted Cash Flow (DCF), focusing on disclosing “technology/sales/policy” driving variables.
• Valuation Sensitivity
  : Due to high R&D and clinical costs, profit margins are still low; valuation is highly dependent on future revenue crossing the critical volume (e.g., positive profit after annual implantations reach 1500 units); therefore, the valuation model should provide sensitivity analysis of “key variables - revenue, gross profit, R&D investment.”

##3. Value Judgment and Risk Tips

1. Value Points

• Market Gap: Millions of patients, insufficient transplant supply, and domestic competition not yet fully formed.
• Technological Barriers: Full magnetic levitation pump, long-term implantation stability, system integration capability.
• Commercial Progress: Actual implantations in multiple hospitals, high revenue growth, and rich clinical data.

2. Key Risks

• Clinical Complications
  : LVAD implantation is essentially a complex cardiac surgery; postoperative bleeding, infection, and thrombosis still need long-term monitoring.
• Policy and Payment
  : If medical insurance reimbursement progresses slowly or price negotiation restrictions occur, profitability may be pressured.
• Increased Competition
  : If Core Medical/Yongren/foreign giants (e.g., Abiomed, Thoratec) accelerate localization or price wars, market share and gross profit margins will be compressed.
• Supply Chain and Capital
  : High-end devices benefit from large-scale manufacturing and customized services, requiring continuous CAPEX investment; after listing on the STAR Market, capital use efficiency and R&D expenditure rhythm will directly affect the company’s valuation and market confidence.

##4. Conclusions and Recommendations

• Commercial Conclusion
  : With 670 implantations and an initial scale of RMB 67.06 million in 2024 revenue, CH-VAD has a strong commercial sample; in the future, through medical insurance access, expansion of heart failure centers and domestic substitution, it can achieve high repurchase and net income elasticity.
• Valuation Dimension Recommendations
  : STAR Market investors should build a valuation model based on the three dimensions of “growth + R&D + policy” (e.g., 2025-2027 revenue CAGR, PS valuation range, medical insurance introduction path), and conduct sensitivity analysis to measure the amplification or suppression of “clinical/payment” variables on valuation.
• Further Actions
  : It is recommended to launch a “deep research mode” to obtain detailed valuations of peer LVAD listed companies, diversified clinical data, medical insurance catalog progress and professional brokerage forecasts, so as to form a more convincing conclusion on IPO pricing or valuation comparison.

[1] Debang Research Institute, LVAD of Artificial Heart: Domestic Products Launch One After Another to Fill the Blue Ocean Market (https://pdf.dfcfw.com/pdf/H3_AP202310171601746930_1.pdf)
[2] Yicai, The First Domestic Interventional Artificial Heart is Here (https://www.yicai.com/news/102975445.html)