CGM (continuous glucose monitoring) is a real-time or continuous blood glucose measurement product that is different from fingertip blood testing for diabetic patients. CGM can automatically collect continuous dynamic blood glucose profiles for up to 14 days without collecting blood samples, solving the problem of It overcomes the pain points of traditional diabetes management such as the need to prick fingertips to collect blood, the inability to completely monitor blood sugar dynamics, and the complexity of carrying instruments. In addition to CGM, major products for diabetes blood sugar management include insulin pumps.
How popular are CGM-related tracks? On May 18, Weitai Medical rushed into the Hong Kong stock market. Before the IPO, Weitai had completed a financing of 575 million yuan. Taikang Qianzhen Fund, a subsidiary of Taikang Investment, led the investment, and Tencent and IDG Capital jointly led the investment.
At the same time, in the past month, three companies, Jiunuo Medical, Kailian Medical, and Kailit Medical, have received large amounts of financing. Among them, domestic insulin pump manufacturer Kailian Medical has received less than Two rounds of financing were completed within one month.
In addition to well-known institutions such as Hillhouse, Legend, and Yunfeng Fund, recent investors also include domestic equipment leader Yuyue. Yuyue Medical announced that it plans to acquire a continuous glucose monitoring (CGM) company for 366 million yuan. Kailit has 50.99% equity and needs to inherit Ascensia Diabetes Care, which has not yet fulfilled its 42 million investment obligation under the previous round of financing agreement, with a total investment of 408 million yuan. Yuyue has been deeply involved in the field of blood glucose monitoring for many years, and its investment of over 400 million shows its emphasis on the CGM track.
Looking back on the development of the CGM industry, in 2006, the FDA approved the listing of CGM products. In 2009, CGM products entered the Chinese market, and around 2012, domestic CGMs produced by San Medino and Meiqi appeared. Currently, the global CGM market is mainly dominated by Dexcom, Medtronic and Abbott. In 2020, the revenue of Abbott's star single-product Instant Sensing series products exceeded US$2 billion and continued to grow strongly in 2021, with Q1 sales revenue in 2021 reaching US$830 million.
However, the domestic CGM industry started early but developed slowly.
Theoretically, the number of diabetic patients in my country exceeds 100 million, of which 5%-10% are type 1 diabetes. Theoretically, all patients with type 1 diabetes are the audience for CGM products. The audience for CGM also includes patients with gestational diabetes and intensive treatment for type 2 diabetes. The average annual cost per patient is about 10,000 yuan, which is the theoretical market size of CGM per year. It can reach about 50 billion yuan.
But imagination is beautiful, but reality is cruel. In China, due to cost reasons and insufficient market education, although the base of diabetic patients is large, not many patients are willing to pay for CGM.
China’s CGM market basically began to truly develop after Abbott’s Auxiliary Instant Sense products entered China in 2017. In just three years, in 2020, Abbott’s Instant Sense series achieved revenue in the Chinese market 760 million yuan. Although China's CGM market is growing rapidly, the current penetration rate is still very low.
Why is there a large number of patients with type 1 diabetes in China, but the acceptance of CGM is low? An industry insider said there are three main reasons.
The first is the difference in payment systems. The payment system directly determines the different magnitudes of market size. The main markets for CGM are in the United States and Europe. Both markets have mature commercial insurance payment systems. Patients have higher payment capabilities and stronger purchasing power for CGM products. In China, the price of Abbott's instant scanner product in the Tmall flagship store is close to 500 yuan, and the price of the sensor is also around 500 yuan, with the annual cost being about just over 10,000 yuan. For self-paying patients, fingertip blood glucose measurement has more advantages in terms of price.
The second is that although domestic products have price advantages, their product performance needs to be improved. In general, it is difficult for domestic products to achieve a balance in terms of cost performance, product comfort, and accuracy. The reason why Abbott was able to achieve revenue of over 700 million yuan after entering the domestic market is because for a long time, domestic products have not been able to reach the quality of Abbott.
The third is that the domestic in-hospital market has not yet opened up, and the in-hospital market still needs more local high-level evidence support to enhance the application of the domestic in-hospital market.
Contrary to the general public perception, CGM’s main market is not only the out-of-hospital C-end market, but the size of the domestic in-hospital market is not even inferior to that outside the hospital.