Domestic Sports Medicine Leader Tianxing Medical Shifts to Hong Kong IPO as Core Business Faces Pressure from Volume-Based Procurement, Entangled in Three Patent Infringement Lawsuits

AI · How to Maintain Profit Growth Under Centralized Procurement Pressure?

Daily Economic News Reporter: Zhen Sujing Daily Editor: Chen Junjie

After withdrawing its application for listing on the STAR Market, Beijing Tianxing Medical Co., Ltd. (hereinafter referred to as “Tianxing Medical”) has shifted to the Hong Kong stock market. Recently, this leading domestic sports medicine equipment company officially submitted its prospectus to the Hong Kong Stock Exchange.

As the largest domestic provider of sports medicine equipment in China, Tianxing Medical has seen continuous revenue growth in recent years, with over 270 million yuan in the first nine months of 2025. However, behind its impressive performance, Tianxing Medical also faces pressures from centralized procurement leading to price reductions in core products and multiple patent infringement lawsuits. Whether this IPO can proceed smoothly and how the company plans to address these challenges post-funding have become market focuses.

In response to questions about this IPO fundraising, patent litigation progress, and strategies for coping with normalized procurement, Daily Economic News reporters sent an interview outline via Tianxing Medical’s official email listed on Tianyancha. As of press time, no reply has been received.

Market Share Leader in China, Revenue and Net Profit Both Rise

The sports medicine equipment market can be divided into two main segments: sports medicine implants and devices, and sports medicine regenerative materials. In 2024, the global sports medicine equipment market reached $7 billion, with implants and devices accounting for over 87%, and regenerative materials about 13%. In China, the 2024 market size was RMB 6.2 billion, with these two segments accounting for 88% and 12%, respectively.

According to the prospectus, Tianxing Medical was founded in 2017, headquartered in Beijing, focusing on clinical solutions in the sports medicine field. Its products include implants, active devices, related consumables, and surgical instruments, mainly used for treatment and rehabilitation of soft tissue injuries such as rotator cuff, ligaments, and meniscus.

Data from Zhuoshi Consulting shows that by 2024 sales revenue, Tianxing Medical is the fourth-largest sports medicine equipment provider in China, with a market share of approximately 6.5% in China’s sports medicine implants and devices market, and the largest domestic provider.

According to Zhuoshi Consulting and other sources, Tianxing Medical is the only Chinese company among the top five players in China’s sports medicine implants and devices market; the other four are international medical giants.

Financial data indicates that from 2022 to 2024, Tianxing Medical’s revenue grew from RMB 147 million to RMB 327 million; net profit increased from RMB 40.34 million to RMB 95.39 million during the same period. Preliminary financial data disclosed in the prospectus show that in the first nine months of 2025, revenue further increased to RMB 273 million, with net profit reaching RMB 89.87 million.

The reporter notes that revenue growth mainly stems from increased sales volume. During the reporting period, Tianxing Medical’s income primarily came from implants, surgical devices, and related consumables. In 2024, sales of implants reached 560,000 units, up from 260,000 units in the same period of 2023.

In terms of R&D investment, from 2022 to 2024, R&D expenses increased from RMB 18.3 million to RMB 37.3 million, with RMB 32.67 million spent in the first nine months of 2025. As of September 30, 2025, the company employed 83 R&D personnel, accounting for 21.7% of total staff. It holds over 260 patent applications, with more than 180 granted.

Product pipeline-wise, as of February 2026, Tianxing Medical’s product matrix includes 62 products, with 27 Class III medical device registration certificates and 24 products with Class II medical device registration certificates. The company states that by the end of 2024, its products had entered over 3,000 hospitals, including more than 1,000 tertiary hospitals. It has obtained regulatory approvals and registration certificates for over 200 medical device products across Europe, Southeast Asia, the Middle East, and Latin America, covering all product lines.

Price Competition Post-Procurement, Gross Margin Rebounds After Pressure

The prospectus shows that sports medicine implants are one of the key categories targeted by national centralized procurement of high-value medical consumables. Starting in 2024, all provinces in China have included implants in their volume-based procurement plans.

The prospectus discloses that as of September 2025, 14 out of 19 of Tianxing Medical’s implants have been included in centralized procurement. As a result, the average selling price of these 14 products has decreased. The average price of implants dropped from RMB 711.9 per unit in 2023 to RMB 446.3 in 2024, remaining around RMB 448.6 in the first nine months of 2025. The average price of surgical devices and related consumables fell from RMB 596.1 per unit in 2023 to RMB 505.6 in 2024, and stayed at RMB 526.8 in the first nine months of 2025.

Tianxing Medical states that if future sales volume growth cannot fully offset the impact of price reductions or if internal measures cannot improve cost efficiency, its financial and operational performance could be adversely affected. Additionally, reforms in DRG/DIP payment methods, which reimburse hospitals based on fixed rates rather than actual costs, are beneficial for cost control and may reduce the prices and usage of high-value consumables like the company’s products.

Price reductions have directly impacted gross margins. In 2023, the gross margin for implants was 79.0%, which declined to 72.4% in 2024. However, in the first nine months of 2025, the gross margin rebounded to 76.6%.

Regarding this rebound, Tianxing Medical attributes it mainly to effective cost management and economies of scale. Specifically, the company negotiated favorable procurement prices with key suppliers, increased production volume, and improved manufacturing efficiency, further reducing per-unit labor and manufacturing costs.

It is noteworthy that, unlike implants, Tianxing Medical’s surgical devices and related consumables were not directly affected by centralized procurement. In 2024, this segment’s gross margin was 60.5%, rising further to 64.3% in the first nine months of 2025. The company explains that this is mainly due to effective cost control strategies and economies of scale.

However, the prospectus also mentions that the rapid development of the sports medicine market, technological advances, new product launches, and changing clinical preferences could impact the company. The business heavily depends on the successful development and commercialization of candidate products, and alternative therapies or competitive medical devices may reduce demand for the company’s existing products.

Involvement in Three Patent Infringement Lawsuits, Customer Concentration Increasing Year by Year

While expanding rapidly, Tianxing Medical faces challenges related to intellectual property disputes. Currently, it is involved in three patent infringement lawsuits filed by competitors in the sports medicine field, all filed at the Beijing Intellectual Property Court.

The prospectus discloses that two of these involve meniscus repair systems, with plaintiffs demanding RMB 20 million in damages and reasonable costs. The third involves a full-suture anchor product, with a claim for RMB 500,000 and an injunction to stop production and sales of the allegedly infringing full-suture anchors until technical adjustments are completed.

Tianxing Medical submitted its defense in September 2025 and has applied for patent invalidation with the National Intellectual Property Administration. The legal opinion cited in the prospectus states that the company’s products do not fall within the scope of the patent claims, and some of the patents asserted by the plaintiffs may be partially or fully invalidated. Therefore, the likelihood of the company being held liable in these lawsuits is very low. The company also notes that even if unfavorable rulings occur, the maximum financial risk is estimated at about RMB 4.6 million, and it has completed technical adjustments and launched upgraded products to avoid operational disruptions.

Beyond patent lawsuits, the prospectus also discloses other noteworthy data. Regarding customer concentration, in 2022, 2023, 2024, and the first nine months of 2025, revenue from the top five customers accounted for 31.9%, 53.1%, 57.7%, and 58.5% of total revenue, respectively. The largest customer contributed RMB 52.9 million (19.4%) in the first nine months of 2025. Loss of major customers or a decline in procurement volume could negatively impact operations.

As of September 30, 2025, Tianxing Medical’s inventory balance was RMB 70.6 million, up 23.5% from the end of 2024. Inventory turnover days increased from 184 days in 2024 to 256 days in the first nine months of 2025. Regarding social insurance contributions, the prospectus discloses that the company had unpaid social insurance and housing fund contributions in 2022, 2023, 2024, and the first nine months of 2025, with total shortfalls of RMB 4 million, RMB 7.7 million, RMB 9 million, and RMB 7.8 million, respectively.

It is also noteworthy that Tianxing Medical applied in 2023 to list on the STAR Market in A-shares, responded to inquiries in May 2024, but ultimately withdrew its application in June 2025, with its sponsor’s approval. The company states that, considering market conditions and the lengthy approval process for STAR Market listing, it decided to explore other listing options. It emphasizes that there are no disputes or disagreements with any professionals involved in the STAR Market application.

Whether Tianxing Medical can successfully list in Hong Kong, and how it will handle ongoing price pressures from centralized procurement, patent litigation risks, and high customer concentration, remains to be seen.