1.1. Company
Chitosan Materials Research & Development LLC is a proposed company, which owns the patented technology of chitosan fiber preparation, advocates the new concept of science and technology-based green life, and provides human beings with natural biological products of the best quality.
China's medical sutures have an annual market demand of about 1.5 billion yuan, of which about 750 million are absorbable sutures. The company was initially established to produce medical chitosan absorbable sutures to meet the needs of the rapidly growing absorbable suture market, and used the investment in factory solutions to address the problem that most of the PGA (Polyglycolic Acid) type of absorbable sutures rely on imports, which is expensive and affects the improvement of people's standard of medical care.
The company focuses on the combination of short-term goals and long-term strategy, the medium and long-term goal will gradually broaden the product field, involved in chitin medical antibacterial materials, drug slow-release materials, artificial organs, cosmetics, health food, health care clothing fabrics, new environmentally friendly packaging materials, fast-food appliances, etc., to form a diversified group of companies to chitin materials as the core business.
1.2. Market
The medical suture market is a group market, and the purchasing process is a group purchasing behavior.
Currently, China's large number of medical sutures are mainly used in silk thread, sheep intestinal thread and PGA class absorbable thread. Sheep intestinal thread material itself is defective, PGA class suture production costs remain high, the scope of use are affected. Medical chitin sutures will enter the market on this entry point.
Medical chitosan sutures use competitive pricing strategy to enter the market. The production cost of the product is about 2.1 yuan per suture, which is one tenth of PGA suture; the average pricing is 30 yuan per suture (according to the survey, the acceptable price in the market is 30-40 yuan per suture), which is about 1/2 of the average market price of PGA suture, and there is more room for price reduction.
The company will set up seven regional distribution centers across the country to establish a sound marketing network with agents and dealers.
Products into the market in the process will be a large number of complimentary products for doctors to try as a means of promotion and means to increase market share, the first year to give 900,000, the second year 1.6 million, the third year after the annual gift of 800,000.
The international leading chitin fiber preparation patent technology is the key to the preparation of medical chitin sutures. The company will establish ISO9000 quality management system and strive to obtain international ISO9000 quality management certification.
1.3. Investment and Finance
The company is located in Shanghai Zhangjiang Hi-Tech Park, and enjoys the preferential tax policy of "three exemptions and three halves".
The company needs 11 million dollars for the initial stage of establishment. Among them, venture capital is 7 million, Donghua University invests 1 million, and short-term borrowing is 3 million. Which is used for fixed asset investment of 6.02 million, working capital of 4.98 million. In addition, Tianpure Biomaterials Co., Ltd. equipment into 1 million.
Size and structure of the share capital is tentatively set as follows: the company's registered capital of 12 million. Foreign venture capital invested 7 million (58.33%); Donghua University (former China Textile University) patented technology invested 3 million (25%), capital invested 1 million (8.33%); Shanghai Tianchun Biomaterials Ltd. equipment invested 1 million (8.33%).
The estimated profit for the second year is 10 million RMB, and the sales profit margin is about 45% every year thereafter, the return on assets for the second year is 75.39%, and the payback period is two years and one month.
Venture capital is best withdrawn in the 3rd-5th year, using the acquisition method is more suitable for the Company.
1.4. Organization and Human Resources
The nature of the company is a limited liability company, and the initial organizational structure adopts a linear system. The company's ownership and operation rights are separated, and the general manager is responsible for the system. Under the general manager, there are vice general manager of marketing, vice general manager of technology and vice general manager of finance.
The patent of chitin fiber preparation technology belongs to Donghua University, Professor Tan Zhiqing and other teachers are the inventors of the patent technology. Professor Tan Zhiqing has many years of experience in the industrialization of scientific and technological achievements, will serve as chairman of the board of directors of the company and vice general manager of technology; entrepreneurial team members will be involved in the company's marketing and financial management; the company has also hired the Department of Marketing of Donghua University, Professor Gu Qingliang as a marketing consultant.
2. Project Background
2.1. Industrial Background
In recent years, China's medical device industry has been developing rapidly. 1978, the total output value of China's medical device industry was 730 million yuan. By 1995, according to the State Administration of Medicine statistics for 8 billion yuan, while the survey shows that the actual total output value of the national medical device industry amounted to 16-18 billion yuan, equivalent to 22-25 times in 1978, accounting for about 2% of the world's total sales. China's medical device industry development lags behind the chemical drug industry, the ratio of medical equipment and drug sales in developed countries is close to 1:1, while China is only 1:10, so there is great room for expansion.
According to the survey, the value-added of high-performance medical textiles can reach about 1:50.
At present, China's large number of medical sutures used in three kinds of thread: silk thread, sheep intestines and PGA class absorbable thread. Sheep intestinal thread and PGA-type sutures are absorbable sutures.
Sheep intestinal thread production process is backward, pollution of the environment, poor absorbability, easy to allergic and antibody reaction. At present, it exists only because of the price advantage.PGA-type absorbable sutures rely heavily on imports, which not only cost a lot of foreign exchange and increase the economic burden of the country and surgical patients, but also have a certain impact on the improvement of China's surgical level.
According to a report by Taiwan's Industrial Technology Research Institute (ITRI), the global market for medical sutures was estimated to be worth 1.5 billion dollars in 1994, with an annual growth rate of about 4%.
According to Taiwan's Institute of Chemical Industry, there are only three factories in the world that produce PGA raw materials, and it is extremely difficult to obtain them, and prices remain high. In addition, PGA water content is too high will lead to material hydrolysis degradation, mechanical strength decline, the quality of the suture is seriously affected.
As a pure biological product, the absorbable suture made of chitosan can be completely absorbed by the human body without toxic side effects, and can meet all the indexes as an absorbable suture, which is in line with the theme of green and environmental protection of social development, and it is an alternative to the PGA-based absorbable suture. On the basis of absorbing the advantages of imported absorbable sutures, the research and development of chitinous absorbable sutures with superior performance and appropriate price is in line with social and market requirements.
Commissioning of medical chitin absorbable sutures is ahead of its time in the world, and has long-term economic and social benefits for promoting the development of China's medical device industry, improving people's medical standards, and reducing the burden on the country's foreign exchange.
2.2. Product Overview
2.2.1. Chitin
Chitin, also known as chitin and chitosan, is a positively charged natural polysaccharide polymer with the chemical name of polyacetamido glucose. It is widely found in shrimp, crab, insects and other shells and fungi, algae in the cell wall, the content of up to 20% -30%, in our country is extremely rich in sources.
Crustal fiber is in addition to cellulose, the second category of organic biomaterials, is a new type of absorbable, biodegradable natural biomacromolecule materials. Chitosan fiber has many different biological properties from cellulose, such as biocompatibility, non-immune antigenic, non-toxic and non-irritant, can be decomposed and absorbed by lysozyme, promote tissue growth, accelerate wound healing, improve immunity and so on. In recent years, chitin fiber has been highly valued by the international medical community, and is a medical polymer material with broad application prospects.
Donghua University chitin research project technology level of international leading, was included in the national key research projects, and stationed in Shanghai Pudong University Key Laboratory.
At present, has successfully developed chitin medical non-woven fabrics, medical dressings and medical band-aid materials, and on January 18, 1994 through the Shanghai Municipal Science and Technology Commission organized by the expert appraisal, up to the international advanced level. Proven by clinical use, the products have anti-inflammatory, analgesic, hemostatic, anti-bacterial, breathable and absorbent, promote tissue growth and other properties. At present, chitin medical non-woven fabrics, chitin band-aid materials, chitin dressings in Shanghai Pudong Zhangjiang Hi-Tech Park has been the scale of production, and achieved good economic and social benefits.
2.2.2. Chitin Suture
Suture is a kind of sterile thread used for wound closure, tissue ligation and fixation, which belongs to Class III products of medical devices. Chitosan Absorbable Suture is a pure natural chitosan as the main raw material, can be absorbed by the body of medical sutures.
Product performance: the chitin absorbable suture has been used in more than 400 clinical cases in several hospitals in Shanghai and Zhejiang, with excellent performance, satisfactory therapeutic effect, fully compliant with the requirements of the suture, without allergy, inflammation, irritation and other adverse reactions.
Product patent: chitin fiber and its preparation method (Patent No. ZL.96103888.8), the patent is owned by Donghua University, the inventor is Professor Tan Zhiqing and other teachers.
2.3. Advantages of Chitosan Absorbable Suture
Clinical experiments have proved that compared with the existing sutures, the medical chitosan absorbable suture has the main advantages as an absorbable surgical suture:
Pure biological products, good compatibility with the human body, and small scars from the wound closure; Raw materials are widely found in the marine organisms, and the cost is one-tenth of the cost of the PGA products. The raw material is widely available in marine biology, the cost is one tenth of PGA products; The environment around the thread body inhibits the growth of bacteria, which is conducive to wound healing; Non-toxic, non-irritating, no antibody reaction, can be completely absorbed by the body; Sufficient tensile strength and flexibility, which is fully in line with the requirements for the preparation of resorbable sutures; Easy to store, almost non-decomposable in the air; It can be subjected to sterilization and disinfection, and it can be dyed, antiseptic and so on. Senior professors, experts and researchers are in charge of scientific research, with strong R&D strength and internationally leading patented technology.2.4. Prospect of chitin application
Chitin is a kind of natural polymer, is a new type of environmentally friendly materials, has a wide range of uses in the field of medicine, agriculture, light industry and other fields. In medicine, it can be used to make artificial skin, drug release materials, hemostatic agents and wound healing agents, artificial organs (such as artificial kidneys, artificial blood vessels), etc.; in agriculture, it can be used for the production of chitosan, chitosan-coated pesticides, degradation of mulch film, etc.; in light industry, it can be used for cosmetics, health care products, functional clothing, environmentally friendly packaging materials and so on.
3. Market Opportunities
3.1. Market Characteristics
3.1.1. Overview
The actual consumer of medical sutures is the patient, the user and purchasing decision maker is the surgeon and head nurse, and the actual purchaser is the purchasing department. The market characteristics present the peculiarity of the separation of users, purchase decision makers and purchasers.
The medical suture market is a group market, the buying process is a group buying behavior, and sales promotion is the most effective sales method. Doctors first choose the type and size of suture according to the type of surgery and requirements, and at the same time will be affected by the use of habits, brand preference, geographical differences and other factors.
Sutures belong to the category of medical devices, and the macro policies and regulations formulated by medical and health management organizations, such as the State Administration of Medicine and Health Bureau, will have a significant impact on their development.
The sale of medical devices should be complete with three certificates, three certificates are "Medical Device Manufacturing License", "Medical Device Sales License", "Product Conformity Certificate", and in some places, "Permission to Sell" issued by the local health authorities is also required.
3.1.2. Purchase decision-making process
In the purchase decision, doctors and chief nurses of the operating room play a very important role, and some of them are even designated or purchased by the chief nurses (especially in hospitals below the second level), and very few hospitals are purchased by the decision-making of the administration. The decision-making model is mainly shown in the following figure:
Purchase Decision Flowchart
3.2. Market Segmentation
By the degree of market development, the domestic market for medical sutures is mainly divided into two categories:
3.2.1. Developed Absorbable Suture Market
It refers to the market that uses sheep's intestinal threads and PGA-type absorbable sutures.
Markets that use PGA absorbable sutures in large quantitiesThe distribution of these markets is mainly in hospitals in large cities with a higher level of economic development and a higher level of medical care, such as Beijing, Shanghai, Guangzhou and so on. Market characteristics are mainly manifested as follows: manufacturers for the use of PGA class absorbable sutures of the pre-publicity has been basically completed, the degree of acceptance of doctors is high, the doctor brand loyalty is high; absorbable sutures are widely used, the application of a long time; the price sensitivity is low; consumer behavior is more mature.
The market for mass use of absorbable suturesThe distribution of this type of market is mainly in hospitals in large and medium-sized cities with a relatively low level of economic development, such as Xi'an. The market characteristics are as follows: absorbable medical sutures mainly use sheep's intestines, not yet large-scale use of PGA absorbable sutures; doctors for absorbable sutures relatively high degree of acceptance; more sensitive to the price; brand loyalty is not high.
3.2.2. The Untapped Absorbable Suture Market
It is the market where absorbable sutures should or could be used and silk sutures are still used.
This kind of market distribution is mainly in small and medium-sized urban hospitals or small hospitals in big cities with low level of economic development and limited medical level. The characteristics of the market are as follows: doctors are less likely to contact or use PGA absorbable sutures; silk sutures are commonly used in surgeries; price sensitivity is very high; PGA absorbable sutures have not yet entered this type of market, and competition is slow.
3.3. Sales Channel Analysis
According to the survey, the main sales channels of medical sutures are:
Direct sales by manufacturers/ sales by local agentsThis is the main way adopted by manufacturers of PGA absorbable sutures. Through local agents can reduce barriers to entry and enter new markets smoothly. Manufacturers' direct sales are suitable for markets with small barriers to entry. Hospitals generally trust the local agent, problems occur in a timely manner, and reputation is guaranteed.
Sold through the medical equipment wholesale companyMainly domestic silk thread, sheep intestines manufacturers, they are through all levels of medical equipment companies, dealers to establish a large sales network, sales channels are smooth, and with the country's major hospitals have a strong business relationship, relatively little influence by human factors.
3.4. Competitive Analysis
3.4.1. Competitive Products and Competitors
Silk Threads: Cheap and still a lot of ordinary silk threads are used in surgery. Shanghai Pudong Jinhuan Medical Supplies Co., Ltd. occupies the majority of the market share of the national silk thread market, followed by the United States Johnson and Johnson's "Mousse line" is also commonly used in large hospitals in China, and domestic manufacturers in Tianjin, Hangzhou, Wuxi, Nantong, etc.Silk thread: cheap price, the current operation is still used in a large number of ordinary silk thread.
Sheep intestines: cheap, more often used in obstetrics and gynecology surgery, inconvenient to use, easy to cause inflammation, in the stage of being gradually replaced. Manufacturers are mainly located in Shanghai, Tianjin, Hangzhou and other places. PGA class absorbable sutures: mostly imported, domestic production in Nantong, higher prices, manufacturers to the United States Johnson and Cyanamid (Kendall) for the most. The main use of door-to-door sales and a large number of products to give away the trial of the way to capture the market.According to the survey, Johnson & Johnson and Cyanamid have more than 80% of the market share of absorbable sutures in Shanghai; followed by Nantong "Huarikang" also has a certain percentage. The price of "Huarikang" is about 60% of that of Johnson & Johnson and Cyanamid, but the price advantage is basically offset by its imperfect after-sales service and quality problems.
3.4.2 Analysis of Competitive Influential Forces
National laws and regulations as well as health authorities have a great influence on the structure of competitive influential forces.
Sellers: mainly distributors and agents. Silk thread and sheep intestines are mainly sold by dealers around the world, and PGA-type sutures are mainly sold directly by manufacturers and agents, and obtaining the cooperation of agents is the key element to win in the competition.
At the same time the sales center of gravity of sellers operating multiple brands and changes in the cost of sales will have a significant impact on competition.
Resource suppliers: Shanghai Tianpure Biomaterials Co., Ltd. to chitosan fiber production equipment into the annual production capacity of 5 tons, the production of non-woven fabrics and medical dressings for their own use of 500 kilograms, the production of chitosan suture use of 500 kilograms of raw materials in sufficient supply; adequate supply of suture needles market.
There are fewer domestic suppliers of chitin raw materials and fewer purchasers, with limited ability to bargain with each other. The ability to control and prevent controlled product quality from suppliers also affects competition.
Substitution risk: the life cycle of high-tech products is shorter and the replacement is fast. Crustacean sutures may be replaced by other products such as anastomoses, laser devices, wound adhesives. Efforts should be made to research new technologies, develop new products and strengthen marketing to neutralize the threat of substitution.
The company has a patent for chitin fiber preparation technology, and potential competitors of similar products need to be licensed to enter, which also poses an obstacle to the emergence of substitutes.
3.4.3. Competitive Advantages
Superior performance of chitin suture itself; monopoly on proprietary technology and talents; cost advantage; strong resource availability; high and new technology in line with the direction of the development of government policies, etc..
3.5. Market Capacity
3.5.1. Market Capacity
According to the estimation: in 1999, the domestic market capacity of medical suture was about **1.5 billion RMB. According to the survey and secondary information, the use of absorbable sutures only accounts for about 5% (including sheep's intestines and PGA-type threads), but the amount accounts for about 50% of the total amount, which is about **750 million. (Note: **See Appendix 1, P29 for the estimation process).
3.5.2. Trend Analysis and Forecast
According to a report by Taiwan's Industrial Technology Research Institute (ITRI), the global medical suture market is growing at an annual rate of 4%. According to the survey, PGA-type suture products have only developed about 10% of the absorbable suture market, and the market potential is huge.
At present, medical absorbable sutures are mainly used in large-scale surgeries (e.g., open thoracic, abdominal, etc.), and PGA-type absorbable sutures mainly rely on imports, on which there are strict national restrictions.
Considering the growth of the market, the annual sales of crustacean sutures are estimated to reach about one hundred million dollars in five years. (See Appendix 1, P30)
3.6. Influence of Policy Approach and WTO
1. The relaxation of support and restriction of healthcare policy on high-tech medical equipment industry and the gradual marketization of the healthcare system have reduced the difficulty for products to enter into this market;
2. China and the U.S.A. signed the bilateral agreement on China's accession to the WTO on November 15, 1999, and China expects to enter into the WTO in 2000, and China will be able to enter into the WTO in the next five years. Bilateral agreements, China is expected to join the WTO in the first half of 2000, tariffs will be further reduced, barriers to entry of imported products will be reduced, the price of imported absorbable sutures will also be reduced, causing some pressure on the product, but also for the medical chitin absorbable sutures to enter the international market provides an opportunity;
3, according to the relevant data show that China's accession to the WTO and the experts predicted that China's accession to the WTO is favorable to the Small and medium-sized high-tech enterprise development;
4, the company has advanced technology, absolute cost advantage, the ability to expand the fast-growing domestic and international medical suture market, to gain a competitive advantage, and to share the benefits of the international economic integration;
5, the international economic integration for the exchange of information to facilitate the sustainable development of technological innovation for the development of high-tech biotechnology in line with the trend to provide a favorable environment for the development of high-tech biotechnology. The development of high-tech biotechnology in line with this trend provides a favorable environment and creates conditions for the company's further development in the future.
4. Company Strategy
4.1. Company Overview
Crustacean Materials Research & Development Co., Ltd. is an enterprise mainly engaged in the production of chitin series products, the company has the world's leading chitin fiber preparation technology and high-quality management team, and advocates a new concept of science and technology based on the green life to provide mankind with the best of the natural biological products. The company has the world's leading chitin fiber preparation technology and high-quality management team.
With advanced patented technology and excellent scientific researchers, the company has the ability to continuously improve the performance of the initial product - medical chitin absorbable suture, in-depth research and development of chitin-based product series and its derivatives, to form a diversified group of companies with the core of chitin materials.
The company has a high-quality marketing management and sales team, high-tech personnel of related technologies. The company's marketing management personnel have received systematic education in management specialties, with rich management experience and good market awareness; sales staff with marketing expertise and relevant medical knowledge.
The company belongs to the small and medium-sized enterprises encouraged by the national policy to produce biological high-tech products, and is ready to invest in Shanghai Zhangjiang High-Tech Park.
4.2. Overall Strategy
The company will become the market leader in the field of medical absorbable sutures in 3-5 years.
4.2.1. Company Mission
"Provide high quality chitin products to the society and improve human health"
4.2.2. Company Tenet
"Concerned about the green environment and the quality of life, creating health and hope "
4.3. Development strategy
4.3.1. Initial stage (1-3 years)
The main product is medical chitin absorbable suture, the market strategy is to replace sheep intestinal thread and a part of the silk thread, to squeeze the market share of the PGA-type suture; to establish its own brand, accumulate Intangible assets; recovery of the initial investment, ready to expand the scale of production, and begin to prepare for the development of derivative products.
The first two years:
Products introduced into the market, increase product awareness, establish brand image;
Gradually establish a sound sales network;
Opening and initially occupying the market of medical absorbable sutures;
Accumulated production of about 4 million, sales revenue of about 43 million yuan, profits of about 10 million yuan;
Market share of the market;
Market share of the PGA suture market;
Market share of the PGA suture market;
Market share of the PGA suture market. p>
Market share of absorbable sutures 4%-8%.
Third year:
Enhance brand image and increase intangible assets;
Increase equipment and expand production scale;
Annual output reaches 3 million pcs, sales revenue reaches about 60 million yuan, and profit reaches about 26 million yuan;
Market share is increased to about 15%;
Develop silk thread, utilize the existing sales network to develop the entire suture market;
Products are basically mature, focusing on tapping the new performance of the product, developing derivative products and expanding the market.
4.3.2. Medium-term (4-6 years)
Further improve and sound sales network;
Focus on the development of related products, further expand the product line, and implement diversified business strategies;
Market share of 17%-20%, and a dominant position;
Consolidate and strengthen the market of sewing threads.
Consolidate and expand the market of crustacean absorbable sutures.
4.3.3. Long-term (5-10 years)
Leveraging the company's technological advantages in chitin material development, developing and researching chitin-related products, realizing product diversification, expanding the market space, enlarging the market share, and becoming a leader in the medical, agricultural and chemical fields.
Vertical extension: based on the medical field, to further improve the performance of chitin sutures; development of new medical materials; the production of related hemostatic agents and wound healing agents; the development of artificial kidneys and so on.
Horizontal extension: development of pesticides and agricultural films for soil restoration; development of health care products and environmentally friendly packaging materials; development of cosmetics and health care clothing fabrics.