Analysis of the Sustainability of Pu'ang Medical's Gross Margin and Selling Expense Ratio

Pu’ang Medical (Stock Code: 874572) is a medical device company listed on the Beijing Stock Exchange (Innovation Layer), mainly engaged in the R&D, production, and sales of diabetes care, general drug delivery infusion, and minimally invasive interventional medical devices [1]. The company was officially listed on October 18, 2024, and its actual controllers are Hu Chaoyu and Mao Liuying [1].

According to public financial data, Pu’ang Medical’s comprehensive gross margin showed a continuous upward trend from 2022 to 2024 and H1 2025, reaching

respectively [2]. This growth trend is mainly driven by the following factors:

The improvement in gross margin of diabetes care products is the main driver of the growth in comprehensive gross margin. The company continues to optimize its product portfolio and increase the sales proportion of high-value-added products.

The proportion of revenue from the OEM sales model in the company’s main business revenue gradually decreased from 78.48% in 2022 to 69.85% in H1 2025 [3]. The increase in the proportion of own-brand sales helps to improve the overall gross margin, as own-brand products usually have higher pricing power and profit margins.

According to public reports, Pu’ang Medical’s selling expense ratio is much higher than that of comparable companies in the same industry, which has attracted the attention and inquiries of regulatory authorities [3].

The company’s U.S. subsidiary has the situation of paying high salaries to employees, which directly pushes up the selling expense ratio. The sales and promotion costs in the U.S. medical market are relatively high, including sales team salaries, marketing expenses, academic promotion, etc.

As a fast-growing medical device enterprise, the company may be increasing its efforts in domestic and overseas market expansion, especially in channel construction and brand promotion in the U.S. market.

• The trend of increasing own-brand proportion is expected to continue, which will continue to support the improvement of gross margin
• Product R&D innovation and upgrading may bring higher gross margin
• The gradual emergence of scale effect is expected to reduce unit production costs

If the company can achieve rapid growth in overseas business, the early investment in selling expenses may be converted into long-term market share and revenue growth, thereby improving the expense ratio indicator.

• The U.S. medical market has high entry barriers and fierce competition, so marketing costs may continue to rise
• The rigid nature of employee salary levels means that selling expenses are difficult to decline quickly
• Academic promotion and channel construction require long-term investment

• Core products may face downward pressure on unit prices [2]
• Fluctuations in raw material costs may affect gross margin
• Intensified industry competition may lead to price competition

Although the proportion of OEM sales is declining, it still dominates the market (69.85%), indicating that the company’s brand influence has not been fully established and its dependence on OEM customers is still high.

The “scissors gap” phenomenon of Pu’ang Medical’s sustained gross margin growth and high selling expense ratio is .

1. Whether the selling expense ratio can gradually decline with the expansion of revenue scale
2. Whether the proportion of own-brand revenue can continue to increase
3. Whether the profitability of overseas business improves
4. Price trends and market share changes of core products

Investors need to pay close attention to the company’s subsequent financial statements, especially the changing trend of selling expense ratio, and whether the improvement of gross margin can cover the impact of high selling expense investment on the company’s overall profitability. For such fast-expanding medical device enterprises, it is recommended to focus on the and .

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[1] 10jqka Finance - Pu’ang Medical (874572) Capital Flow_Stock Quotes (http://stockpage.10jqka.com.cn/874572/company/)

[2] OFweek Medical Network - Pu’ang Medical’s Gross Margin Continues to Improve: Core Product Unit Price Declines, Selling Expense Ratio Far Higher Than Peers (https://mp.ofweek.com/medical/a556714909577)

[3] Zhihu Column - Paying Million-Yuan Annual Salaries to Employees of U.S. Subsidiaries, Pu’ang Medical’s Selling Expense Ratio Exceeds Peers and Is Questioned (https://zhuanlan.zhihu.com/p/1987612663115699421)