(Yicai Global) Nov. 23 -- The share price of medical device maker Shanghai Kinetic Medical plunged 4.3 percent today, close to its lowest point in nine months, as two major investment firms reneged on a CNY1.1 billion (USD155 million) private placement scheme.

Shanghai-based Kinetic Medical [SHE:300326], which mainly makes minimally invasive orthopedic medical instruments, closed at CNY16.23 (USD2.47).

Kinetic has agreed to terminate the investment plans of Singapore-based Temasek Fullerton Alpha and Beijing-based Hillhouse Capital Management and will not be holding them accountable for breach of contract, the company said over the weekend. No reasons were given for the change of mind.

In May, Temasek and Hillhouse agreed to purchase a 4.8 percent and 7 percent stake respectively in Kinetic at CNY18.73 (USD2.85) per share. The news sent the company’s share price rocketing to a record high of CNY28.89 that day, and it appreciated to a new high of CNY31.34 in July. Since then, the stock price has almost halved.

The change of heart might have to do with the Chinese government’s inclusion of medical devices in its centralized procurement program for the first time this year. This has led to a sharp drop in prices and caused great changes to Kinetic’s operating environment, according to some media reports.

Lepu Medical Technology, for one, saw its share price tank by as much as 7 percent earlier this month as news broke that the price for coronary stents, one of the hi-tech medical device maker’s main products, was to be reduced to a fraction of its current pricing through the government bulk-buy program. The price suddenly dropped to CNY700 (USD107) from an average of CNY13,000 (USD1,980) per stent.

Editor: Kim Taylor