The development of Mindray's ultrasound imaging industry representatives

Mindray Medical was established in 1991 and mainly engages in the research and development, manufacturing, marketing, and service of medical devices. After years of deep cultivation in the medical device industry, it has adopted a "two-pronged" approach of endogenous development and external expansion, becoming a medical device company in China with the most abundant product categories. In 2017, the company's overall operating revenue reached 11.174 billion yuan, and its net profit attributable to the parent company was 2.589 billion yuan. In the Qmed 2015 ranking of the top 100 medical device companies in the world, Mindray Medical was the only Chinese company among the top 50, making it the undisputed leader in domestic medical devices. Mindray Medical officially landed on the Growth Enterprise Market on October 16, 2018.

Currently, it mainly covers three major areas: life information and support, in vitro diagnostics, and medical imaging. Other businesses include surgical endoscopes, orthopedic consumables, and veterinary devices, with revenue shares of 37.91%, 33.48%, 26.27%, and 1.97%, respectively. Among them, medical imaging mainly includes color ultrasound and digital X-ray products, accounting for 19% and 7.27% of total revenue, respectively. Endoscope products include endoscopic surgical instruments and rigid endoscopy systems, with revenue accounting for less than 2%.

Mindray Medical Product Classification

Ultrasound: Grassroots Expansion, Import Substitution, Entering the Golden Harvest Period
Mindray entered the imaging field in 1996 and achieved many firsts in the ultrasound field. In 2002, it developed China's first full-digital monochrome ultrasound DP-9900; in 2006, the first full-digital color ultrasound DC-6; in 2008, the first color Doppler ultrasound system M5; and in 2015, the first high-end color ultrasound system Resona7. Ultrasound product revenue reached 1.45 billion yuan, 1.65 billion yuan, and 2.123 billion yuan in 2015, 2016, and 2017, respectively. In 2017, ultrasound revenue accounted for 72.3% of the medical imaging field and 19.0% of overall revenue.

A complete medical device product line to support grassroots Bidding. The color ultrasound industry's income and grassroots tiered medical treatment expansion are expected to contribute more than 5 billion yuan to the market in the next five years, helping the ultrasound industry achieve an annual growth rate of more than 20%. Grassroots centralized procurement has high requirements for equipment but faces significant Price pressure, resulting in the winning companies being mostly leading companies such as Mindray Medical and Kaili Medical that have achieved economies of scale. In particular, since Mindray also has a rich variety of other medical device categories, it has a significant negotiating advantage in the Bidding process, making Mindray the company with the most winning projects and the largest amount in ultrasound equipment. However, due to grassroots procurement's "quantity for Price" approach, market competition is intense, and the contribution to the company's net profit is relatively limited.

Acquisition of Zonare, consolidating the leading position of domestic ultrasound, and high-end ultrasound entering the "harvest period." Mindray took the lead in entering the high-end market in 2015, mainly benefiting from the acquisition of Zonare, a manufacturer of high-end ultrasound imaging, in 2013. In 2000, Siemens acquired the ultrasound company Acuson and launched the Acuson series of color ultrasound systems, especially the "classic" product Acuson Sequoia512, helping Siemens establish a foothold in the ultrasound market. Some employees of Acuson later founded a new company, Zonare, in Silicon Valley. Mindray's acquisition of Zonare added wings to its success, and based on the improved version of Acuson technology, it launched high-end products such as Resona7, which have been recognized by ultrasound experts. After 2-3 years of market promotion and recognition, the products have entered the volume harvest period.

High-end products are gaining momentum, and volume and Price are rising together. Since 2014, Mindray has launched the DC-8, Resona 6/7 high-end color ultrasound series, and the obstetrics and gynecology color ultrasound Resona 8, gradually expanding the sales share of mid-to-high-end color ultrasound. From 2015 to 2017, color ultrasound sales continued to grow while simultaneously increasing the average Price, achieving a "dual rise in volume and Price." The overall growth rate of color ultrasound has become the fastest among product lines, reaching 29% in 2016-2017. From the perspective of the ex-factory average Price of color ultrasound, it has gradually increased from 120,700 yuan in 2015 to 121,300 yuan.

Mindray Medical Product Line Revenue and Growth Rate

Mindray Medical Color Ultrasound Ex-factory Average Price

The color ultrasound industry shows a positive trend, benefiting from the expansion of the grassroots market, the updating of the existing market, and the acceleration of import substitution. Mindray, the leading company, has benefited greatly. We expect that in the next three years, the revenue growth rate of Mindray's ultrasound product line will be 20%, 18%, and 15%.
Mastering core ultrasound technology and continuing to develop high-end and specialized markets. Mindray's research and development direction in the field of medical imaging includes two aspects: high-end portable color Doppler ultrasound diagnostic instrument systems and high-end color ultrasound technology. In terms of high-end color ultrasound technology, it has mastered emission continuous focusing technology, sound velocity correction technology, shear wave elasticity imaging technology, and vector blood flow technology, and is currently pre-researching high-performance transducers, automatic breast scanning, contrast fusion, and cardiac motion analysis. In the future, the company will continue to develop high-end color Doppler ultrasound diagnostic instruments and high-end portable ultrasound diagnostic instruments.

Surgical Endoscopes: Perfecting the Complete Operating Room Solution and Consolidating the Surgical Position

Before entering the surgical endoscope market, Mindray's layout in surgery has already covered medical devices such as monitors, anesthetics, electrocardiograms and defibrillators, surgical lamps, and operating tables. As the core equipment in the operating room, the laparoscopic system can improve Mindray's overall solution in the operating room, which is of great significance for consolidating its market position in domestic and foreign surgical operating rooms.

Starting in 2012, Mindray began to test the minimally invasive field through mergers and acquisitions and cooperation. In August 2012, Mindray acquired Hangzhou Optoelectronics, and in October of the same year, it acquired Shanghai Yiguang (disposed of in March 2017). The former mainly produces and sells rigid endoscopes and supporting surgical instruments, while the latter produces flexible endoscopes and supporting instruments. In 2016, Mindray launched its first laparoscopic series, the HD3-three-lens CMOS full-HD laparoscopic system. According to Mindray, this laparoscopic system was jointly developed in cooperation with German experts in rigid endoscopy manufacturing and Japanese photosensitive element companies. It uses imported Japanese medical three-chip CMOS photosensitive elements, which can realistically reproduce lifelike colors and clear details of intracavity tissues, providing doctors with safety during surgery and accurate treatment. HD3 is the world's first surgical rigid endoscope imaging system that integrates 3CMOS 1080 full HD imaging technology, 2x optical zoom technology, and built-in USB full HD recording function, and can meet most of the clinical needs of minimally invasive surgical procedures. Mindray's launch of endoscopes and instruments for minimally invasive surgery keeps up with industry trends, but more importantly, it consolidates its position in surgical operating rooms and assists the life information and support product line.

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