Medical Online, September 19: As the summer heat of August has passed, major listed companies have also submitted their half-year "report cards." It is said that 2018 marked the beginning of a golden decade for the medical device industry. So, looking back at the first half of 2019, have major listed medical device companies laid a solid foundation for this "golden decade"?

This article analyzes the half-year achievements of major listed medical device companies on domestic exchanges. Through data such as revenue, net profit attributable to shareholders of listed companies and its growth rate, and R&D investment, we delve into the situation of the domestic medical device market in the first half of the year.

Mindray Leads the Way: Prioritizing Resources

In the first half of 2019, driven by the steady growth of its life information and support, in-vitro diagnostics, and medical imaging businesses in both domestic and international markets, Mindray Medical achieved total revenue of 8.206 billion yuan (a year-on-year increase of 20.52%), and net profit attributable to shareholders of the listed company reached 2.369 billion yuan, firmly securing the top spot. Compared to Lepu Medical, which ranked second, Mindray Medical's revenue and net profit were more than twice as high. Judging solely from revenue, the gap between the top 10 companies shows a narrowing trend as the ranking increases.

From an R&D perspective, the top 10 companies all saw increased R&D investment compared to the same period last year, with the largest increase being achieved by Blue Sail Medical (243.88%), and the smallest by Genomed (1.51%). Mindray Medical had the largest R&D investment in the first half of the year, followed by Lepu Medical. The two seem to have corresponding returns based on their net profit rankings, but there is no correlation between their R&D investment or year-on-year growth rate, and their revenue and profit. It seems that while focusing on self-research is good, resources should be allocated strategically.

Concentrated Revenue and Profit Distribution, Fierce Industry Competition

Looking at the distribution of revenue, half of the companies had revenue below 500 million yuan, indicating that most companies are still in the exploratory phase. 1 billion yuan seems to be a threshold; the number of companies exceeding 1 billion yuan in revenue is evenly distributed, and their average market capitalization is around 10 billion yuan, significantly higher than companies with less than 1 billion yuan in revenue. This shows that companies with a certain scale and their own operational models are gradually surpassing more than 50% of their peers. Only three companies exceeded 3 billion yuan in revenue: Mindray Medical, Lepu Medical, and Runda Medical.

In terms of profit distribution, the overall profitability shows an upward trend. Only Mindray Medical (2.369 billion yuan) and Lepu Medical (1.16 billion yuan) exceeded 600 million yuan in net profit. Although Fishy Medical's net profit growth rate was only 13.49%, its net profit reached 533 million yuan, ranking third in net profit, after Mindray Medical and Lepu Medical.

Only Jiu'an Medical and Qianshan Pharmaceutical Machinery reported losses in the first half of the year. Three-fifths of the companies' profits are concentrated within 100 million yuan, indicating fierce industry competition. Most of the "profits" are harvested by the top two-fifthscompanies.

Bohui Innovation's Overseas Subsidiary's Huge Losses Drag Down Profits; Qianshan Pharmaceutical Machinery Suffers Another 300 Million Yuan Loss

In terms of profit growth, the three companies with the fastest and slowest net profit growth all had revenue less than 1 billion yuan in the first half of the year. Weili Medical had the fastest growth (net profit increased by 182.35%), mainly due to the newly merged subsidiary Langhe Medical. Langhe Medical was acquired by Weili Medical in the second half of 2018, and in the first half of 2019, it achieved a net profit of 21 million yuan, far exceeding other subsidiaries under Weili Medical. In addition, Weili Medical improved its product comprehensive gross profit margin through optimizing its product structure,procurementcost reduction, and improved production efficiency. Weili Medical also disposed of its loss-making subsidiary, Guangdong Weiste, all contributing to the increase in Weili Medical's net profit.

Bohui Innovation experienced the most significant decline (net profit decreased by 91.01%). According to Bohui Innovation's 2019 semi-annual report, three out of its four major subsidiaries incurred huge losses in the first half of the year, which may be a major reason for Bohui Innovation's decline in profit. Beijing Bo'enike Microfluidics Technology Co., Ltd. had zero profit and a net loss of 382,800 yuan; Guangdong Weilin Biopharmaceutical Co., Ltd. had a net loss of 5.0554 million yuan. The most severe loss was from Advion, a 100% overseas subsidiary. Because it undertakes the main work of clinical mass spectrometry equipment and reagent research and development, due to higher R&D investment and lower-than-expected product sales in traditional markets, Advion incurred a loss of 15.3002 million yuan.

Although its net profit decline narrowly missed Qianshan Pharmaceutical Machinery (fourth from the bottom, net profit decreased by 43.75%), it has been on a downward trend since 2017, with its revenue steadily declining and net profit plummeting. It suffered a loss of 324 million yuan in 2017 and 2.465 billion yuan in 2018, with a net profit decrease exceeding 600%. In the first half of this year, Qianshan Pharmaceutical Machinery lost 299 million yuan. According to its semi-annual report, due to the debt crisis and asset restrictions during the reporting period, the production and sales of pharmaceutical machinery declined, with operating income decreasing by 15.67%; financial expenses and asset impairment losses increased sharply, which are the main reasons for its losses.

The rapid growth of Mindray Medical and the significant decline of Bohui Innovation in the first half of the year are both noteworthy. However, the past is the past, and the present is the future. Whether Mindray can maintain its momentum and how Qianshan Pharmaceutical Machinery will overcome its predicament remain to be seen; the fiercely competitive market will ultimately provide the answer.

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