A Newly Accelerated Emerging Market Story June 2020 LI, May - - PowerPoint PPT Presentation
A Newly Accelerated Emerging Market Story June 2020 LI, May Board Secretary 1 A New Phase With Accelerated Growth Billion CNY 16.6 Revenue 16 13.8 12 8 8 Listed 5.5 in Listed NYSE 4 Delisted in A 1.5 in Share NYSE 0
June 2020 LI, May Board Secretary
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2
1.5 5.5 8 13.8
4 8 12 16
2006 2011 2015 2018 2019
Delisted in NYSE
Revenue
Billion CNY
A New Phase With Accelerated Growth
Listed in NYSE Listed in A Share 2016 16.6
25.9% 41.2% 49.5% China Market is expected to maintain a double-digit growth in the future
China Global Europe, US, Japan
Tremendous Growth in China
2006 2018 1978
0.56
2022 China Market as %
CAGR 18%
CAGR 20%
CAGR 10%+
57.6 530
1000
CNY Billion
3% 18% 28% Device to drug ration is substantially lower in China.
Medical Device Drugs
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Inpatient Surgeries Sees Double Digit Growth
16% 10% 13% 13% 8% 10% 4% 12% 10% 10% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 1000 2000 3000 4000 5000 6000 7000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Number of Inpatient Surgeries in China
Number of Surgeries Growth Rate Resource: 2019 China Healthcare Yearbook for China’s data, WHO for other countries’ data
2,924 15,280 12,188 12,087 10,000 4,432
China US Germany UK Japan
2012 2018
Number of surgeries in China grows roughly 10% every year. Yet still a fraction of developed market numbers. Number of Surgeries in Every 100K Population
in 10k
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15,280
Macro Environment Favors China’s Medical Device Market
Recent policies of removing drug markup fuels medical device purchases. Long term focus of strengthening primary healthcare delivery has allowed a tiered system
Zero-markup on Drugs
Tiered System of Diagnosis and Treatment Budget Control on National Healthcare Insurance
and Centralized Procurement Healthcare institutions are under pressure of seeking for value-for-money solutions to improve outcomes and efficiencies, where favors leading domestic medical device providers. 5
Two Invoice System
Market leaders benefit from the integration of distributing channels and market consolidation. Policies Post Coronavirus Outbreak Will Provide More Opportunities The deficiency of healthcare sector and lack of domestic high-end devices is confirmed during coronavirus outbreak, which will lead to incremental investment after the outbreak.
Only a Handful of Medical Device Companies Achieved $2 Billion Revenue Under 30 Years
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From $0 to $2 billion
47yrs
55yrs
27yrs
11.2
1992 2017
1.5 1.1 0.7 0.5 2.2 3.7 4.3 4.7 5.6 6.7 7.4 7.8 8.0 9.0 13.8
1995 2001 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1992 Patient Monitor 2001 Ultrasound 2009
Defibrillator 、Surgical Lights Operating Tables Medical Supply Units
2007 Anesthesia 2013 CLIA* Coagulation 2017
Rigid Endoscopes
2003 Biochemistry 2011
Infusion Pump
2013 M&A Zonare 2008 M&A Datascope
A Unique Growth Story
From single product to multiple product lines From China market to global market From low-end to high-end segments 1998
Hematology 2018
CNY Billion
16.6
7
2012 Ventilator
*CLIA: Chemiluminescence Immunoassay
2019
Overseas China
Market Positions of Key Products
Patient Monitor Defibrillator
Anesthesia
Biochemistry Hematology
Medical Imaging Patient Monitoring & Life Support In-Vitro Diagnostics
China No.1 Global No.3 China No.1 China No.1 Global No.3 China No.3 China No.2 China No.3
Global No.5 Quadrupled in a decade Doubled in a decade Doubled in a decade Up from #6 a year ago Increased 11 times in a decade
Ultrasound CLIA* China No.5
Global No.3 ↑1 ↑2
Global No.7
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Source: Company Estimate and Public Information
↑1 ↑1
Ventilator
China No.1
PS: Market share in China is based on the data of 2020Q1, while global market share is based on the data of 2019FY
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Market Positions of Key Products Top Tier Globally
Medical Supply Units
China 2.9 billion USD Global 14.5 billion USD China 2.6 billion USD Global 37.2 billion USD China 6.3 billion USD 20% 18% 17% Global 14.8 billion USD
Total Addressable Market Size in 2019 Top Tier in China New Growth Drivers
Source: Company Estimate and Public Information
Consistent R&D Investment Yields Great Returns
Invested ~10%
10%
more than 1.6billio
illion CNY in 2018
Launches 7-12
12 new products each
year
64% 64%
master degree or above More than 2,
2,500 500 R&D personnel
Close to 5,
5,000 000 patent applications, 13% 13% of
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8 8 R&D centers in US and China
Beijing Chengdu Shanghai Shenzhen Nanjing Xi’an Stockholm Seattle Miami silicon valley Toronto Vancouver Mexico Sao Paulo Sydney Melbourne New Delhi Lagos London Paris Cairo Istanbul Moscow Bombay Novosibirsk Johannesburg New Jersey
Strategically Located R&D, Sales & Marketing Infrastructure
R&D Centers Branches and subsidiaries
8 R&D centers in North America and China,
leveraging global innovation resources.
31 branch sales offices in China. 40 subsidiaries in overseas market. Products are
sold to more than 190 countries and regions. 11
Developed Markets 15% China 57% Emerging Markets 28%
Growth Drivers in Recent Years
High-end Products Breakthrough Focused investment on core business segments, launched new high end series with all key product categories, with continuous technology breakthrough. High-end products opened new doors to the high end segment. Other Products Upgrade Mid-to-low-end products upgrades integrated high-end features that create more value for customers that are more cost conscious. Strong Growth in New Businesses New businesses such as CLIA, ventilator and infusion pump delivered tremendous growth thanks to new product launches and synergies in R&D and sales platforms. Higher Penetration In China + EM Reinforced localization, capturing higher growth opportunities in China and Emerging Markets with more comprehensive product offerings, channel management and clinical and after-sales service support. Remarkable Change in Customer Base Revenue from high-end clients, including global top tier hospitals and IDN clients, significantly increased. The revenue between public and private sector became more balanced, with better penetration into new customer base and well-positioned against macro economic fluctuations. 12
High-End Breakthrough & Fast Growing New Businesses
Benevision N22
World’s First Intelligent PM
Resona 7
World’s first ultrasound with Zone Intelligence
High-end launches within the largest three products 13 CLIA, ventilator, infusion pump and
new businesses became significant growth contributors
Chemiluminescense Immunoassay Ventilator Infusion Pump CAL8000
Word’s first integrated hematology automation line with CRP module
Now in over 99% of Tier 1 hospitals in China
9 out of top 10 cardiac hospitals in US 19 out of top 20 hospitals in US use Mindray’s ultrasound more and more IDNs in US … …
Product Upgrades Resulted in Customer Upgrades
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Ruijin Hospital, Shanghai Jiaotong University School of Medicine Peking Union Medical College Hospital University Hospital De Toulouse Royal Papworth Hospital
Net Margin
Key Financials in Recent Years
CNY billion Revenue R&D Spending Net income* Operating Cashflow ROE*
*Note: Net income attributable to the company’s shareholders. *Note: 2018FY & 2019FY ROE ratio declined as IPO proceeds pumped up net assets.
8.0 9.0 11.2 13.8 16.6
2015 2016 2017 2018 2019
0.9 1.6 2.6 3.7 4.7
2015 2016 2017 2018 2019
11.4% 17.7% 23.2% 27.0% 28.3%
2015 2016 2017 2018 2019
0.99 1.09 1.13 1.42 1.65
2015 2016 2017 2018 2019
2.0 3.0 3.3 4.0 4.7
2015 2016 2017 2018 2019
10% 28% 47% 42% 28%
2015 2016 2017 2018 2019
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Revenue maintained healthy growth：The company maintained healthy growth momentum during Covid-19 outbreak and achieved a
total net revenue of 4.74 billion CNY with a YoY growth of 21.39% for the first quarter of 2020.
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Domestic market grew 25%-30%, which outperformed our guideline, and international market grew 15%-20%. Since the pandemic spread within China for the most time during the 1st quarter, the company’s production capacity and shipment was focusing on the domestic market.
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Strong demand on patient monitors, ventilators and infusion pumps brought by the pandemic caused PMLS to grow more than 50% in the 1st quarter. However, decrease in hospitals’ outpatient & emergency clinics, surgeries and physical examination negatively impacted IVD reagents consumption, which caused IVD slightly declined. Portable ultrasound and mobile DR recorded strong demand and tremendous growth during the pandemic, which lead to a ~10% growth in MIS. But console ultrasound’s growth was depressed by the pandemic due to lower patient flow in the hospitals.
Profitability continued to improve：Net income attributable to the company’s shareholders for 2020Q1 was 1.31 billion CNY with a
30.58% YoY growth.
–
Net margin achieved 27.70%, up by 1.95 pct.
–
The healthy growth in revenue contributed significantly to the profitability improvement. USD appreciation against CNY also had positive impacts on profitability, while USD depreciated during the 1st quarter of 2019.
Operating Cash flow remained healthy：Net cash generated from operating activities in 2020Q1 was 1.42 billion CNY with a
tremendous growth of 204.34%, which was growing much faster than net income attributable to the company’s shareholders.
20Q1 Financial Highlights under COVID-19 Pandemic
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Future Plans
Combine a vertically integrated business model with a growing global platform to achieve our goals… …
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Growth businesses such as ventilator and infusion pump continue to lead growth for this category Competitive whole hospital IT solutions gains more momentum in IDNs Minimally-invasive surgery becomes a more significant growth driver Fasten product upgrades in CLIA and total lab automation Broaden offerings in coagulation and microbiology Enhance investment in overseas markets and expands from small size into medium size laboratories Continuous innovation leads to premium high-end ultrasound launch Enhance brand recognition in high- end ultrasound customer group and strengthens penetration in mid-to- low-end markets
PMLS IVD MIS
Industry Consolidation Continues
Others TOP20
452
2006
247
Market share for Top 20 consistently increases
2006 Company Healthcare Revenues 1 Johnson & Johnson 17.7 2 GE Healthcare 12.1 3 Medtronic 10.1 4 Baxter International 9.8 5 Cardinal Health 9.8 6 Tyco Healthcare 9.5 7 Siemens 9.2 8 Philips 7.5 9 Boston Scientific 6.3 10 Stryker 4.9 11
3.9 12 Guidant Corp. 3.6 13 3M Healthcare 3.5 14 Zimmer Holdings 3.3 15 Becton, Dickinson & Co. 3.0 16
2.9 17 Kodak Health Group 2.7 18 Hospira 2.6 19 Fresenius 2.5 20 Smith & Nephew 2.4 Total TOP20 127.3 Other 119.7 Total 247
$ billion $ billion
2019 Company Healthcare Revenues 1 Medtronic plc 30.9 2 Johnson and Johnson 26.0 3 Abbott Laboratories 20.0 4 GE Healthcare 19.9 5 Fresenius Medical Care 19.3 6 Becton, Dickinson & Co. 17.3 7 Siemens Healthineers 16.1 8 Cardinal Health 15.7 9 Philips 14.7 10 Stryker 14.5 11 Baxter International 11.1 12 Boston Scientific 10.4 13 Zimmer Biomet 7.9 14 EssilorLuxottica 7.8 15 3M Company 7.4 16 Olympus 7.3 17 Danaher 6.6 18 Terumo 5.6 19 Smith & Nephew 4.9 20 Intuitive Surgical 4.2 Total TOP20 267.7 Other 184.1 Total 451.8
2019 59.3% 51.5%
Market share of Top 20 companies
Source: The 2019 Top 100 Global Medical Device Companies by QMED. Evaluate MedTech《World Preview 2018, Outlook to 2024》
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