Recently, Mindray Medical disclosed the record of the investor relations event held on September 14, and answered several questions of concern to investors. Among them, "North American growth is lower than expected", "future performance guidance targets", mergers and acquisitions, AI medical layout and other issues have become the focus of this meeting. In this regard, Mindray Medical also answered from relevant perspectives.

Among them, when mentioning future performance guidance, Mindray Medical said that based on the current situation, the company still has strong confidence that it can successfully achieve the goal of global medical device TOP20 in 2025 at the latest according to the established plan.

Achieve global medical device TOP20 at the end of 2025 at the latest. According to the data, Mindray Medical mainly has three major production lines: life information and support, in vitro diagnosis and medical imaging. In recent years, it has also begun to focus on cultivating sub-tracks such as minimally invasive surgery, animal medicine, AED and orthopedics. So, does it have a clear goal for future performance guidance? What is Mindray's current progress in hospital bidding in the second half of the year? What does Mindray think of the current national subsidies for equipment updates? Mindray responded that the company expects the overall growth to continue to be stable in the second half of the year, with the international market growing faster than the domestic market.

Specifically, the domestic equipment business revenue accounted for about 27% of the company's overall revenue in the second half of last year. The performance of this part of the business in the second half of this year will largely depend on the scale and rhythm of the equipment update. At present, the ultra-long-term special treasury bonds supported by the state for equipment update projects are still being issued as planned, and the issuance progress of local government special bonds has also been observed to be accelerating, providing support for the bidding and procurement of medical equipment. In addition, about 32% of the company's overall revenue in the second half of last year came from domestic consumables business headed by IVD reagents. The growth of this part of the business will mainly depend on the amount of testing brought by domestic medical activities. More importantly, Mindray's overseas revenue accounted for about 41% of the overall revenue in the second half of last year. Based on the continuous localization construction and high-end customer breakthroughs, it is expected that the overseas market will continue to maintain a rapid growth trend in the second half of the year and for a long time in the future, especially in developing countries and European markets. Although the company's performance growth has been affected by changes in the external environment in the short term, this impact exists for most manufacturers. The company has increased its market share by actively responding to environmental changes. Therefore, based on the current situation, the company still has strong confidence that it can successfully achieve the goal of being the top 20 global medical device company by 2025 at the latest according to the established plan.

As for the reason why the growth in North America in the first half of 2024 was lower than expected, Mindray said that the company's North American revenue will grow at a compound annual growth rate of 16% from 2020 to 2023, while the industry growth rate in the North American market is usually only in the low single digits. At present, the company has been operating in nearly 90% of the IDN medical alliances in the United States. The main products sold in the United States, such as monitors, anesthesia machines, and POC ultrasound, have achieved the top three market share, and the market share is still increasing. In the first half of this year, Mindray also signed an exclusive supply agreement for anesthesia machines for the next three years with the tenth largest IDN in the United States. Such high-end breakthrough cases have been everywhere in the past few years. Since the Sino-US trade friction began in 2018, Mindray has been closely following the progress of relevant negotiations and actively adjusting its response strategy. Even after the 25% tariff was imposed that year, the company's progress in the US market did not stagnate. By continuously expanding the coverage and revenue share of high-end customers, the US business has grown steadily, and the profit level has continued to improve in the past few years. Looking ahead, Mindray's positioning in the US market has not changed. The US will be the world's largest medical device market for a long time, and it is also the world's leading academic and scientific research center. It is crucial to help Mindray hone its product capabilities and establish its brand image, but it is not the main force driving Mindray's rapid growth. At present, Mindray has deployed about 30 sub-products, but currently only sells three types of products in the United States, and the North American market accounts for only 6% of the company's revenue in the first half of the year. In the future, the US market will maintain steady growth for a long time, but the growth rate will be slower than the company's average, so the proportion of the US in our revenue will continue to decline in the foreseeable future.

At present, compared with the lack of suitable diagnostic and treatment tools, the scarcity of experienced medical staff is a more important reason for the shortage of high-quality medical resources, and the training of such personnel requires not only a large amount of capital investment, but more importantly, it takes a very long time. Mindray said that it will apply the AI function of combining big data and intelligent algorithms to medical equipment, and it is believed that it will become an effective way to "solve the problem of the scarcity of experienced medical staff more quickly."

In fact, since 2015, Mindray has launched many blockbuster products, such as the N series monitors, R series ultrasounds, blood cell readers, etc., all of which are equipped with intelligent auxiliary functions, and the intelligent functions have become an important reason for these products to become popular and have been unanimously recognized by clinicians. In order to accelerate its layout in this field, Mindray began to jointly develop AI algorithms for film readers with Tencent a few years ago. This product became the first AI product in the domestic in vitro diagnostic industry to enter the special review procedure for Class III innovative medical devices, and also broke the situation where only one imported brand dominated the film reader market. By applying large-scale AI film reading, the average reading time of doctors can be greatly shortened from 25-30 minutes to half a minute, which can effectively solve the problem of low microscopic examination rate of blood samples in the laboratory in the past. The multicenter study, led by Huashan Hospital Affiliated to Fudan University and jointly conducted by 11 tertiary hospitals across the country, including West China Hospital of Sichuan University and First Hospital of Jilin University, was published in the authoritative SCI journal ClinicaChimicaActa (impact factor 5.0, JCR Zone 1) in January 2024. For the first time, the MC series of fully automatic blood cell morphology analyzers (AI film readers) developed and produced by Mindray based on deep learning convolutional neural networks were systematically studied and evaluated from the perspective of clinical practical application.

The above study shows that Mindray's MC series of fully automatic blood cell morphology analyzers are accurate and reliable digital cell morphology analysis equipment, which can be fully applied to blood cell analysis re-examination and peripheral blood morphology examination. It is a major breakthrough in the application of artificial intelligence in clinical testing, and provides new ideas and possibilities for the application of artificial intelligence in medical testing. Since its launch in 2023, the sales of film readers have exceeded the cumulative sales of competitors in the past decade, and have been installed in more than 400 hospitals around the world. In addition, at the 2024 Tencent Global Digital Ecosystem Conference held not long ago, Mindray was not only invited to attend the conference as a representative of the Chinese medical device industry, but also shared for the first time at the conference the "Big Model for Critical Care" jointly created by Mindray and Tencent. The model has intelligent applications for critical care departments such as "medical record writing, patient individualized condition query, and critical care knowledge retrieval". It can use natural language to conduct individualized condition query and medical record writing for patients, which not only significantly improves the efficiency of doctors in handling large amounts of continuously changing clinical data, but also allows medical staff to spend much less time on data recording and interpretation, case and course writing, freeing them from heavy text work and returning medical care to medical care itself. At present, the big model for critical care has been tested and implemented in top domestic hospitals. It is believed that it will lead the digital and intelligent development of the medical industry to burst out with greater potential. Data shows that the global medical device industry market size in 2020 is 477.4 billion US dollars, a year-on-year increase of 5.63%. It is expected that by 2024, the global medical device industry will reach nearly 600 billion US dollars, with a compound growth rate of 5.6% from 2017 to 2024. The industry is expected to maintain stable growth. The Chinese device market is growing rapidly, with a growth rate much higher than that of the pharmaceutical and global device markets. As of 2020, the size of China's medical device market is about 734.1 billion yuan, a year-on-year increase of 18.3%, nearly four times the growth rate of global medical devices. China has become the world's second largest medical device market after the United States. As the "big brother" of domestic equipment, Mindray Medical is not only bringing more cost-effective and more differentiated products and services to domestic customers through continuous technological breakthroughs, but also going overseas to serve the global market.

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