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Mindray's ambition of new medical infrastructure

Since 2020, Mindray Medical has frequently mentioned the word "new medical infrastructure" in its annual report.

Mindray Medical pointed out that the company achieved revenue of about 3 billion RMB in domestic new medical infrastructure in 2021. Excluding the business opportunities that have been implemented in the first quarter, there are still 24 billion RMB order intake for new medical infrastructure, which are expected to be gradually implemented in the next two years or so.

New infrastructure has been a hot topic in the past two years in China. In April 2020, the National Development and Reform Commission clarified the scope of the new infrastructure for the first time at a press conference. The new infrastructure is guided by new development concepts, driven by technological innovation, based on information networks, and oriented towards the needs of high-quality development. An infrastructure system that provides services such as digital transformation, intelligent upgrade, and integrated innovation.

From the current official definition, "new medical infrastructure" can be understood as a new type of infrastructure applied in the medical field, or the digitization of the medical industry.

So as a leader in medical devices, how does Mindray Medical benefit from the new medical infrastructure in China?

Compared with traditional "hardware" companies that sell medical devices or equipment, Mindray Medical now feels a bit "soft and hard". According to Mindray Medical's annual report, its "Tri-Ray" ecology consisting of "Ray link", "Ray Cloud++", and "Ray Inspection" laboratories is being continuously improved and upgraded to meet the increasingly prominent information construction needs of hospitals.

As of the end of 2021, the “Ray-link” IT solution has achieved a cumulative number of signed hospitals exceeding 200, with more than 150 newly added in 2021 alone; “Ray Cloud++” has achieved a cumulative installed capacity of more than 1,300 sets, with more than 1,100 new installed capacity in 2021. The “Ray Inspection” laboratory IT solution has been installed in nearly 60 hospitals across the country since its launch in 2021.

Mindray's "Ray- Link" system for a smart hospital

The ecological construction is "moisturizing and silent". As doctors' usage habits are cultivated, Mindray Medical's product line expansion in various hospitals will be smoother. Therefore, the higher the growth rate of the installed capacity of "Tri-Ray", the greater the potential potential energy.

However, as from the announcement of Mindray Medical, it mentioned that the revenue from "new medical infrastructure" will be 3 billion RMB in 2021, and it also mentioned the benefit and the expansion of domestic hospitals, Mindray Medical's domestic life information and support product lines (including monitoring Instruments, ventilators, defibrillators, anesthesia machines, operating beds and other products) will achieve rapid growth of more than 40% in 2021, higher than the overall revenue growth rate.

The income that "Tri-Ray" can bring is not clearly listed, and the impact on Mindray Medical is difficult to quantify. What Mindray Medical said benefited from the “new medical infrastructure” was more from the opportunities brought by the expansion or newly-builting of the hospital.

Therefore, the "new medical infrastructure" should be understood as "newly added medical infrastructure" rather than "medical digitalization".

The construction of medical infrastructure has its own cycle and investment logic, so as new infrastructure, which should not be confused. The demand for the former comes from the domestic market to increase the construction of ICU wards, infectious disease hospitals, fever clinics, expand large public hospitals, and improve the treatment capacity of county-level hospitals, which is driven from top to bottom; the demand for the latter comes from hospital information. The need for integrated management is a spontaneous and optional upgrade measure, and the profit model will also be different from the traditional sales of medical devices.

​​In 2021, Mindray Medical has achieved breakthroughs in more than 700 blank high-end customers overseas, and at the same time, 700 high-end customers have broken through and achieved horizontal breakthroughs in more products, including large laboratories, such as the No. 1 in Latin America. The tripartite laboratory DASA has realized the exclusive supply of blood cell products.

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It can be seen that although the growth rate of overseas revenue is flat, Mindray Medical's overseas customer expansion ability has not weakened, its brand influence has continued to increase, and its future development has not been affected.

Since its listing in October 2018, Mindray Medical has taken advantage of the three-year bull market on the GEM, and its market value has risen all the way, reaching a maximum of 602.9 billion RMB. However, in less than a year, the market value of Mindray Medical has evaporated by more than 200 billion RMB. In the absence of major adverse fundamentals and the potential growth space brought by new medical infrastructure, Mindray Medical may gradually regain lost ground with the disclosure of quarterly earnings data in the near future.


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