Recently, Mindray Medical released its latest investor relations activity record form, responding to the latest layout plans for this year regarding Mindray International, the domestic market, and AI applications.

From a regional perspective, Mindray's international market is expected to continue its rapid growth trend this year, with developing countries, which account for two-thirds of international revenue, leading the growth.

Looking at the strategies of global top-tier medical device companies, international expansion and innovation are the two core elements for overseas leaders. Going global has become an inevitable choice for leading domestic enterprises. Overseas niche markets offer substantial incremental growth potential, with relatively stable product pricing, and domestic devices have a clear cost-performance advantage. To expand their market reach, domestic companies must inevitably focus on international markets.

According to Southwest Securities' statistics, when comparing domestic companies vertically, the internationalization rate is mostly close to 30%. Among these, low-value consumables and IVD (in vitro diagnostic) products have made faster progress in overseas expansion, while high-end imaging and high-value medical devices are still in the exploratory stage.

Low-value consumables rely on the ODM/OEM model to quickly expand into overseas markets at low cost, and currently, China has become the global hub for large-scale manufacturing. However, by comparison, high-value consumables face greater challenges, constrained by factors such as raw materials, core components, and breakthroughs with premium clients. There is still significant room for improvement in clinical advantages and channel expansion.

Developing countries have become high-growth regions for medical equipment exports. Along with China's "Belt and Road" initiative, the export of medical devices has been steadily increasing. These countries have significant demand for healthcare infrastructure development, providing a vast market space for Chinese medical equipment enterprises. According to relevant statistics, in the first three quarters of 2024, China's medical device exports to Belt and Road partner countries reached a cumulative total of $13.44 billion, marking a year-on-year increase of 5.1%.

Mindray indicates that even after excluding high-potential seed businesses, the average market share of the company's three major product lines in developing countries is currently only in the high single digits, far below the market share levels in domestic markets. Additionally, the market in developing countries still has significant growth potential. To seize this historical opportunity in the风口 market (trend market), the company continues to allocate resources and increase investments across all aspects. It is expected that for a considerable period in the future, developing countries will remain one of the main drivers of the company's growth. Last year, the company's international revenue ratio saw a noticeable increase, and it is anticipated that the international revenue ratio will likely continue to rise over the next few years.

This year, the procurement orders for medical equipment have shown a significant increase, with trade-in and centralized procurement at the local level proceeding simultaneously. The centralized procurement of equipment has entered a mature stage.

Mindray analyzes that the factors that hindered growth in the domestic market last year, such as the regulatory adjustments in the medical industry, local special bonds, and insufficient fiscal funds, are expected to reach a turning point this year. The regulatory adjustments in the medical industry have basically entered a normalized stage, and a more compliant and transparent procurement environment will also help the company further improve its bid winning rate.

In the recent centralized procurement project for 200 ultrasound machines launched by the Hainan Provincial Health Commission, Mindray took the lead in the number of bids won, securing a total of 160 units.

According to the latest disclosure from Mindray, data from Enterprise Early Warning shows that the issuance of local government special bonds, especially medical special bonds used to support hospital renovations, expansions, and equipment procurement, has continued to accelerate this year. The state has also explicitly proposed a one-time increase in a substantial debt quota to replace local governments' existing implicit debt, intensifying efforts to support local debt risk resolution. Data from Zhongcheng Medical Devices indicates a trend of continuous recovery in monthly bidding for different categories of medical equipment. Although there is a time lag from bidding to revenue recognition, this is of significant importance for the recovery of Mindray's domestic business this year.

At the same time, the provinces for centralized procurement of large medical equipment are also expanding. In addition to Anhui, a major province for equipment procurement, Guangxi has recently issued a medical equipment procurement document, requiring that all medical and health institutions funded by the government or state-owned enterprises (including state-controlled enterprises) that purchase Class B large medical equipment and medical equipment costing more than 10 million yuan per unit (set) using fiscal funds must implement centralized volume-based procurement uniformly through the Autonomous Region Public Resource Trading Center starting March 1, 2025. In principle, centralized volume-based procurement of medical equipment will be organized annually starting in May, with no less than one procurement session each year.

It is noteworthy that Guangxi has imposed requirements on the procurement of imported brands: those that have not obtained a medical equipment configuration license, have not received approval for the procurement of imported medical equipment when required, cannot complete the procurement process within the validity period of the approval, or have not passed the filing process are strictly prohibited from being procured.

According to Guotai Junan Securities, as of early 2025, equipment centralized procurement has been promoted in Yibin, Sichuan; Anyang, Henan; Suzhou, Jiangsu; Anhui and other places, with the terminal prices decreasing by 9%-50% compared to the budget.

Mindray stated that, looking at the global medical device procurement market, the centralization of procurement activities has become one of the important signs of many mature markets. Consolidating large-scale demand for unified procurement helps to form economies of scale, save procurement costs, and reduce unfair competition.

The purpose of centralized procurement of medical devices is to further guide procurement behavior towards compliance, professionalism, and transparency, while also reducing unreasonable markup space in the circulation links. At the same time, it ensures reasonable profits for manufacturers and strongly encourages and supports the demand for digital and intelligent medical devices, alleviating the burden on patients and medical staff and improving service quality.

In terms of profitability, Mindray believes that the profitability of equipment products is influenced by multiple factors, including component prices and the competitive market environment. The impact of centralized procurement projects on profit margins remains within a controllable range. Thanks to sustained high R&D investment, insights into clinical needs, and integrated innovation capabilities, Mindray has achieved high-end breakthroughs in the vast majority of accessible equipment products.

AI has become one of the core elements in the competition among medical imaging companies. Currently, leading equipment companies both domestically and internationally have made varying degrees of progress in the intelligent application of medical imaging models, with medical imaging being the most profound field for AI imaging.

Among domestic companies, Mindray was one of the earliest to explore intelligent solutions and has now established a comprehensive intelligent ecosystem. The company recently disclosed that it has fully integrated AI applications in medical imaging, spanning from POC applications, cardiovascular applications, and obstetric applications to the Ruiying ecosystem. Mindray's medical imaging approach is not limited to standalone intelligent features for localized workflow optimization but aims to create a full-stack, panoramic intelligent ultrasound solution.

After the emergence of DeepSeek, medical device companies have quickly integrated it to enhance product performance, and Mindray is no exception. Mindray stated that "Ruiying Cloud++" has partnered with DeepSeek to officially launch the "Ruiying·AI+" solution, focusing on improving and popularizing medical professional capabilities, providing healthcare workers with professional and intelligent learning and development solutions.

Apart from Mindray, other medical equipment companies such as United Imaging Healthcare and Neusoft Medical have also stated that they have completed or are actively working on integrating their businesses with DeepSeek.

From Mindray's assessment of the three major aspects, the medical equipment industry is expected to expand more incremental business in areas such as overseas expansion, centralized procurement, and AI development this year.