Mindray Medical International Limited. Corporate Presentation January 2009

Transcription

1 Mindray Medical International Limited Corporate Presentation January 2009

2 Disclaimer This material contains forward-looking statements with respect to the company's outlook regarding drivers, developments, and trends affecting its worldwide markets, opening of international offices, new product development and commercial launch dates, projected revenues, net income margins, earnings per share, revenue growth targets, net income growth targets, sales force and distributor targets, projections of the size of China's healthcare market, estimated government expenditures, research and development expenditure targets, the company's manufacturing development plan, and the anticipated results of its product development activities. These statements are based on information available at the time they are made and are subject to a number of risks and uncertainties. Actual results could differ materially from those anticipated by these forward-looking statements as a result of a number of factors, some of which may be beyond the company's control. Factors that affect the Company's business operations and product development, as well as a further list and description of risks and uncertainties associated with Mindray's business, are discussed in its reports filed with the Securities and Exchange Commission, including its most recent annual report on Form 20-F. Mindray disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. 1

3 Index Overview Mission and Vision Slide 3 Investment highlights Slide 4 Introduction to three product segments Slide 5-10 R&D competitiveness and cost advantages Slide Market position and growth strategies Slide Business updates 2008 Preliminary results Slide Outlook Slide 17 Appendix Focus on maximizing shareholder value Slide 22 China market share update Slide DPM acquisition overview Slide

4 Mission and Vision MISSION To improve the health and wellbeing of the world s people by providing the highest quality medical equipment and services at the most competitive prices VISION To be a worldclass medical equipment solutions provider by increasing accessibility to affordable quality health care while creating value for customers, employees, shareholders and society 3

5 Investment Highlights World-class R&D platform Industry s largest R&D R&D team teamin in China China with with over over 1,400 1,400 staff staff Two Tworesearch centers in in Mahwah and and Seattle, USA, USA, with with staff staff Competitive product positioning Top Top quality and and best value in in the the market Leading market position in in China 1,000+ sales sales and and sales sales support staff staff in in offices covering major major cities cities all all over over China China 2,000+ distributors including 1,000+ exclusive distributors Established and and fast fast growing international presence Acquired established direct direct sales sales & services infrastructure in in US US & Western Europe sales sales countries and and 1,200+ distributor partnerships Experienced management team Co-founders are are pioneers in in China s medical device industry International experience 4

6 Product Line I: Patient Monitoring & Life Support Products Multi-parameter Patient Monitoring Hand-carried Patient Monitoring Vital Vital Signs Signs Patient Monitoring Central Station Telemetry Anesthesia Machine Defibrillator NEW! 5

7 The 3rd Largest Player in the Global Patient Monitoring Devices Market Global PMD PMD market is is ~$ ~$ billion, projected to to grow grow at at 3% 3% annually In In China, China, Mindray holds holds ~50% ~50% market share share for for the the PMD PMD market as as of of mid mid Overall PMD PMD market in in China China is is ~$170m and and growing at at more more than than 8% 8% per per annum Main Main growth drivers Penetrating into into higher higher end end hospitals Increasing use use of of PMDs PMDs in in hospitals in in China China Ongoing replacement of of old/expiring PMDs PMDs worldwide Operating room room full full suite suite solution Product Development Roadmap Addressable Market Size (us$) Surgical Beds and Lights: 0.3B Defibrillator: 1.2B Anesthesia Machines: 0.5B Patient Monitoring Devices: 3.3B Time 35+ models currently Total addressable market size worldwide : USD 5.3bln Note: Source: company estimates 6

8 Product Line II:In-Vitro Diagnostic Products 3-part/ 5-part 5-part Hematology Analyzer Biochemistry Analyzer Microplate Washer Microplate Reader Veterinary Reagent NEW! 7

9 In-Vitro Diagnostic Products, the Biggest Addressable Market Global market for for in-vitro diagnostic devices ( IVD ) is is ~$19 ~$19 billion, projected to to grow grow at at 4% 4% annually In In China, China, Mindray has has ~40% ~40% of of the the 3-part 3-part hematology analyzers market, 16% 16% of of the the biochemistry analyzers market as as of of mid mid Overall IVD IVD market in in China China is is ~ $900m and and expected to to grow grow 20% 20% per per annum for for the the next next 5 years years Growth drivers Preventive measures Demand for for early early and and better better diagnostics Government funding to to hospitals and and clinics clinics in in rural rural areas areas in in China China Accelerating reagent business Product Development Roadmap Addressable Market Size (us$) Immunoassay: 10.5B 5-Part Hematology: 1.6B Biochemistry: 5.7B 3-Part Hematology: 1.1B Time 10+ models currently 59 hematology reagents and 56 biochemistry reagents Total addressable market size worldwide: USD18.9bln Note: Source: company estimates 8

10 Product Line III: Medical Imaging Systems Color Color Ultrasound B/W B/W Ultrasound Portable B/W B/W & Color Color Ultrasound Veterinary Digital Radiography NEW! 9

11 Medical Imaging Systems, the Fastest Growing Line Global ultrasound market is is ~ $ 4.5billion, projected to to grow grow at at 4% 4% annually In In China, China, Mindray has has ~33% ~33% of of the the b/w b/w ultrasound market, 8% 8% of of the the color color ultrasound market as as of of mid mid Chinese ultrasound market ~ $470m, expected to to grow grow at at more more than than 10% 10% over over the the next next few few years years Growth drivers Government funding to to hospitals, clinics clinics in in rural rural areas areas as as well well as as community clinics clinics Ongoing replacement of of old old or or expiring black black & white white ultrasounds Hand-carried ultrasound ( HCU ) expected to to outpace overall market Product Development Roadmap Addressable Market Size (us$) Digital Radiography B/W Ultrasound: 1.2B Time 10+ models currently Other Imaging Products Color Ultrasound: 3.3B Total addressable market size worldwide: > 4.5B Note: Source: company estimates 10

12 Growth Driver - R&D Competitiveness Degree R&D Team Size PMD Diagnostic Ultrasound Others PhD Others 5.4% 3.1% R&D Headcount 283 Bachelor 29.6% R&D Structure Functionality Others 17.1% Software 25.1% (US$mm) % Patents % R&D Investment % % 13.2 Authorized (in China): % 9.8% 19.1 % of sales (%) % 10.0% 9.6% 9.7% % E Note: GAAP R&D investment as percentage of sales is 8.8% in 2004, 9.8% in 2005, 9. 8% in 2006, 9.6% in 2007 and estimated to be 9.7% in Patents 8.0% 6.0% 4.0% 2.0% Supporting 4.9% Pending (in China): 402 Master 62.0% Mechanic 14.0% Hardware 12.7% Authorized (ex-china): 13 Total: 1,499 Engineers System 26.2% Pending (ex-china): 133 Note: As of Dec. 31,

13 10 First-time Product Approvals in 2008 Patient Monitoring & Life Support Products In-Vitro Diagnostic Products Medical Imaging Systems ipm Monitor (Dec. 2008) BC-5300/ Part Hematology Analyzer (Jan. 2008) DC-3 Ultrasound (Mar. 2008) Defibrillator (Dec. 2008) AS3000 (Jun. 2008) EX55/65 (Mar. 2008) BS-380 Biochemistry Analyzer (Dec. 2008) BA88A semi-automatic biochemistry analyzer (Oct. 2008) 6 Biochemistry reagents & 6 Hematology reagents (FY 2008) DigiEye-560T Digital Radiography (Jun. 2008) DigiEye-561T (Dec. 2008) 12

14 Maintain Sustainable Cost Advantage 58% 57% 56% 55% 54% 53% 52% Consolidated non-gaap Gross Margin (%) % % 54.3% % % Maintained a consistent non-gaap gross margin of 54~56% since 2003 R&D working with manufacturing to deliver sustainable competitive cost advantage and push products up the value chain Further decrease material cost and increase our operational efficiencies as we build economies of scale Strive to fully realize cost synergies with DPM acquisition Note: All numbers are non-gaap numbers excluding impact from share-based compensation and amortization of intangible assets 13

15 Leading Position in China More than 80% of our sales are through distributors Urumchi Lanzhou Chengdu Kunming Chongqing Xi an Guiyang Nanning Taiyuan Zhengzhou Beijing Wuhan Changsha Guangzhou Shijiazhuang Shenyang Jinan Nanjing Hefei Dalian Qingdao Nanchang Shenzhen Hong Kong Shanghai Hangzhou Fuzhou Changchun Competitive Price Price to to Performance Ratio Ratio Around Around 20%-30% 20%-30% discount discount vs. vs. international international players players 20% 20% premium premium vs. vs. domestic domestic players players Extensive Sales Sales Network sales sales and and sales sales support support offices offices sales sales and and service service staff staff distributors distributors (including (including exclusive exclusive distributors) distributors) Sales Sales Force Force Management Low Low employee employee turnover turnover rate rate experienced experienced sales sales employees employees Strong Brand Brand Recognition Brand Brand loyalty loyalty recognized recognized domestic domestic hospitals hospitals across across China China High-quality High-quality products products and and customer customer support support services services 14

16 Growth Drivers and Strategy in China Gain market share in in high-end markets Target rural area hospitals and and community clinics and and benefit from government s significant investment in in rural areas Introduce new new products to to penetrate new new markets; recent examples include: Beneview series, color ultrasound, 5 part part hematology, digital radiography, defibrillator Generate more recurring revenue from reagents Increase installation base of of 5-part hematology analyzers More biochemistry reagents to to launch into into market Continue to to build sales force and and distribution channels Enhance brand recognition Government providing support for for the the marketplace --stimulus package 15

17 Strengths and Growth Catalysts in International Market Leveraging direct sales infrastructure in in the the U.S. U.S. and and western Europe for for cross-selling DPM DPM has has long long standing contractual relationships with with all all major major GPO s in in the the U.S. U.S. Cross-selling plan plan materializes as as first first jointly jointly developed product to to launch in in 1H 09, 1H 09, followed by by another in in 2H 09 2H 09 On On track track to to deliver $30mm run-rate synergies in in year year from from DPM DPM acquisition Building up up worldwide distribution networks international sales sales people work work together with with 1,900+ international distributors Established operations in in strategic sales sales countries with with continuous recruitment and and localization of of staff staff to to increase awareness of of the the Mindray brand brand Realigned sales sales channels of of both both sides, sides, taking taking advantage of of DPM s direct direct sales sales infrastructure in in the the US US and and Western Europe and and Mindray s emerging market presence Opportunity for for Mindray to to increase share in in current market environment MR s MR s high high value-price ratio ratio products are are more more attractive in in a cost-conscious global global market Continuing to to benefit from global trends Increasing pricing pressure on on hospitals and and clinics, healthcare affordability, aging aging population 16

18 2008 Preliminary Results (in US millions, except EPS) YoY growth (%) Net sales $540~550 $294 84%~87% Net income 2 $132 $ % Diluted EPS 2,3 $1.16 $ % Note: Preliminary financials as publicly provided on January 12, 2009 Non-GAAP figure - excludes impact from share-based compensation and amortization of intangible assets as defined in the Company's November 10, 2008 earnings press release and SEC filing that these slides accompany fully diluted EPS is calculated using an estimated 114 million total shares outstanding 17

19 2009 Outlook Remain very confident in the long-term trends of the business and continue to achieve market share gains, 2009 annual sales expected to grow at least 20%YoY Continue to launch 7-9 new products in Products launched in the last 18 months will help support revenue growth and profitability in 2009 and beyond Positive domestic outlook- continued government spending combined with MR s leadership position in China to help maintain strong domestic growth DPM integration on track First jointly developed product expected to be launched in 1H 09 Cost reductions from manufacturing and R&D synergies Cross selling benefits to be realized in 2009 Vertically integrated model enables MR to achieve immediate cost savings, supporting steady gross margin and competitive pricing Continued core focus on operating efficiency and margin improvement 18

20 Summary Mindray s mission to provide high-quality medical devices at competitive prices has proven to deliver high-growth in both developed and developing markets Pragmatic positioning in each market and segment optimizes earnings by striking a balance between profit and market share World-class R&D capabilities and operational efficiency ensures quality consistency, pricing competitiveness and abundant cash flow Diversified product portfolio and geographic distribution reduces earnings fluctuations and maximizes exposure to growth opportunities across segments and geographies Acquisition of DPM adds highly complementary assets to Mindray, including a recognized global brand and direct sales & service infrastructure in US and Europe 19

21 Thank you! Q&A 20

22 Appendix 21

23 Focus on Maximizing Shareholder Value Net Income 1,2 EPS³ (US$mm) % % CAGR 58.9% % % % Net Margin % E 100% 75% 50% 25% 0% (US$) E Note: 1 Foreign exchange rate: using the noon buying rate of the Federal Reserve of New York at the quarter/year end 2 Non-GAAP net income excluding impact from share-based compensation, amortization/expense of acquired intangibles (net of tax impact) ³ Non- GAAP EPS excluding impact from share-based compensation, amortization/expense of acquired intangibles (net of tax impact) 22

24 Leading Market Positions in China Patient Monitoring Devices Drager 3.0% Spacelabs 2.0% NK 2.0% GE 9.0% Goldway 4.0% Philips 15.0% Urit 6.0% Others 15.0% BLT 4.0% Guoteng 2.0% Tecom 7.0% Perlong 2.0% NK 4.0% Procan ABX 3.0% Biote 3.0% 4.0% Sysmex 12.0% Creative 2.0% Others 5.0% Mindray 52.0% 3-Part Hematology Analyzer Mindray 44.0% RMB 546mm * RMB 202mm* * Note: Corporate estimates as of June 30, Market size numbers are of the 1 st half of ~400 T/H Biochemistry Analyzer Neusoft 3.0% Others 25.0% Sinnowa 6.0% Beckman 4.0% Toshiba 7.0% SIUI Sinoways6.0% 2.0% Landwind 3.0% Toshiba 5.0% Hitachi 2.0% Aloka 9.0% Medison 2.0% Emperor 3.0% Siemens 6.0% Hitachi 9.0% B/W Ultrasound Teknova 3.0% GE 12.00% Kehua 3.0% Huashixin 2% Olympus 13.0% Others 10.0% Chison 4.0% Mindray 28.0% Mindray 33.0% RMB 380mm* RMB: 317mm* 23

25 New Growth Areas in China 5-Part Hematology Analyzer Others 11.0% Sysmex 37.0% Others 7.0% Yi'an 17.0% NK 6.0% Zhongyuan 5.0% Bayer 5.0% Drager 19.0% 英国百斯 9.0% ABX 7.0% Anesthesia Machine Beckman 14.0% Mindray 4.0% Changkong 5.0% GE 28.0% Mindray 16.0% Abbott 8.0% RMB 159mm* RMB 326mm* * Note: Corporate estimates as of June 30, Market size numbers are of the 1 st half of Color Ultrasound Esatoe 5.0% Others 5.0% SonoScape 2.0% Toshiba 5.0% Hitachi 4.0% Aloka 8.0% Neusoft 2.0% Others 7.0% Sinnowa 4.0% Abbott 2.0% Roche 6.0% Kehua 2.0% Beckman 10.0% GE 30.0% Medison 3.0% Biochemistry Analyzer Hitachi 19% Toshiba 9.0% Philips 19.0% Mindray 19.0% Olympus 20.0% Mindray 8.0% Siemens 15.50% RMB 1,343mm* RMB 560mm* 24

26 Datascope Transaction Overview Mindray successfully acquired Datascope Patient Monitoring Business in May, The acquisition integration to date is on track. Assets Included: Purchase Consideration 1,2 : Patient monitoring business ( PMB ) Mahwah manufacturing facility Trademarks Global technology services business associated with patient monitoring business Direct sales force Intellectual property Netherlands warehouse facility $209 million (implied CY 07 revenue multiple of 1.30x) Timing: Deal closed in May, 2008 Financing: Will be financed by cash on balance sheet and debt Non-GAAP EPS Impact: Expected to be accretive in 09 Note: 1 Based on reported CY07 revenue for patient monitoring business of $161.3mm 2 $38m in account receivables will be retained by Datascope 25

27 Transaction Highlights Global Footprint US Infrastructure & Direct Distribution Broadens Mindray international presence and significantly increases US operational footprint Increases MR total 07 revenue base by ~53% Provides immediate direct sales and service capabilities in US Enhances R&D capabilities for the combined entity Creates cross-selling opportunities for MR s product lines Strong Brand The Mindray/PMB combination will bring together two leading brands in patient monitoring Use of the Datascope brand through 2015 Manufacturing and R&D Outsourcing Savings Significant opportunity to improve gross margins on DPM stand-alone monitors Enhanced product offerings with access to China-based R&D capabilities Significant Operating Synergies Mindray expects to achieve approximately $30mm of run-rate synergies (annual) in the areas of manufacturing, SG&A and R&D within 3 years from closing 26

28 A Perfect Fit of Complementary Assets Leading market position in China Established and rapidly growing presence outside of China Sales in more than 140 countries More than 1,200 international distributors Revenue growth of 47% and net income growth of 64% in 2007 World-class R&D platform with more than 1,000 R&D engineers More than 5,000 employees worldwide Strong brand name in US patient monitoring market Leading share in specific sub-segments of US patient monitoring market¹: > 50% share in Ambulatory Surgery Centers 10-15% in Hospital Anesthesia Market ~ 20% in Vital Signs Monitoring Large, established US and European direct sales and service organization dedicated to patient monitoring Note: 1 Millennium Research report 27