Mindray Medical International Limited. First Quarter 2008

Transcription

1 Mindray Medical International Limited First Quarter 2008

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 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. 2

4 Company Snapshot Globally headquartered in in Shenzhen, China with U.S. U.S. headquarters in in Mahwah, New Jersey and and over 4,800 employees worldwide More than 1,200 total R&D staff in in Shenzhen, Mahwah, Beijing and and Seattle The The single largest sales & services platform in in China Nationwide coverage with with over over sales sales and and sales sales support staff staff exclusive distributors and and more more than than non-exclusive distributors Established direct sales platforms in in the the U.S. U.S. & Western Europe direct direct sales sales staff staff in in the the U.S. U.S. covering 4,000 4,000 hospital customers Direct Direct sales sales teams teams in in the the UK, UK, France and and Germany Rapidly expanding international presence Working with with over over 1,600 1,600 distributors Selling to to more more than than countries 3

5 Product Roadmap Patient Monitoring & Life Support Products In-Vitro Diagnostic Products Medical Imaging Systems Addressable Market Defibrillator & Surgical Beds and Lights Anesthesia Machines Patient 3-part Monitoring Hematolog Devices y Addressable Market 3-Part Hematology Immunoassay 5-Part Hematology Biochemistry Addressable Market Other Imaging Products Digital Radiography Color Ultrasound B/W Ultrasound Time 30+ models currently Time 10+ models currently 30 hematology reagents and 35 biochemistry reagents Time 10+ models currently Patient Monitor Anesthesia Machine Hematology Analyzer Biochemistry Analyzer Color Portable Ultrasound Digital Radiography 4

6 Leading Market Position in China Urumchi Changchun Shenyang Shijiazhuang Beijing Taiyuan Jinan Lanzhou Zhengzhou Xi an Nanjing Hefei Chengdu Wuhan Dalian Qingdao Shanghai Hangzhou Nanchang Chongqing Changsha Fuzhou Guiyang Kunming Guangzhou Shenzhen Nanning Hong Kong Strong Brand Brand Recognition Brand Brand loyalty loyalty enjoyed enjoyed among among domestic domestic hospitals hospitals across across China China High-quality High-quality products products and and customer customer support support services services Extensive Sales Sales Network sales sales and and service service staff staff in in sales sales and and sales sales support support offices offices Over Over exclusive exclusive distributors distributors Competitive Price Price to to Performance Ratio Ratio Around Around 30% 30% discount discount vs. vs. international international players players 20% 20% premium premium vs. vs. domestic domestic players players Sales Force Force Management Low Low turnover turnover rate rate Effective Effective incentive incentive scheme scheme 5

7 Rapidly Expanding International Presence Revenue Breakdown by Region 2003 Total Revenues: RMB 460 million (US$56 mm) 2007 Total Revenues: RMB 2,231 million (US$306 mm) North America 7.7% Eur ope 6.7% Other Asia 7.3% Other 3.1% China 75.2% Other 11.9% North America 6.8% Europe 18.4% Other Asia 13.5% China 49.4% CAGR 108.7% 91.2% 73.0% 44.0% 33.5% 48.4% Other Europe Other Asia North China Total America 6

8 1Q08 Achievements Delivered robust growth despite a challenging currency environment Net Net revenues RMB626.0 million, an an increase of of 48.2% 48.2% YoY YoY Non-GAAP net net income RMB199.2 million, an an increase of of 42.7% 42.7% YoY YoY Accelerated domestic growth solidified No.1 market position in in China 40%+ 40%+ YoY YoYgrowth for for the the 4th 4th consecutive quarter driven driven by by both both tender tender and and distributor sales sales Sustainable high growth of of international business supported by by acquisition 49.4% 49.4% growth rate rate (60%+ in in constant dollar dollar terms) terms) in in international markets excluding DPM DPM Added Added employees from from Datascope s patient monitoring division Gained an an established brand brand line, line, extensive sales sales networks and and experienced engineers in in U.S. U.S. & Western Europe Expanded current product offerings to to broaden market reach Launched two two new new products (DC-3, EX-55/65) Maintained a disciplined cost focus 57.4% 57.4% gross gross margin, 35.2% 35.2% operating margin and and 31.8% 31.8% net net margin Note: All numbers here are non-gaap figures which exclude impact from share-based compensation expenses and amortization of intangibles 7

9 Financials Guidance1 (in millions, except EPS) E YoY growth (%) Net sales RMB 2,230.9 USD 560~580 Gross margin (%) 54.9% 53%~54% Net income 2 RMB USD 132 ~135 43~47% Diluted EPS 3 RMB 5.95 USD 1.16~ ~44% Capital expenditure RMB USD 90~110 Share-based compensation RMB 58.4 USD 11 Acquisition-related intangible amortization expenses (net of tax impact) USD 20 1 Forecast financials as publicly provided on May 8, Non-GAAP net income excluding impact from share-based compensation, amortization/expense of acquired intangibles (net of tax impact) fully diluted EPS is calculated using an estimated 114 million total shares outstanding

10 Maximizing Shareholder Value Net Income 1,2 EPS³ (US$mm) % % CAGR = 63.1% % % Net Margin % % 75% 50% 25% 0% (RMB) Dividend CAGR = 49% Dividend (US$) 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; 2007 using unaudited data as of December 31,

11 Proven R&D Capabilities 1,800 1,600 1,400 1,200 1, Degree Others Ultrasound Diagnostic PMD R&D Team Size 188 R&D Headcount PhD Others 2.9% 6.3% Bachelor 36. 0% R&D Structure Functionality Others 22.6% Over 1,000 staff Over 1,000 staff , E Software 22.5% (US$ mm) 60.0 % of sales (%) Patents 6.6% % 3.0 Authorized (in China): 261 Pending (in China): 602 R&D Investment 8.6% % % % % % E Note: GAAP R&D investment as percentage of sales is 8.8% in 2004, 9.6% in 2005 and 9.4% in 2006 Patents 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Master 54.8% Mechanic 14.6% Hardware 14.5% Authorized (outside China): 7 Pending (outside China): 117 Note: As of June 31, 2008 System 25.9% 10

12 2008 New Product Pipeline Patient Monitoring & Life Support Products In-Vitro Diagnostic Products Medical Imaging Systems ipm Monitor (4Q 2008) BC-5300/ Part Hematology Analyzer (Apr. 2008) DC-3 Ultrasound (Apr. 2008) Defibrillator (4Q 2008) BS-380 Biochemistry Analyzer (4Q 2008) DR-50 Digital Radiography (Jun. 2008) DR-51 (4Q 2008) Start shipping time Expected launching time 5 new reagents (1H 2008) Additional reagents (2H 2008) 11

13 Post-Acquisition Integration Update First Quarter

14 Mindray World Map Post-acquisition Vancouver Toronto Seattle Mahwah AMERICAS Mexico City EUROPE France London Amsterdam Germany Italy Istanbul AFRICA Moscow 30 Offices in China Mumbai Indonesia ASIA-PACIFIC Global HQ in Shenzhen Current Offices Opening Soon Direct sales & service areas through Datascope Patient Monitoring, a Mindray company Headquarters Sao Paulo 13

15 Clear Roadmap for Successful Integration Integration of Supply Chain Product Portfolio Integration Create Shareholder Value Through Successful Integration Brand Transition Integration of R&D Platform 14

16 Integration Milestones Outsource manufacturing to to China Current situation: Majority of of components are are outsourced to to U.S. U.S. vendors Integration plan: plan: Step Step one, one, move move component outsourcing to to Shenzhen. Step Step two, two, redesign components or or platforms as as necessary. Timetable: months for for DPM s existing products. Ongoing long-term process for for future future products. Outsource some R&D to to China Current situation: About About half half of of the the R&D R&D is is outsourced at at a high highcost Integration plan: plan: Step Step one, one, move move outsourced R&D R&D projects to to Shenzhen. Step Step two, two, optimize combined R&D R&D resources for for project pipeline. Timetable: months for for DPM s existing projects. Ongoing long-term process for for future future projects. Maximize cross-selling opportunities Current situation: 100% 100% patient monitoring business on on DPM DPM side side Integration plan: plan: Begin Begin to to sell sell Mindray s patient monitors and and ultrasound products through DPM s hospital channels Timeline: Early Early

17 More than the Sum of its Parts DPM s direct sales and service team in U.S. & Europe Cross-selling opportunities, better distribution for Mindray s high price-toperformance products Mindray s efficient component sourcing and China-based R&D Enhanced ability to tailor / add functionality to DPM products, better and faster response to customer needs 16

18 Summary Mindray s mission to provide high-quality medical devices at competitive prices has proven effective in delivering 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 Datascope s patient monitoring division adds highly complementary assets to Mindray, including a recognized global brand and direct sales & service infrastructure in the U.S. and Europe. 17

19 Thank you! Q&A 18

20 Leading Market Positions in China Patient Monitoring Devices BLT Goldway 1.6% Drager 3.3% 3.8% Spacelabs 2.1% NK 3.5% GE 13.5% BLT 5.5% Philips 18.4% Maxco 1.3% Tecom 11.4% Perlong 3.1% NK 3.9% Procan 2.2% Bayer 2.4% ABX 2.4% Others 4.4% Others 13.3% Beckman 2.2% Sysmex 14.4% Biote 3.7% Mindray 40.4% 3-Part Hematology Analyzer Source: 2007 Frost & Sullivan Report RMB 1,025mm Mindray 43.1% RMB 457mm 200~400 T/H Biochemistry Analyzer AMS 2.9% Others 8.9% 荷兰威图 4% Neusoft 2.4% Sinnowa 5.6% Glamour 3.5% BT 2.0% Sysmex 4.2% Beckman 5.4% Teknova Emperor SIUI 3.9% 5.2% 5.8% Sonoscape Landwind 1.6% 4.2% Hitachie 1.5% Toshiba 2.7% Aloka 8.5% Medison 2.5% Siemens 7.1% Toshiba 7.6% B/W Ultrasound GE 13.50% Hitachi 15.6% Olympus 11.2% Others 15.7% Mindray 27.1% Mindray 27.8% RMB 590mm RMB: 702mm 19

21 New Growth Areas in China 5-Part Hematology Analyzer Others 4.6% NK 8.9% Sysmex 33.8% Bayer 4.0% ABX 7.9% Anesthesia Machine Others 2.6% Kaitai 3.4% Yi'an 4.3% 长峰 8.9% Zhongyuan 14.5% Source: 2007 Frost & Sullivan Report Drager 24.2% 英国百斯 0.9% Beckman 18.2% Mindray 4.0% Mindray 13.9% Abbott 8.6% Penlon 2.1% Kontron 2.5% GE( 欧美达 ) 29.2% RMB 307mm RMB 654mm Color Ultrasound Tearson 0.7% SonoSite 0.4% Esaote 3.5% SIUI 0.3% SonoScape 1.7% Toshiba 5.3% Hitachi 3.1% Others 4.8% Aloka 6.7% GE 29.8% Medison 5.0% Biochemistry Analyzer AMS 1.6% Rayto Caihong 1.5% 2.5% 长春光机 1.3% Bayer Neusoft 1.5% 1.8% Vital Scientific 2.4% Sinnowa 4.1% Glamour 3.8% Others 10.1% BT 1.0% Abbott 2.0% Hitachi 16.5% Sysmex 2.1% Roche 5.8% Philips 18.3% Mindray 4.8% Mindray 14.8% Toshiba 6.5% Beckman 9.7% Siemens 15.50% Olympus 12.1% RMB 2,562mm RMB 1,182mm 20

22 (in millions) Financials 1Q08 Results Highlights 1Q08 RMB US$ 1Q07 RMB US$ CY2007 RMB US$ YoY (in RMB terms) Net Revenues , % Gross Profit¹ Non-GAAP GP Operating Income¹ Non-GAAP OI , , % 48.4% 60.3% 54.6% Net Income¹ Non-GAAP NI Cash and Cash Equivalents , , , Account Receivables Inventories Total Liabilities Total Shareholder s Equity 2, , , A/R Days Inventory Days A/P Days GAAP figures including impact from share-based compensation expenses and amortization of intangibles 46.6% 42.7% 21

23 Working Capital Management (Days) Accounts Receivable (Days) Inventory Days (Days) Accounts Payable (RMB Millions) Operating Cash Flow

24 DPM Transaction Overview Mindray is pleased to announce the execution of a definitive agreement with Datascope to acquire its patient monitoring business, to be integrated into the global strategy of Mindray Assets Included: Purchase Consideration 1,2 : Patient Monitoring business ( DPM ) Mahwah manufacturing facility Trademarks Global Technology Services business associated with Patient Monitoring business Direct sales force Intellectual property Netherlands warehouse facility $209 million (as adjusted for working capital) Timing: Deal closed in May 2008 Financing: 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 All account receivables will be retained by Datascope 23

25 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 an estimated 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/DPM 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 24

26 DPM Direct Service Network in U.S. A strong field presence with a solid reputation 25

27 Long standing contractual relationships with all major GPO s 26

28 Leading positions in U.S. DPM has built a strong business 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 Note: 1 Millennium Research report 27