23
0 Mindray Medical International Limited Corporate Presentation May, 2010
0
Mindray Medical International Limited
Corporate Presentation
May, 2010
1
Disclaimer
This material contains “forward-looking statements” within the meaning of the safe harbor provisions of the U. S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts but instead represent only the company's beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the company's control. It is possible that the firm's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. It is possible that our actual results and financial condition and other circumstances may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of factors, including but not limited to: those related to the company’s business outlook for the fiscal year 2010, including with respect to net revenues, non-GAAP net income, capital expenditure, anticipated growth or recovery in particular geographic or product markets, the impact of anticipated healthcare reform or government expenditures, the level of investment in healthcare from government and private sources, the company’s ability to benefit from planned company investments or to derive anticipated operation synergies, to improve cost structures and operational efficiencies and to benefit from government tender sales in China, and growth of non-tender sales in China. These statements are not historical facts but instead represent only our belief regarding future events or circumstances, many of which, by their nature, are inherently uncertain and outside of our control. For a discussion of some of the risks and important factors that could adversely affect our business, financial condition, results of operations, and prospects, see “Risk Factors” beginning on page 7 of our annual report on Form 20-F for the fiscal year ended December 31, 2009.The financial information contained in these materials should be read in conjunction with the consolidated financial statements and notes thereto included in our public filings with the Securities and Exchange Commission. Our results of operations for the first quarter of 2010 are not necessarily indicative of our operating results for any future periods. Any projections in this release are based on limited information currently available to us, which is subject to change.Although such projections and the factors influencing them will likely change, we will not necessarily update the information. Such information speaks only as of the date of this release. 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.
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Who We Are
Mindray is a leading developer, manufacturer and marketer of medical devices worldwide, creating value and driving growth through:
Meeting the needs of hospitals and health systems in various geographies around the world
Constant innovation driven by a vertically integrated business model and a world class R&D operation
A market‐leading position in China, with a fast growing international presence
33
Broad and Growing Product Family
44
• A world‐class organization rooted in the world’s fastest growing market
• China’s first domestic brand in three product areas, today backed by international research centers in U.S. and Europe
• China’s most comprehensive sales and service infrastructure, covering all major cities from local sales offices with distributors covering vast rural and remote areas
• High growth track record in international markets
• Through acquisition and organic expansion programs, we build direct and indirect sales infrastructure in the international markets to increase penetration into hospitals and other points of sale around the world
• Long‐term focus on growth, profitability and cash generation
Investment Highlights
59 85132 164
294
548634
35 53 89 133 147
16 22 56
216 245 253
373
23130
100200300400500600700
2003 2004 2005 2006 2007 2008 2009
Revenue
Net income*
Cash & cash equivalents and short‐term/restricted investmentsUS$ mm
* non-GAAP figures which exclude share-based compensation expense and acquired intangible assets amortization expense, in-progress research and development expenses, realignment costs - post acquisition, as well as income from early termination of contract, all net of related tax impact .
55
Continuous Innovation Drives Rapid Growth
0
100
200
300
400
500
600
700
800
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010E
Total Revenue USD mm
Multi‐parameter Patient Monitor
Anesthesia Patient Monitor;SpO2 & Blood Patient Monitor
Modular Patient Monitor
3‐part diff. Hematology Analyzer
B/W Ultrasound;Semi‐automatic Biochemistry Analyzer
Fully Automatic Biochemistry Analyzer
Portable B/W Ultrasound;Portable CRT Screen Patient Monitor
5‐part diff. Hematology Analyzer ;Color Ultrasound;High‐Value Patient Monitor;Anesthesia Machine
Mid‐end Biochemistry Analyzer
Hand‐carried Color Ultrasound;DigitalRadiography;Defibrillator
Surgical Light & Bed;Ceiling Pendent System;High‐end Color Ultrasound
-- Patient Monitoring & Life Support Products
-- In‐Vitro Diagnostic Products
-- Medical Imaging Systems
6
1Q10 Highlights
Achieved overall sales growth of 8.7% (a 14.2% increase after excluding the impact of the 1Q09 retroactive software VAT refund)
Strong non‐tender sales growth of over 45% in the domestic China market
Substantial international market growth fueled by robust performance in all emerging markets
$8.6 million tax reduction improved bottom line
31.6% YoY growth in non‐GAAP net income
Non‐GAAP gross margin improved to 57.5% from 56.9% of 1Q09; non‐GAAP operating margin of 24.6%
Launched M7, a higher end portable color ultrasound system that enhanced our product mix and increased access to higher end markets
Cash & cash equivalents and short‐term investments reached $376.8 million at the end of the quarter
Note:
All numbers here are non‐GAAP figures which excludes share‐based compensation expense and acquired intangible assets amortization expense and realignment
costs ‐ post acquisition, all net of related tax impact
7
Financials – 1Q10 Results Highlights
Note:1 GAAP figures include share‐based compensation expense and acquired intangible assets amortization expense and realignment costs ‐ post acquisition, as well as related tax impact .
USD (in millions)except EPS, A/R, A/P, Inventory days
1Q10 1Q09 4Q09 YoY
Net Revenues 145.8 134.2 188.8 8.7%
Operating Income¹Non‐GAAP OI
EBITDA
31.935.9
38.8
29.434.7
35.6
38.042.3
51.7
8.5%3.6%
9.0%
Net Income¹Non‐GAAP NI
36.240.1
25.330.5
37.441.7
42.8%31.6%
Diluted EPS¹Non‐GAAP Diluted EPS
0.310.35
0.230.27
0.330.37
38.4%27.5%
Accounts Receivable Days 69 60 53Inventory Days 96 88 74Accounts Payable Days 60 58 43
8
1Q10 Domestic Market Highlights
China sales grew 11.3%, net of $6.5 million in retroactive software VAT refund received in
Q1 2009
Experienced strong non‐tender sales growth of over 45% in the Chinese market,
primarily driven by continuous strong demand and purchasing power of the Chinese
hospitals
Excellent brand awareness and strengthened sales channel to drive strong non‐
tender sales in the future, particularly among higher‐end products
Impressive growth in spite of the lingering effect of the Chinese New Year in February
Tender sales accounted for 9.5% of China sales as a result of a drop in government
spending year over year
9
1Q10 International Market Highlights
1Q10 International sales increase of 16.6% over 1Q09
Grew over 30 % year‐over‐year in emerging market sales
Achieved positive growth in North American sales for the first time since the beginning
of 2009; order in‐take grew at an even faster rate than sales
Eastern Europe and the CIS region achieved substantial growth for the first time since the financial crisis
Newly established ultrasound sales team in North America continues to demonstrate
success by expanding sales through both direct and indirect channels
Enhanced our investment in international channels to better penetrate the international
market
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2010 Market Outlook and Company Priorities
MARKET DYNAMICS
• Favorable Chinese private and government spending environment to continue
• Emerging market conditions continue to improve
• U.S. healthcare reform uncertainties to remain in the early part of the year
• Other developed markets to see slow recovery
MINDRAY OPPORTUNITIES
• Strong 2010 new product pipeline to support new segment penetration
• Accelerated Mahwah synergies to continue with better penetration of newer products introduced during 2009
• Continue to improve working capital management:
• Inventory Management: Gradually improve inventory levels as a function of sales
• Accounts Receivables: continue to closely monitor our overall credit performance to strike a balance between the sales need and the risk tolerance level for the company
11
Upgrade International Sales Infrastructure
• Realign international sales management to build distinct indirect and direct sales models
• Invest in localizing operations of key growth areas (Latin America, Asia Pacific and Africa)
• Expand ultrasound direct sales business in developed markets
12
2010 New Product Pipeline
Patient Monitoring & Life Support ProductsPatient Monitoring
& Life Support ProductsIn‐Vitro Diagnostic ProductsIn‐Vitro Diagnostic Products Medical Imaging SystemsMedical Imaging Systems
Surgical light
Surgical bed
Patient Monitor
Ceiling pendent system
9 Reagents Portable color ultrasound
Digital radiographyBiochemical analyzer
13
Mahwah Synergies and Growth Drivers
• Focus on further market penetration of products introduced in 2009
• R&D to continue to develop products for the U.S. and other developed markets
• Manufacturing realignment to take advantage of core competency in each of our geographies
• Continue the early success of ultrasound initial launch in hospitals by further building a direct sales operation in developed markets
• Emphasis on efficiency improvement to enhance output from our sales and marketing operation
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Financials ‐‐ 2010 Guidance1
1 Forecast financials as publicly provided on May 10, 2010 2 This guidance has excluded the $8.6 million adjustments in corporate income tax provision in 1Q 2010 related to the nationwide software enterprise
status for fiscal year 2009. This guidance also assumes the Shenzhen subsidiary continues to receive a 15% corporate income tax rate.
Net revenue 17% YoY
Non‐GAAP net income 17% YoY
Capital expenditure $60 – 70 million
1515
Appendix
16Note: As of Dec. 31, 2009 Note: As of Dec. 31, 2009 16
684 719
1417
154 188283
472
394424246189 207
389417
288200 208
353376
217
145 155
281282
285
150 149
1499
1036
2001 2002 2003 2004 2005 2006 2007 2008 2009
R&D Focus and Competency
1.6 3.04.8
7.4
13.2
19.1
29.5
52.0
58.0
6.6%
8.1%8.6% 8.8%
9.8% 9.8% 9.6% 9.5%9.20%
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
2001 2002 2003 2004 2005 2006 2007 2008 20090.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
R&D InvestmentR&D Investment
Note: GAAP R&D investment as percentage of sales is 8.8% in 2004, 9.8% in 2005, 9. 8% in 2006, 9.6% in 2007, 9.5% in 2008 and 9.2% in 2009.
% of sales (%)(US$mm)
Global R&D HeadcountGlobal R&D Headcount
Shenzhen R&D StructureShenzhen R&D Structure PatentsPatents
Overall R&D
PMDIVD
MIS
Others
PhD3%Others
5%
Bachelor28%
Master64%
Analytic7%
Mechanic13%
System20%
Others20%
Software27%
Hardware13%
Total: 1,417 Engineers
Degree Functionality
China Patents
Authorized: 383
Pending: 393
1717
Sustainable Market Leadership in China
Strong Brand Recognition Brand loyalty among domestic hospitals across ChinaHigh‐quality products and customer support services
Extensive Sales & Service Network30 sales and sales support offices1000+ sales and service staff 2000+ distributors (including 1200+ exclusive distributors)
Competitive Price to Performance RatioApproximately 30% discount vs. international playersApproximately 20% premium vs. domestic players
Sales Force ManagementLow turnover rateEffective incentive scheme
Strong Brand Recognition Brand loyalty among domestic hospitals across ChinaHigh‐quality products and customer support services
Extensive Sales & Service Network30 sales and sales support offices1000+ sales and service staff 2000+ distributors (including 1200+ exclusive distributors)
Competitive Price to Performance RatioApproximately 30% discount vs. international playersApproximately 20% premium vs. domestic players
Sales Force ManagementLow turnover rateEffective incentive scheme
Urumchi
Shenyang
DalianBeijing
QingdaoJinanTaiyuan
Zhengzhou
Xi’an
Lanzhou
Shanghai
Nanjing
Hangzhou
Fuzhou
Hefei
Wuhan
NanchangChangsha
Guangzhou
Hong Kong
Shenzhen
Nanning
Chengdu
Chongqing
Kunming
Guiyang
Changchun
Shijiazhuang
Tianjin
Harbin
Suzhou
1818
1.301.17
0.15
0.270.42
0.79
0.55
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
2003 2004 2005 2006 2007 2008 2009
Investment Highlights: Long‐term Focus On Shareholder Value Growth
EPS*EPS*Net Income*Net Income*
(US$)
1323
35
53
89
133147
25.4%
24.2%
30.1%
27.5%25.6%26.0%
22.0%
0
20
40
60
80
100
120
140
160
2003 2004 2005 2006 2007 2008 20090.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
Net Income (US$mm) Net Margin
CAGR = 49.8%
* non-GAAP figures which exclude excludes share-based compensation expense and acquired intangible assets amortization expense, in-progress research and development expenses, realignment costs - post acquisition, as well as income from early termination of contract, all net of related tax impact.
1919
Others6%
EmergingMarket22%
Developed Market26%
China46%
Revenue Growth and Breakdown by RegionRevenue Growth and Breakdown by Region
2003 Total Revenues: US$ 59mm
2009 Total Revenues: US$ 634mm
Investment Highlights: Demonstrated High Growth Record
Others5%Emerging
Market 12%
DevelopedMarket8%
China75%
2020
3-part Hematology
Patient Monitoring & Life Support ProductsPatient Monitoring & Life Support Products
In-Vitro Diagnostic ProductsIn-Vitro Diagnostic Products Medical Imaging SystemsMedical Imaging Systems
1998 2001 2006
Launch Time
Immunoassay & reagent: 10.5B
3-Part Hematology & reagent: 1.5B
5-Part Hematology & reagent: 1.1B
Biochemistry & reagent: 5.7B
B/W Ultrasound: 1.2B
Digital Radiography: 1.1B
2000 2006 2008
Launch Time
Other Imaging Products
Color Ultrasound: 3.3B
Patient Monitoring Devices: 2.7B
Anesthesia Machines: 0.8B
Defibrillator & Surgical Beds and Lights:1.5B
1992 2006 2009
Launch Time
40+ models currently
Total addressable market size worldwide : ~ 5B
20 models currently
55 hematology reagents and 55biochemistry reagents
Total addressable market size worldwide: ~18.8B
15+ models currently
Total addressable market size worldwide: > 5.6B
Investment Highlights: Proven Product Development Capabilities
Add
ress
able
Mar
ket
Size
(us
$)
Add
ress
able
Mar
ket
Size
(us
$)
Add
ress
able
Mar
ket
Size
(us
$)
Other life support products
Source: Company estimates, as of Dec. 31, 2008
2121
Mindray32%
Foreign brands24%
Foreign brands22%
Other domestic brands 39%
Mindray39%
Foreign brands34%
Other domesticbrands 17%
Mindray49%
Mindray30%
Other domestic brands 24%
Foreign brands46%
Investment Highlights: Leading Market Positions in China
RMB 591mm
RMB 303mm
Patient Monitoring DevicesPatient Monitoring Devices
3-Part Hematology Analyzers & Reagents3-Part Hematology Analyzers & Reagents
200~400 T/H Biochemistry Analyzers200~400 T/H Biochemistry Analyzers
RMB 350mm
RMB: 392mm
B/W Ultrasound SystemsB/W Ultrasound Systems
Other domesticbrands 44%
Note: 1H09 domestic China market share numbers, corporate estimates as of June 30, 2009
2222
Foreign brands73%
Mindray13%
Ultrasound Systems (B/W & Color Ultrasound Systems)Ultrasound Systems (B/W & Color Ultrasound Systems)
RMB 2,081mm
Foreign brands 70%
Domesticbrands 30%
Life Support Products (Defibrillators, Surgical Lights & Beds)Life Support Products (Defibrillators, Surgical Lights & Beds)
Mindray16%Foreign brands
50%
RMB 2,015mm
Other domesticbrands 34%
In-Vitro Diagnostic Products & ReagentsIn-Vitro Diagnostic Products & Reagents
Investment Highlights: Promising Market Expansion Potential in China
Note: 1H09 domestic China market share numbers, corporate estimates as of June 30, 2009
Est. RMB 800mm
Other domesticbrands 14%
RMB 879mm
Other domesticbrands 21%
Patient Monitoring & Anesthesia MachinesPatient Monitoring & Anesthesia Machines
Mindray37%
Foreignbrands 42%
