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Analyst Blog

Mindray Medical International Limited (MR - Analyst Report), a leading Chinese medical device manufacturer, recently revealed that it has agreed to buy a majority holding in Hunan Changsha Tiandiren Biotech Co., Ltd. ("TDR"). The terms of the deal were not revealed as the agreement is not material to Mindray’s financial results.

TDR is a Chinese producer of microbiology analysis offerings focused on microbial identification, antibiotic susceptibility testing (“ID/AST”) as well as blood culture system. TDR, located in Hunan, China, was founded in 1997.

Fast reporting of ID/AST test results and a continuous monitoring blood culture system can yield improved management of antibiotics. The Chinese ID/AST and blood culture system market was valued at $139 million in 2010 and growing at 15% to 20% per annum. The worldwide market was valued at $2.25 billion in 2010 with an annual growth rate of 5%. 

Mindray stated microbiology analysis is an important component of In-Vitro Diagnostics (IVD). The deal demonstrates Mindray’s determination to grow its IVD range of products. TDR’s offerings will blend into the company’s pre-existing IVD offerings.  

Mindray is a bellwether in the Chinese MedTech industry with a solid international presence. A key distinction with domestic competitors is that the majority of Mindray’s products have CE Mark and/or Food and Drug Administration (“FDA”) clearance.

Mindray maintains a decent product pipeline and brings out several new products each year. New products contribute in a major way to its revenues.

The company has entered the premium segment globally, where its competitive advantage is still unclear. Also, on the negative side, health care reform, in China and the U.S., may reduce demand for Mindray’s products. Competition is fierce and leads to price erosion over time.

Mindray’s competitors, in different niche segments, include General Electric (GE - Analyst Report), Philips (PHG">PHG) and Siemens . Our Neutral recommendation is supported by a short-term Zacks #3 Rank (Hold).