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Chinese medical devices major Mindray Medical International Limited (MR - Analyst Report) recently revealed a voluntary recall impacting its A3/A5 Anesthesia Delivery System. The company launched the recall on account of an admitted chance of a leak in the system due to inappropriate positioning of the carbon dioxide absorbent gasket in the canister.  

Clients with a system (s) that may be recalled were informed via postal mail on August 8, 2012. As of November 14, 2012, about 70% of the sets impacted by this action had been rectified. The matter is rectified by the substitution of the gasket in the canister by a Mindray representative.  

Sets with the impacted gaskets were dispatched between May 31, 2011 and July 15, 2012 in Australia, Latin America and the U.S. The company has informed the Food and Drug Administration (FDA) about the voluntary recall. Quality problems and negative reactions may be reported to the FDA by fax, normal mail or via the Internet.

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 Mindray’s revenues. In fiscal 2011, the company launched 13 new products.

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 GE Healthcare, a part of General Electric (GE - Analyst Report), Philips (PHG - Analyst Report) and Siemens . The stock currently retains a Zacks #3 Rank, which translates into a short-term “Hold” rating.

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