Business

Sun Apr 27 03:37:51 PDT 2008

* Profit growth to accelerate to over 40 percent in 2009

* Mindray to double research staff by end-2009, rising to about 2,000

By Kirby Chien

BEIJING, April 24 (Reuters) – China’s top maker of medical devices, Mindray Medical, said on Thursday business was accelerating after the recent purchase of a Datascope Corp unit, making the doubling of its research team a must.

The firm’s vice president of strategic development, Cheng Minghe, told Reuters in an interview that the acquisition will also boost earnings growth beginning next year.

Mindray Medical International Ltd last month agreed to buy Datascope patient monitoring business for $202 million in cash to help it expand in the United States and Europe.

"The Datascope buy should help earnings growth to accelerate in 2009," said Cheng. "It should be better than 40 percent next year."

However, sales growth could slow to around 30 percent because of the larger base, he said. The addition of the Datascope unit will increase Mindray’s sales by over half.

Mindray had said previously that sales and profits would both grow around 40 percent over the next few years.

The faster pace of growth is also putting pressure on the firm’s 1,000-strong research and development team, he said.

"Our research team will need to about double by the end of next year," Cheng said.

"There are a lot of new projects." However, the company will continue to maintain its research budget at about 10 percent of sales, as rising sales will expand the research spending.

The company is still waiting for the Committee on Foreign Investment in the United States to approve the deal which Cheng expects to come by the middle of next month.

Continued…

EXPANDING OVERSEAS

Before the Datascope purchase about half of the company’s sales came in overseas markets, which are split roughly into thirds: Europe, Asia (ex-China), and the Americas, said Cheng.

The push overseas pits Mindray against global giants such as General Electric Co, Germany’s Siemens AG and Philips.

While the potential for the domestic healthcare industry is huge, China only accounts for about 5 percent of the global healthcare market. Its sales growth overseas will continue to outpace domestic sales for the foreseeable future, he said.

Moreover, the global economic slowdown is pushing foreign customers to step up purchasing from more efficient manufacturers such as Mindray, which offers a discount of around 30 percent compared to rivals, said Cheng.

"There is no negative impact from the subprime crisis, it is only positive," he said.

The combined business with Datascope will offer over 50 products across its three segments — patient monitoring and life support products, in-vitro diagnostic products and medical imaging systems.

Mindray has said the deal will leverage its research and development strength and Datascope’s strong U.S.-based direct sales and service network.

(Editing by Louise Ireland)

Provided by Reuters

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