Mindray Medical International Limited
First Quarter 2008
1
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.
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Mission and Vision
To improve the health and well-being of the world’s people by providing thehighest quality medical equipment and services at the most competitive prices.
MISSION VISIONTo be a world-class medical equipment solutions provider by increasing accessibility to affordable quality health care while creating value for customers, employees, shareholders and society.
3
Company Snapshot
Globally headquartered in Shenzhen, China with U.S. headquarters in Mahwah, New Jersey and over 4,800 employees worldwide
More than 1,200 total R&D staff in Shenzhen, Mahwah, Beijing and Seattle
The single largest sales & services platform in ChinaNationwide coverage with over 900 sales and sales support staff 1000 exclusive distributors and more than 2000 non-exclusive distributors
Established direct sales platforms in the U.S. & Western Europe57 direct sales staff in the U.S. covering 4,000 hospital customersDirect sales teams in the UK, France and Germany
Rapidly expanding international presenceWorking with over 1,600 distributorsSelling to more than 140 countries
Globally headquartered in Shenzhen, China with U.S. headquarters in Mahwah, New Jersey and over 4,800 employees worldwide
More than 1,200 total R&D staff in Shenzhen, Mahwah, Beijing and Seattle
The single largest sales & services platform in ChinaNationwide coverage with over 900 sales and sales support staff 1000 exclusive distributors and more than 2000 non-exclusive distributors
Established direct sales platforms in the U.S. & Western Europe57 direct sales staff in the U.S. covering 4,000 hospital customersDirect sales teams in the UK, France and Germany
Rapidly expanding international presenceWorking with over 1,600 distributorsSelling to more than 140 countries
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3-part Hematology
Patient Monitoring & Life Support ProductsPatient Monitoring & Life Support Products
In-Vitro Diagnostic ProductsIn-Vitro Diagnostic Products Medical Imaging SystemsMedical Imaging Systems
Time
Immunoassay
Addr
essa
ble
Mar
ket
3-Part Hematology
5-Part Hematology
Biochemistry
Addr
essa
ble
Mar
ket
B/W Ultrasound
Digital Radiography
Time
Other Imaging Products
Color UltrasoundPatient Monitoring
Devices
Anesthesia Machines
Addr
essa
ble
Mar
ket Defibrillator & Surgical
Beds and Lights
Time
30+ models currently 10+ models currently30 hematology reagents and 35 biochemistry reagents
10+ models currently
Product Roadmap
Patient Monitor Anesthesia Machine Hematology Analyzer Biochemistry Analyzer Color Portable Ultrasound Digital Radiography
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Leading Market Position in China
Strong Brand Recognition Brand loyalty enjoyed among domestic hospitals across ChinaHigh-quality products and customer support services
Extensive Sales Network1000 sales and service staff in 29 sales and sales support officesOver 1000 exclusive distributors
Competitive Price to Performance Ratio
Around 30% discount vs. international players20% premium vs. domestic players
Sales Force ManagementLow turnover rateEffective incentive scheme
Strong Brand Recognition Brand loyalty enjoyed among domestic hospitals across ChinaHigh-quality products and customer support services
Extensive Sales Network1000 sales and service staff in 29 sales and sales support officesOver 1000 exclusive distributors
Competitive Price to Performance Ratio
Around 30% discount vs. international players20% premium vs. domestic players
Sales Force ManagementLow turnover rateEffective incentive scheme
Urumchi
Shenyang
DalianBeijing
QingdaoJinan
Taiyuan
Zhengzhou
Xi’an
Lanzhou
ShanghaiNanjing
Hangzhou
Fuzhou
HefeiWuhan
NanchangChangsha
Guangzhou
Hong Kong
ShenzhenNanning
Chengdu
Chongqing
Kunming
Guiyang
Changchun
Shijiazhuang
Other11.9%
North America
6.8%
Europe18.4%
Other Asia13.5%
China49.4%
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Revenue Breakdown by RegionRevenue Breakdown by Region
2003 Total Revenues: RMB 460 million
(US$56 mm)
2007 Total Revenues: RMB 2,231 million
(US$306 mm)
Rapidly Expanding International Presence
Other3.1%
NorthAmerica
7.7%Europe6.7%
OtherAsia7.3%
China75.2%
2003 – 2007 CAGR2003 – 2007 CAGR
America
91.2% 73.0%44.0% 33.5% 48.4%
Other Asia EuropeOther North China Total
108.7%
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1Q08 Achievements
Delivered robust growth despite a challenging currency environmentNet revenues RMB626.0 million, an increase of 48.2% YoYNon-GAAP net income RMB199.2 million, an increase of 42.7% YoY
Accelerated domestic growth solidified No.1 market position in China40%+ YoY growth for the 4th consecutive quarter driven by both tender and distributor sales
Sustainable high growth of international business supported by acquisition49.4% growth rate (60%+ in constant dollar terms) in international markets excluding DPMAdded 440+ employees from Datascope’s patient monitoring divisionGained an established brand line, extensive sales networks and experienced engineers in U.S. & Western Europe
Expanded current product offerings to broaden market reachLaunched two new products (DC-3, EX-55/65)
Maintained a disciplined cost focus57.4% gross margin, 35.2% operating margin and 31.8% net margin
Delivered robust growth despite a challenging currency environmentNet revenues RMB626.0 million, an increase of 48.2% YoYNon-GAAP net income RMB199.2 million, an increase of 42.7% YoY
Accelerated domestic growth solidified No.1 market position in China40%+ YoY growth for the 4th consecutive quarter driven by both tender and distributor sales
Sustainable high growth of international business supported by acquisition49.4% growth rate (60%+ in constant dollar terms) in international markets excluding DPMAdded 440+ employees from Datascope’s patient monitoring divisionGained an established brand line, extensive sales networks and experienced engineers in U.S. & Western Europe
Expanded current product offerings to broaden market reachLaunched two new products (DC-3, EX-55/65)
Maintained a disciplined cost focus57.4% gross margin, 35.2% operating margin and 31.8% net margin
Note: All numbers here are non-GAAP figures which exclude impact from share-based compensation expenses and amortization of intangibles
(in millions, except EPS) 2007 2008E YoY growth (%)
Net sales RMB 2,230.9 USD 560~580
Gross margin (%) 54.9% 53%~54%
Net income2 RMB 672.0 USD 132 ~135 43~47%
Diluted EPS3 RMB 5.95 USD 1.16~1.18 42~44%
Capital expenditure RMB 350.1 USD 90~110
Share-based compensation RMB 58.4 USD 11
Acquisition-related intangible amortization expenses (net of tax impact)
USD 20
Financials -- 2008 Guidance1
1 Forecast financials as publicly provided on May 8, 2008 2 Non-GAAP net income excluding impact from share-based compensation, amortization/expense of acquired intangibles (net of tax impact)3 2008 fully diluted EPS is calculated using an estimated 114 million total shares outstanding
9
23
35
92
13
53
30.1%
27.5%
25.6%
26.0%22.0%
20
40
60
80
100
2003 2004 2005 2006 20070%
25%
50%
75%
100%
Maximizing Shareholder Value
1.22
2.463.16
5.95
4.33
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
2003 2004 2005 2006 2007
EPS³EPS³Net Income1,2Net Income1,2
1 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, 2007
(US$mm) Net Margin
CAGR = 63.1%
(RM
B)
DividendDividend
2007 2008
Dividend (US$)
0.15 0.18
CAGR = 49%
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Patents
Authorized (in China): 261
Pending (in China): 602
Authorized (outside China): 7
Pending (outside China): 117
Proven R&D Capabilities
1.6 3.0 4.87.4
13.2
19.1
29.5
57.0
10%9.6%9.8%9.8%
8.8%8.6%8.1%
6.6%
0.0
10.0
20.0
30.0
40.0
50.0
60.0
2001 2002 2003 2004 2005 2006 2007 2008E0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
R&D InvestmentR&D Investment
Note: GAAP R&D investment as percentage of sales is 8.8% in 2004, 9.6% in 2005 and 9.4% in 2006
(US$ mm) % of sales (%)
R&D Headcount R&D Headcount
PatentsPatents
Note: As of June 31, 2008
Degree Functionality
R&D StructureR&D Structure
PhD2.9%Others
6.3% Bachelor36. 0%
Master54.8%
Mechanic14.6%
System 25.9%
Others22.6%
Software22.5%
Hardware14.5%
189 207 246
200 208288
145 155
217150 149
258
188283
472
1,551
154
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2001 2002 2003 2004 2005 2006 2007 2008E
OthersUltrasoundDiagnosticPMDR&D Team Size
700 719
1036
Over 1,000 staffOver 1,000 staff
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iPM Monitor(4Q 2008)
Defibrillator(4Q 2008)
BC-5300/5380 5-PartHematology Analyzer(Apr. 2008)
BS-380 Biochemistry Analyzer(4Q 2008)
DC-3 Ultrasound (Apr. 2008)
DR-50 Digital Radiography(Jun. 2008)
DR-51(4Q 2008)
2008 New Product Pipeline
Patient Monitoring & Life Support ProductsPatient Monitoring & Life Support Products
In-Vitro Diagnostic ProductsIn-Vitro Diagnostic Products Medical Imaging SystemsMedical Imaging Systems
5 new reagents(1H 2008)
Start shipping time
Expected launching time
Additional reagents (2H 2008)
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Post-Acquisition Integration UpdateFirst Quarter 2008
13
Mindray World Map Post-acquisition
EUROPE
ASIA-PACIFIC
AFRICA
Vancouver
Mexico City
Indonesia
Amsterdam
Moscow
Istanbul
Mumbai
Seattle
Toronto
Sao Paulo
Global HQ in Shenzhen
30 Offices in China
London
FranceGermany
Mahwah
AMERICAS
Current Offices
Opening Soon
Direct sales & service areas through DatascopePatient Monitoring, a Mindray company
Headquarters
Italy
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Clear Roadmap for Successful Integration
Product Portfolio Integration
Brand Transition
Integration of R&D Platform
Integration of Supply Chain
Create Shareholder Value Through
Successful Integration
Integration Milestones
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Outsource manufacturing to ChinaCurrent situation: Majority of components are outsourced to U.S. vendorsIntegration plan: Step one, move component outsourcing to Shenzhen. Step two, redesign components or platforms as necessary. Timetable: 18 months for DPM’s existing products. Ongoing long-term process for future products.
Outsource some R&D to ChinaCurrent situation: About half of the R&D is outsourced at a high costIntegration plan: Step one, move outsourced R&D projects to Shenzhen. Step two, optimize combined R&D resources for project pipeline.Timetable: 18 months for DPM’s existing projects. Ongoing long-term process for future projects.
Maximize cross-selling opportunitiesCurrent situation: 100% patient monitoring business on DPM sideIntegration plan: Begin to sell Mindray’s patient monitors and ultrasound products through DPM’s hospital channels Timeline: Early 2009
Outsource manufacturing to ChinaCurrent situation: Majority of components are outsourced to U.S. vendorsIntegration plan: Step one, move component outsourcing to Shenzhen. Step two, redesign components or platforms as necessary. Timetable: 18 months for DPM’s existing products. Ongoing long-term process for future products.
Outsource some R&D to ChinaCurrent situation: About half of the R&D is outsourced at a high costIntegration plan: Step one, move outsourced R&D projects to Shenzhen. Step two, optimize combined R&D resources for project pipeline.Timetable: 18 months for DPM’s existing projects. Ongoing long-term process for future projects.
Maximize cross-selling opportunitiesCurrent situation: 100% patient monitoring business on DPM sideIntegration plan: Begin to sell Mindray’s patient monitors and ultrasound products through DPM’s hospital channels Timeline: Early 2009
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More than the Sum of its Parts
DPM’s direct sales and service team in U.S. & Europe
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
Cross-selling opportunities, better distribution for Mindray’s high price-to-performance products
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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.
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Thank you!
Q&A
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Others15.7%
Teknova3.9%
Emperor5.2%
Aloka8.5%
Hitachie1.5%
SIUI5.8%
Landwind4.2%
Sonoscape1.6%
Toshiba2.7%
Siemens7.1%
Medison2.5%
Mindray27.8%
Sysmex14.4%
Maxco1.3%
Others4.4%
Bayer2.4%
Procan2.2%
BLT5.5%
Perlong3.1%
Tecom11.4%
NK3.9%
Beckman2.2%
ABX2.4%
Biote3.7%
Mindray43.1%
Mindray27.1%
Olympus11.2%Beckman
5.4%
Toshiba7.6%
Glamour3.5%
Neusoft2.4%
Sinnowa5.6%
荷兰威图4%
BT2.0%
Sysmex4.2%
Others8.9%
AMS2.9%
Hitachi15.6%
Leading Market Positions in China
Spacelabs2.1%
Drager3.8%
BLT1.6%
Others13.3%Goldway
3.3%
GE13.5%
NK3.5%
Philips18.4%
Mindray40.4%
RMB 1,025mm
RMB 457mm
Patient Monitoring DevicesPatient Monitoring Devices
3-Part Hematology Analyzer3-Part Hematology Analyzer
200~400 T/H Biochemistry Analyzer200~400 T/H Biochemistry Analyzer
RMB 590mm
Source: 2007 Frost & Sullivan Report
RMB: 702mm
B/W UltrasoundB/W Ultrasound
GE13.50%
20
GE29.8%
Others4.8%Tearson
0.7%
SonoSite0.4%
Esaote3.5%SIUI
0.3%
SonoScape1.7%
Toshiba5.3%
Hitachi3.1%
Aloka6.7%
Medison5.0%
Philips18.3%
Mindray4.8%
Bayer4.0%
NK8.9%
Sysmex33.8%
Others4.6%
Beckman18.2%ABX
7.9%
Abbott8.6%
Mindray13.9%
New Growth Areas in China
Drager24.2%
英国百斯0.9%
Zhongyuan14.5%
Others2.6%
Yi'an4.3%
Kaitai3.4%
长峰8.9%
Kontron2.5%
GE(欧美达)29.2%
Penlon2.1%
Mindray4.0%
RMB 307mm
5-Part Hematology Analyzer5-Part Hematology Analyzer
Source: 2007 Frost & Sullivan Report
RMB 2,562mm
Color UltrasoundColor Ultrasound
RMB 654mm
Anesthesia MachineAnesthesia Machine Biochemistry AnalyzerBiochemistry AnalyzerHitachi16.5%
Others10.1%AMS
1.6%Caihong
2.5%Rayto1.5%
长春光机1.3%
Vital Scientific2.4%
Neusoft1.8%
Bayer1.5%
Sysmex2.1%Roche
5.8%
Sinnowa4.1%
BT1.0%
Glamour3.8%
Abbott2.0%
Toshiba6.5%
Beckman9.7%
Olympus12.1%
Mindray14.8%
RMB 1,182mm
Siemens
15.50%
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Financials – 1Q08 Results Highlights
(in millions) 1Q08RMB US$
1Q07RMB US$
CY2007RMB US$ YoY (in RMB terms)
Net Revenues 626.0 89.3 422.4 54.7 2,230.9 305.8 48.2%
Gross Profit¹Non-GAAP GP
353.9359.4
50.551.3
237.1242.2
30.731.4
1,224.51,245.3
167.9170.7
49.3%48.4%
Operating Income¹Non-GAAP OI
199.8220.5
28.531.4
124.6142.6
16.118.5
606.6683.8
83.293.7
60.3%54.6%
Net Income¹Non-GAAP NI
179.4199.2
25.628.4
122.4139.6
15.818.1
591.6672.0
81.192.1
46.6%42.7%
Cash and Cash Equivalents
1,487 212 1,479 191 1,379 189
Account Receivables 234 33 99 13 210 29Inventories 202 29 171 22 181 25Total Liabilities 700 100 511 66 505 69Total Shareholder’s Equity
2,768 395 2,198 284 2,728 374
A/R Days 32 22 26
Inventory Days 64 72 55
A/P Days 68 75 591 GAAP figures including impact from share-based compensation expenses and amortization of intangibles
22
Working Capital Management
26
2119
17
0
5
10
15
20
25
30
2004 2005 2006 2007
Accounts Receivable
5560
71
87
0
10
20
30
40
50
60
70
80
90
100
2004 2005 2006 2007
Inventory Days
59
3835
27
0
10
20
30
40
50
60
70
2004 2005 2006 2007
Accounts Payable
166
363
545
663
0
100
200
300
400
500
600
700
2004 2005 2006 2007
Operating Cash Flow
(Day
s)
(Day
s)(D
ays)
(RM
B M
illio
ns)
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DPM Transaction Overview
Assets Included:
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
Purchase Consideration1,2: $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
Mindray is pleased to announce the execution of a definitive agreement with Datascopeto acquire its patient monitoring business, to be integrated into the global strategy of Mindray
Note:1 Based on reported CY07 revenue for patient monitoring business of $161.3mm2 All account receivables will be retained by Datascope
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Broadens Mindray international presence and significantly increases US operational footprintIncreases MR total 07 revenue base by an estimated 53%
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
The Mindray/DPM combination will bring together two leading brands in patient monitoringUse of the Datascope brand through 2015
Significant Operating Synergies
Significant opportunity to improve gross margins on DPM stand-alone monitorsEnhanced product offerings with access to China-based R&D capabilities
Manufacturing and R&D Outsourcing
Savings
Global Footprint
Strong Brand
Provides immediate direct sales and service capabilities in US Enhances R&D capabilities for the combined entityCreates cross-selling opportunities for MR’s product lines
US Infrastructure & Direct Distribution
Transaction Highlights
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DPM Direct Service Network in U.S.
A strong field presence with a solid reputation
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Long standing contractual relationships with all major GPO’s
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
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