(MR) Mindray Medical International Limited Acquires IT Firm in China

Mindray Medical International Limited (MR), a leading Chinese medical device manufacturer, recently revealed an agreement to take a majority stake in Zhejiang Greenlander Information Technology Co., Ltd. (“Greenlander”). The terms for the deal were not revealed. The pact will not impact Mindray’s financial condition. Greenlander is located in Hangshou, China.

Mindray aims to generate significant synergies from the acquisition. Greenlander’s IT service offerings will prove to be a boon for Mindray’s pre-existing medical imaging technology.

Greenlander, launched in 2003, is a vendor of healthcare IT offerings with a focus on Picture Archiving and Communication System (“PACS”) and Radiology Information System (“RIS”). RIS is an IT-driven data base utilized by radiology practices to save and distribute patient-related radiological data. The RIS know-how comprises outcome reporting, patient scheduling and tracking and picture tracking abilities. It is a vital support for the smooth work flow of radiology practices.

PACS, on the other hand, is a medical imaging know-how that enables economical safekeeping and easy access to images from different sources.

The RIS and PACS systems are frequently utilized in the endoscopy, ultrasound, radiology and pathology departments of hospitals as effective storage and communication management offerings.

The RIS and PACS markets, in China, were valued at about $142 million, in fiscal 2010, with a growth rate of over 20% per annum, over the coming 3 years to 5 years. On a global basis, this market is valued at approximately $3.46 billion with a growth rate of about 10% on an annual basis.

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), Philips (PHG) and Siemens (SI). Our Neutral recommendation is supported by a short-term Zacks #3 Rank (Hold).

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