Stalling and shifting, China's leading medical device company experiences growing pains

Ask AI · How does Mindray challenge international giants behind 17% growth in the European market?

【Text / Wang Li Editor / Zhou Yuanfang】

2025 is a year for Mindray Medical (300760.SZ) to redefine growth. This company, praised by the industry as the “Number One in Chinese Medical Devices,” delivered its first “double decline” performance report in seven years in its 2025 annual report: operating revenue of 33.28B yuan, down 9.38% year-on-year; net profit attributable to parent of 8.14B yuan, down 30.28% year-on-year.

Behind the surface numbers, it reflects a deep adjustment happening in China’s medical device industry. A series of policies such as DRG/DIP payment reform, centralized procurement of in vitro diagnostic reagents, and mutual recognition of test results have been implemented intensively, causing the medical device industry centered on equipment and in vitro diagnostic reagents to enter a painful period. Mindray’s domestic business achieved revenue of 15.63B yuan for the year, a sharp drop of 22.97% year-on-year, exemplifying the common pressure faced by the entire industry.

However, this annual report is not all gloom. International revenue reached 17.65 billion yuan, a 7.40% increase year-on-year, accounting for over 53% of total revenue for the first time. Mindray’s revenue focus in 2025 has officially crossed the internal-external balance point, beginning to face the outside world as a truly global enterprise. The European market grew by 17% year-on-year, and emerging business segments (minimally invasive surgery, minimally invasive intervention, veterinary medicine) grew by 38.85% year-on-year, with a gross margin of 63.74%. These two growth curves stand out especially amid the overall downward trend.

More noteworthy is the strategic signals from the company’s layout: R&D investment of 3.93B yuan, accounting for 11.80% of revenue, a record high; the “equipment + IT + AI” digital medical ecosystem has been implemented in top global institutions such as Shanghai Renji Hospital and Saudi Arabia’s largest virtual hospital; total dividends for the year amounted to 5.31 billion yuan, with a payout ratio of 65.27%. Over seven years of listing, the company has returned more than 37.7 billion yuan to investors, more than six times the IPO fundraising amount. Superficially, performance is under short-term pressure; deeply, it signifies structural strategic reshaping.

Deep decline, where is the turning point?

Pressure from centralized procurement: domestic scale shrinks, market share rises

In 2025, almost all mainstream manufacturers cannot avoid the domestic Chinese medical device market. Mindray’s domestic revenue for the year was 15.63B yuan, down 22.97% from 20.29B yuan in 2024. But viewing this decline within a longer policy cycle reveals that it is an inevitable result of the resonance of multiple policy forces, rather than a fundamental weakening of the company’s competitiveness.

In 2025, the domestic medical device industry faced three layers of policy pressure. First, the ongoing deepening of DRG/DIP payment reform, which includes hospital testing activities into cost control frameworks, compressing the volume and unit price of various tests; second, the expansion of centralized procurement scope for in vitro diagnostic reagents, with significant price drops in core categories like chemiluminescence and blood analysis—some categories saw declines over 50%; third, the promotion of mutual recognition policies for test results, reducing the need for repeated testing and further shrinking reagent consumption. The combination of these factors exerted concentrated pressure on Mindray’s domestic in vitro diagnostic revenue.

Medical imaging and life information and support businesses were similarly affected. Due to the overall reduction in hospital capital expenditure budgets, Mindray’s medical imaging revenue declined by 18.02% year-on-year, and life information and support revenue fell by 19.80%. Longer decision chains and stricter approvals in hospital equipment procurement, delays in large hospital orders, and hospitals’ proactive reduction of procurement plans due to operational pressures all contributed.

Scale contraction does not equate to a decline in competitiveness. The annual report reveals a counterintuitive phenomenon: despite the overall industry contraction, Mindray’s domestic market share actually increased significantly. The logic behind this is that centralized procurement policies have fundamentally impacted the price advantage of foreign brands. International manufacturers like Roche and Abbott saw their profit margins significantly compressed within compliant procurement price ranges, while Mindray, with a more flexible local supply chain and better channel coverage, gained relative advantage in price competition. Accelerated import substitution benefits leading domestic top-tier manufacturers with complete product matrices.

Notably, emerging domestic businesses recorded high growth during the reporting period. Segments less affected by centralized procurement, such as minimally invasive surgery and veterinary medicine, demonstrated strong resilience. The combined revenue from emerging domestic businesses and in vitro diagnostics now accounts for nearly 70% of domestic revenue, indicating a structural shift—from a highly equipment-dependent, single-mode model to a recurring consumables and high-growth emerging business model.

Profitability-wise, overall gross margin declined by 2.81 percentage points to 60.33%, reflecting the real impact of price declines from centralized procurement and product structure adjustments. Importantly, this gross margin remains high in the global medical device industry, comparable to top international companies like Medtronic and Stryker, indicating that Mindray’s core product pricing power remains intact. Domestic sales expenses, though decreased in absolute terms to 5.15B yuan, still require larger revenue scales to fully leverage operational leverage.

Breaking into the “GPS” giants’ territory, 17% growth in Europe

In 2025, Mindray’s international revenue reached 17.65 billion yuan, a 7.40% increase year-on-year, accounting for over 53% of total revenue for the first time. This ratio’s significance goes beyond finance—it marks that Mindray has officially transitioned from a domestic-focused, internationally supplementary stage to a new competitive landscape centered on globalization. For Mindray, this is both a strategic milestone and a double-edged sword: international dominance entails higher exchange rate risks, geopolitical risks, and localization management costs.

The international environment in 2025 was challenging. High interest rates and inflation suppressed medical capital expenditure in emerging markets; regional orders were disturbed by ongoing conflicts in Ukraine, the Middle East, and other areas; local currency devaluations eroded some business revenues. Exchange losses increased, combined with reduced interest income, leading to a 34% rise in financial expenses year-on-year. Despite this, Mindray still achieved positive growth, with Europe standing out with a 17% increase.

European breakthrough is strategically significant. Traditionally, Europe has been the home turf of the “GPS” giants—Philips, Siemens, GE Healthcare—whose high barriers are built on long-standing customer relationships and certification advantages. Mindray’s ability to achieve 17% growth on a high-growth basis in 2024 and again in 2025 indicates it has established a certain recognition in the European market.

Strategically, Mindray’s internationalization has evolved from early reliance on price competition and low-cost substitution to a value-based medical approach driven by digital solutions. The “equipment + IT + AI” ecosystem detailed in the annual report, with implementations at institutions like Indonesia’s Mayapada Medical Group and Saudi Arabia’s SEHA Virtual Hospital, essentially replaces single equipment competition with system integration capabilities and long-term service contracts, enhancing customer value and stickiness. However, this also extends market expansion cycles and increases upfront delivery costs.

Partnerships with top institutions, such as deepening strategic cooperation with Medtronic in patient monitoring and signing comprehensive strategic agreements with Asia’s largest private healthcare group IHH in Malaysia, India, and Turkey, reflect Mindray’s attempt to leverage top-tier institutional branding and channel networks to accelerate high-end market penetration. This path is more resource-efficient than building channels from scratch but requires careful management to maintain brand independence and avoid becoming an OEM.

Localization efforts are also evident. The company has established 64 overseas subsidiaries in about 40 countries, with over 90% of 3,000+ overseas employees being local hires; beyond five overseas R&D centers, 14 countries have planned local manufacturing projects, with 11 already initiated. Localized production helps avoid trade barriers and tariffs and offers long-term strategic defense amid rising anti-globalization sentiments. However, the initial capital investment in localization cannot be underestimated, and for regions still in profit recovery, it may temporarily pressure profits.

It is important to view the regional structure of international business rationally. Developing countries still contribute the majority of international revenue, while high-margin markets like Europe and North America are still in early stages of penetration. The annual report admits that the market share of life information and support businesses overseas remains below domestic levels, and ultrasound product penetration is still in single digits. Especially in North America, complex device registration cycles, hospital procurement decision chains, and local competitors’ defensive strategies make large-scale penetration more difficult than in other markets.

Opportunities and risks coexist in emerging markets: strong demand for healthcare infrastructure in Asia, Africa, and Latin America gives Mindray inherent advantages with its cost-performance positioning; but these markets face long government payment cycles, high accounts receivable risks, and complex foreign exchange controls. In 2025, credit impairment losses of 196 million yuan and asset impairment losses of 336 million yuan highlight ongoing risks amid international expansion. Over five years, international revenue grew from about 7 billion yuan in 2020 to 17.65 billion yuan in 2025, a 2.5-fold increase, confirming that internationalization is a real and sustainable growth driver—yet the transformation from quantity to quality still requires time.

From “selling equipment” to “smart medical systems,” Mindray’s ambition in surgical robots

In 2025, emerging business segments (minimally invasive surgery, minimally invasive intervention, veterinary medicine) with a revenue of 5.38B yuan and a 38.85% YoY growth became the most prominent growth signal amid the overall decline. This segment accounts for about 16% of the company’s total revenue, with a gross margin of 63.74%, the highest among all businesses, surpassing in vitro diagnostics (58.33%) and life information/support (59.37%). Behind the figures is Mindray’s strategic logic to build a second growth curve.

Minimally invasive surgery focuses on endoscopic procedures, with the UX series 4K+3D+NIR fluorescence endoscopy system already launched. It forms a complete product matrix around energy platforms, staplers, puncture devices, covering core clinical departments such as general surgery, thoracic surgery, gynecology, and urology.

More importantly, the annual report explicitly states that the company has completed the foundational capability layout for surgical robots, planning to launch products based on accumulated technology in endoscopy, energy platforms, and surgical instruments. This is Mindray’s first strategic declaration of surgical robots in its annual report, marking its entry into the high-end surgical robot market dominated by da Vinci systems (Intuitive Surgical). This market is huge globally but has high technical barriers. The timing and path of Mindray’s entry will be one of the most critical strategic topics to watch in the coming years.

The minimally invasive intervention business relies on Huatai Medical (which Mindray acquired control of in 2023), focusing on electrophysiology, coronary, and peripheral vascular interventions. During the reporting period, PFA (pulsed field ablation) and RFA systems and consumables received NMPA approval and entered clinical trials. Mindray’s products in arrhythmia intervention are moving from R&D to commercialization, competing in a market mainly led by Medtronic, Abbott, Boston Scientific. PFA is currently at the forefront of cardiac electrophysiology, with high technical barriers but strong market growth potential. It should be noted that Huatai Medical is still in the integration and enhancement stage, with expected synergy effects taking more than three years to fully realize, and short-term incremental contribution limited.

Veterinary medicine is one of the clearest and most commercially certain of the three emerging businesses. Mindray extends its R&D from human medical devices to veterinary clinical scenarios, with overseas revenue accounting for about 80% of total veterinary revenue. Since its inception, this business has adopted a global perspective, effectively avoiding direct impact from domestic policies. Given the expanding pet economy and rising demand for veterinary testing standardization, veterinary medicine is one of the few sectors where Mindray can achieve natural growth without centralized procurement pressure, exemplifying cross-field R&D capability reuse.

The strategic ambition of the digital medical ecosystem also warrants separate attention. Centered on “equipment + IT + AI,” with specific products like the critical care big model (Qiyuan), testing big model, and ultrasound AI assistant, Mindray is transforming from a hardware manufacturer into a hospital digital partner. Real clinical results support implementations such as the perioperative big model at Shanghai Renji Hospital reducing medical record entry time, the emergency critical care digital integration plan at Peking University Shenzhen Hospital, and the sample review time at Southern Medical University Shenzhen Hospital increasing by about 30 times. Projects like the ultrasound network across Anhui province and the regional medical testing center in Dali reveal deep embedding into China’s health strategy.

However, the commercialization of AI ecosystems still faces many uncertainties. The hospital information system market is complex, with HIS/LIS system vendors like Weining Health and Neusoft dominating core data nodes. For Mindray’s AI big models to achieve multi-source data integration, deep collaboration with these existing IT systems is necessary, involving both technical interface compatibility and business interests coordination. Moreover, AI product pricing differs significantly from traditional equipment sales; how to set reasonable prices and sustain charges under public hospital procurement constraints remains a business model challenge. Domestic AI medical regulation policies are still in the rule-making stage, and product compliance pathways are uncertain, posing potential risks.

R&D investment is the cornerstone of Mindray’s ongoing competitiveness but also a variable adding short-term financial pressure. In 2025, R&D expenses reached 4k yuan, accounting for 11.80% of revenue, further up from 10.91% in 2024. Notably, from 2023 to 2025, total R&D investment exceeded 11.7 billion yuan, with the absolute scale roughly stable, but due to revenue contraction, the expense ratio increased passively, exerting additional pressure on profit margins.

Looking at Mindray’s overall strategic layout—using internationalization to hedge domestic policy pressures, emerging businesses to offset mature traditional segments, and digital ecosystems to counter pure hardware competition—this hedging mechanism has begun to show effects as of 2025. Whether it can fully bridge the gap and generate new scale effects in the medium term depends on time and execution.