Friends who have been mixing in the snowball market for years probably know that our big A-shares have two companies, and the comment section is always like a debate forum: one is Kweichow Moutai, and the other is Mindray Medical.

Both companies have a dedicated group of deep-value investors arguing daily; the former is the hardest part of China’s consumer myth. Many buy Moutai not just for the liquor, but for a set of judgments about China’s economy, residents’ wealth, and the resilience of high-end consumption. It’s like a touchstone, revealing everyone’s deepest confidence in China’s economy.

The latter is the valuation anchor for the entire medical sector because its performance simultaneously reflects manufacturing attributes—directly indicating the prosperity of the medical device industry—and technological attributes, with a high-end process closely tied to domestic substitution of medical devices.

But over the past year or two, both companies have been experiencing a subtle moment: Moutai faces swings in high-end consumption expectations, while Mindray faces a more complex pressure—it looks like a manufacturing and tech company, yet is deeply embedded in a highly policy-driven industry.

So the question arises: if a company’s growth logic is half based on manufacturing upgrades and technological progress, but the other half is influenced by public policies, hospital finances, medical insurance cost controls, and industry regulation, how should it be valued? What kind of future should we believe in?

The recently released 2025 annual report shows that Mindray’s revenue decreased by 9.38% year-over-year, and net profit attributable to parent decreased by 30.28%. These figures alone are enough to make investors revisit these questions.

Three Faces of Medical Devices

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The medical device industry is rarely like any other, inherently possessing a “split personality” trait.

The most direct aspect is its proximity to “manufacturing.”

A monitor, an ultrasound, an in vitro diagnostic system—sell it once, and it’s sold. If your product is more stable, your channels deeper, your after-sales stronger, and your costs lower, hospitals will naturally buy from you.

This logic applies across home appliances, construction machinery, consumer electronics, and more. When the industry is booming, leading players leverage scale, efficiency, channels, and product line depth to gradually outpace competitors; during downturns, they rely on cash flow, cost control, and mergers to deepen their moats.

TCL and China Star, Wente and Anshi, Midea and KUKA—all are extensions of this manufacturing logic: expanding capacity through capital moves, supplementing technology, elevating their position. Mindray’s investments and synergies with Huatai over recent years also carry this flavor.

Mindray’s status as a “benchmark” in the medical device sector largely stems from its manufacturing leadership. In terms of scale, it ranks among the top three globally in six product categories; in nine categories, it holds the top spot in China. Its channels reach over 190 countries and regions worldwide, with four major segments—In Vitro Diagnostics, Life Information & Support, Medical Imaging, and Emerging Business—forming a robust product line.

But beyond manufacturing, the most troublesome and fascinating aspect of medical devices is its second face: public service.

Because its clients are hospitals, but behind hospitals stand the healthcare insurance, fiscal, health, development and reform, and procurement systems—an entire set of public resource allocation logic.

Hospital equipment procurement budgets and tendering processes—these directly impact company performance but are not decided solely by the companies. For example, a January 2025 notice states, “To strengthen expansion in key areas such as medical equipment, implement equipment upgrades, and increase support through ultra-long-term special government bonds,” which itself indicates that the industry’s prosperity is never purely market-driven.

Because of this, when hospitals tighten, the entire industry’s rhythm slows down. Mindray’s outlook for the domestic market in its 2025 annual report is straightforward:

This can be translated simply as: policies are supporting, projects are being pushed, demand hasn’t disappeared, but the industry recovery isn’t fast enough to let people breathe a sigh of relief.

But what truly complicates Mindray’s narrative is its last identity: a tech company.

Market enthusiasm for Mindray repeatedly hinges not just on its device sales but on its being seen as one of the few Chinese medical industry players capable of simultaneously delivering “domestic substitution,” “high-end breakthroughs,” and “global expansion.”

In its 2025 annual report, Mindray clearly states its positioning: the company is using an integrated “device + IT + AI” strategy to evolve from a single equipment supplier into a comprehensive service provider for medical institutions, while promoting digital intelligence in healthcare through the “Qiyuan Ecosystem.” R&D investment for the year was 3.93B yuan, accounting for 11.80% of revenue, with over 5,200 R&D engineers.

The problem lies here: technology attributes are usually a plus, but in adverse conditions, they can easily become a delayed promise.

Policy adjustments result in quarterly impacts on financial statements, but the returns from high-end and digitalization efforts take longer to materialize into profits.

Thus, the real divergence for Mindray emerges: are its technological and high-end capabilities strong enough to outperform the influence of the industry’s non-market factors?

Quarterly fluctuations can be explained by financial reports, but the company’s valuation ceiling still depends heavily on how strong its technological attributes are.

Long-term orderly growth

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Looking only at the 2025 financials, Mindray is indeed facing a tough time. Total revenue was 33.28B yuan, down 9.38% year-over-year; net profit attributable to parent was 8.14B yuan, down 30.28%.

Breaking it down, the main issue is domestic. The annual report shows that in 2025, Mindray’s domestic revenue was 15.63B yuan, down 22.97%; international revenue was 17.65B yuan, up 7.40%, increasing its share of total revenue to 53%.

In other words, Mindray’s current reality is clear: domestic pressure, overseas growth.

The pressure behind this stems partly from changes in hospital procurement budgets and tendering cycles. The annual report explicitly states that the domestic equipment industry is in a weak recovery phase. Front-end tendering is resuming, but revenue recognition on the back end has not yet caught up.

This is the most painful part for Mindray right now. If demand simply disappeared, the logic would be straightforward; the real concern is demand still exists, projects are ongoing, policies are supportive, but the transmission chain is very long.

It’s like turning on a tap, but downstream you hear no water, only guessing whether the pipe is still not flowing or if a blockage is somewhere in the middle.

The National Development and Reform Commission later disclosed that in 2025, support funds from ultra-long-term special government bonds for equipment upgrades had backed about 8,400 projects, driving total investments over 1 trillion yuan. This indicates significant policy support, but the issues lie more in the speed of implementation and transmission delays.

On another level, the restructuring of the medical payment system and efficiency logic is ongoing. For many years, the industry thrived on “incremental expansion”: hospital expansion, department growth, increased testing volume, and addressing shortfalls in primary care—growing the overall market. Now, the industry emphasizes efficiency, payment constraints, and result recognition, changing the growth model.

This shift benefits patients and improves overall healthcare efficiency, but for sectors relying heavily on testing volume expansion, demand will be more restrained than before.

Mindray’s annual report directly links DRG/DIP payment reforms, centralized procurement of reagents, result recognition, and price governance to the industry’s transition into a contraction phase. It notes that reagent usage and prices have declined to varying degrees, leading to a significant market shrinkage.

Market patience with Mindray stems partly from past achievements, but also from a vague larger possibility: in the future, its valuation support may not just come from domestic hospital procurement recovery but from product high-endization and a gradual shift of customer base globally.

In 2025, Mindray’s international revenue reached 17.65 billion yuan, accounting for 53% of total; high-end international strategic clients contributed 15% of international revenue. In Europe, after high growth in 2024, Mindray achieved another 17% growth in 2025; emerging international businesses grew nearly 30% year-over-year.

On the high-end front, driven by the continuous volume of domestically produced ultra-high-end ultrasound systems like Resona A20 and Nuewa A20, high-end and ultra-high-end models now account for nearly 70% of domestic ultrasound revenue.

Looking further ahead, by 2025, Mindray is no longer just selling equipment but selling systems. The annual report repeatedly mentions “Qiyuan Ecosystem,” “Ruiying Ecosystem,” and “Ruijian Ecosystem,” all pointing to the same goal: the company aims to bundle single-point products into comprehensive solutions tailored for hospital scenarios.

When technological attributes truly start to deliver, it’s rarely through a single blockbuster product but by selling higher-end products into top-tier hospitals, integrating more complete platform solutions into more difficult-to-access customer systems, and gradually transforming these into changes in revenue and profit structures.

Epilogue

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So the real question for Mindray becomes: what kind of growth does it want?

Is the domestic recovery and cyclical rebound more important, or is the long-term re-valuation driven by overseas expansion?

Is the rebound from equipment upgrades more critical, or is the product structure upgrade from high-end substitution more vital?

These questions can’t be answered in just a few quarters of financial reports. Moutai’s stock price compresses confidence in Chinese consumption. Mindray compresses the ambition of China’s medical industry and the constraints of China’s healthcare system—whether it can ultimately find a balance within the same company.

This balance isn’t like internet or AI products, where explosive potential can be verified overnight; nor like consumer goods, where a single product can quickly change market perception.

It’s more like a long climb, with the bottom of the slope being domestic procurement and policy cycles, and the top being high-end substitution and global platforms. Every step is slow, and every step must be taken carefully.

It’s experiencing a typical moment for large corporations: the old certainty is weakening, and the new certainty requires more time to develop.