MINGYUAN MEDICARE Development Co Ltd (HK: 233) believes that focusing on preventative medicine in the world’s largest country is a prescription for success.
By focusing on preventative therapies and diagnostic regimens, the Hong Kong-listed firm is potentially making its products applicable to all 1.3 bln denizens in China, whereas traditional drugmakers only find consumers in those already afflicted by a particular malady.
Mingyuan (www.mingyuan-hk.com) describes itself on its company website as being dedicated to developing advanced and popular biomedical testing products for use in health screening and clinical diagnosis for the early detection and prevention of major diseases including cancers.
The firm also provides innovative medical services and advanced health management for its customers to raise the public’s awareness on health management.
“Our products, used for early screening of asymptomatic patients, provide early awareness of potential problems to patients, and in many situations lead to timely and accurate diagnosis. In our experience, early screening for cancers provide the patients with early medical interventions, therapeutic opportunities and most importantly, their survival probabilities,” said Chairman Mr. Yao Yuan.
He added that finding better and faster ways to achieve accurate diagnosis can potentially improve patient management, lead to earlier therapeutic intervention and reduce the costs associated with indecision, benefiting both patients and healthcare providers.
In a recent meeting with Mingyuan’s CEO, Mr. Henry Chien, NextInsight, Aries Consulting and a group of Greater China fund managers learned that the company is confident that China’s government-run health care system will continue to emphasize preventative medicine rather than treating ailments only after they arrive.
This is music to Mingyuan’s ears, as the Hong Kong-listed firm makes medical diagnostic products for the Chinese market and biochips that detect certain proteins in the body and help diagnose and monitor cancers as well as track treatment efficacy.
China’s medical care plan: Planning ahead
Mingyuan believes it entered the preventative and medical diagnostics health care business at just the right time.
Given the long lead-in time that innovative pharmaceutical firms need for both R&D and drug approvals, Mingyuan’s founding in 1998 and then its listing in Hong Kong in 2002 coincided with the beginning China’s string of annual double-digit GDP increases.
Mingyuan’s recent performance shows that this foresight is paying dividends, with the company’s first half to June revenue rising 35.0% year-on-year to 208.0 mln hkd with the bottom line also improving an impressive 11.5% to 92.1 mln hkd.
“We were in a fortunate position early on, because beginning in 2005, it became clear to us that China at the time began to focus on preventative medicine rather than treatments and cures, so there was a growing demand for our products,” Mr. Chien said.
He also believed that the still fledgling government health care system had an unstated preference for Western medicines and diagnostic technologies because they had a more empirical body of evidence supporting their efficacy and possible side effects than the Traditional Chinese Medicine brethren.
Beijing is increasingly focused on prevention, with a preference for accurate diagnostic products such as those coming off Mingyuan’s production lines.
This is due to the products’ ability to detect major ailments such as cervical and prostate cancers at a very early pre-polyp stage, and thus save billions of yuan in treatment costs for full-blown tumors down the road.
Mingyuan recognizes this desire on the part of Beijing’s health care regime to not only provide affordable diagnosis and treatment to as many citizens as possible, but due it with the least amount of stress to the fiscal coffers into the bargain.
“We hope more diagnostic tests using our products are approved by the government to be included on the Yibao (national health insurance) card system,” Mr. Chien said.
However, this did not mean the company was turning its back on any attractive M&A opportunities that might appear on the horizon.
“M&As and joint ventures are always a possibility in this industry. But only if they are to promote the development of specific drugs and if the two managements have similar outlooks, styles and philosophies,” Mr. Chien said.