Mindray Medical won the bid for 1 yuan and was scrapped in recent years, and the product has been recalled many times, and the revenue growth has slowed down

Low-cost bid-winning projects have been common before, why was Mindray Medical scrapped this time?

"China Science and Technology Investment" Long Min

Recently, according to the Chinese government procurement website, Mindray Medical (300760. SZ) won the bid for 1 yuan for the procurement project of automatic biochemical immunoassay analyzer and automatic biochemical immunology assembly line of a tertiary hospital was scrapped because "the project received doubts about the bidding results". It is not uncommon in the medical device industry to win bids at low prices, but there are not many cases that are ultimately scrapped.

At the same time, the recall information recently released by the Guangdong Provincial Drug Administration shows that the semi-automatic external defibrillators and automatic external defibrillators produced by Mindray Medical have been found to have incorrect functional configurations after the company's self-inspection, and decided to initiate a voluntary recall, involving a total of 4,483 products, with a recall level of Level 2.

According to the financial report, at the end of 2023, the growth rate of Mindray Medical's operating income will drop to 15% for the first time, which is the first time that the revenue growth rate has fallen below 20% since 2017. In the first quarter of 2024, the growth rate of Mindray's operating income fell further to 12.06%.

The winning project of 1 yuan was scrapped

According to the "Announcement on the Correction of the Bidding Results of Guangxi Jianlan Project Management Co., Ltd. on the Procurement of Automatic Biochemical Immunoassay Analyzer and Automatic Biochemical Immunoassay Line (GXZC2023-G1-005008-GXJL)" issued by the Chinese government procurement network, the procurement project was scrapped.

According to the announcement, because the project received questions about the bidding results, Guangxi Jianlan Project Management Co., Ltd. organized the original bid evaluation committee on June 3 this year to assist in the questioning reply, and after the bid evaluation committee reviewed, the price of the project did not meet the requirements of the price score setting of Article 55 of the comprehensive scoring method of Order No. 87 "Measures for the Administration of Bidding and Bidding for Government Procurement of Goods and Services", which affected the fairness of procurement.

According to the third chapter of the bidding documents, on page 46 of the instructions to bidders, "30.3 shall be annulled if one of the following circumstances occurs: there are violations and irregularities that affect the fairness of procurement". Confirmed by the purchaser, the project was scrapped.

The invalid bidding project is the procurement of automatic biochemical immunoassay analyzer and automatic biochemical immunology assembly line by Guangxi Zhuang Autonomous Region Maternal and Child Health Hospital. According to the announcement, the maximum price of the automatic biochemical immunoassay analyzer is 1.2 million yuan, and it is planned to purchase 2 sets; One automatic biochemical immunity assembly line was purchased, with a budget of 4 million yuan.

On May 22, the winning results of the project were announced, and China Resources (Guangdong) Medical Laboratory Co., Ltd. won a fully automatic biochemical immunity assembly line with a budget of 4 million yuan for 1 yuan, and the brand is Mindray Medical; Guangxi Beibu Gulf Innovation Investment Co., Ltd. won 2 sets of automatic biochemical immunoassay analyzers with 1.18 million, and the brand is Hitachi + Yahuilong.

The biochemical immunology assembly line has become one of the important development products in the in vitro diagnostic market, and in recent years, it is not an exception to win the bid at an ultra-low price in this field, but it is rare to be scrapped.

In April 2022, the medical equipment procurement project of the Third Affiliated Hospital of Dalian Medical University was budgeted at 4.86 million yuan, and it was finally won by Heavy Pharmaceutical Holdings (Dalian) Co., Ltd. at a price of 1 yuan; In November 2023, Jiangxi Xiangxuan Trading Co., Ltd. won the bid with 1 yuan in the procurement of automatic immunoassay analyzer and automatic biochemical assembly line of Yulin Red Cross Hospital.

In January 2024, Fujian Pien Tze Huang Diagnostic Technology Co., Ltd. won the bid for the biochemical immunity assembly line project of Zhangzhou Municipal Health Commission for 1 to 3 cents; In February 2024, the emergency blood coagulation assembly line project released by the Zhangzhou Municipal Health Commission won the bid with 1 to 3 cents in the 5 procurement tables.

Zhang Xuefeng, a financial commentator, told the reporter of "China Science and Technology Investment": "The competition in the medical device industry is fierce, and companies often use low-price strategies to improve the winning rate in order to compete for market share. Winning the bid at a low price can help enterprises quickly occupy the market and expand their brand influence and market share. Some companies enter the market through low-price strategies, in order to get more orders and profits in follow-up cooperation. In order to meet the requirements of government procurement, some enterprises may make concessions on the quotation to ensure that they win the bid. ”

"The fact that the project won the bid was questioned shows that the market is concerned about the rationality of winning the bid at a low price and the quality of the product, which is also a requirement for the transparency and fairness of government procurement. Winning the bid at a low price may cause concerns about product quality and service capabilities, and cause the project party to reconsider the winning bid. The scrapping of bids shows that government procurement is further standardizing and improving transparency, avoiding vicious competition at low prices, and ensuring the quality and reliability of procurement projects. Zhang Xuefeng added.

In recent years, the product has been frequently recalled

In addition, the recall information recently released by the Guangdong Provincial Drug Administration shows that the semi-automatic external defibrillators and automatic external defibrillators produced by Mindray Medical have been found to have incorrect functional configurations after the company's self-inspection, and the company has decided to initiate a voluntary recall, and the recall level is level 2.

The medical device recall report form disclosed that a total of 4,483 products were involved in this recall. So far, Mindray has not received any reports of adverse events such as death or injury caused by the above problems.

In response to the above situation, Mindray will take two corrective measures: one is to notify all affected customers in the form of a customer letter, informing them of relevant information and the measures that need to be taken; Second, the service personnel will take the initiative to contact the affected customers to upgrade the software for their affected products.

According to the enterprise investigation, since 2020, including the above-mentioned recalls, Mindray Medical has had a total of 6 voluntary recalls.

In May 2022, during internal monitoring, the tumor-associated antigen 125 calibrator produced by Mindray found that the batch of CA125 calibrator may pose a stability risk, which may lead to an "accuracy" beyond the acceptable range of the product's technical requirements, involving 1006 boxes of products, and the recall level is level 3

In November 2020, Mindray discovered that the maximum electromagnetic radiation intensity of some color Doppler ultrasound systems at a specific single frequency point in the high frequency band may not meet the technical requirements of the products, so it voluntarily recalled its color Doppler ultrasound systems, involving a total of 330 products.

In September 2020, Mindray found that the performance indicator "blank absorbance change rate" of the 043720003 batch of 5′-nucleotidase (5′-NT) assay kit exceeded the design expectation during routine product retention testing, which may lead to the index exceeding the acceptable range of the product's technical requirements at the end of the validity period, so it initiated a voluntary recall.

Also in September 2020, Mindray received a notice from its supplier, Northern Digital Inc., that some of its mid-range transmitters may have durability issues that affect the magnetic navigation and positioning function. The magnetic field generator provides the navigation and positioning function of the probe for fusion imaging of the Ultrasound Resona series products, and this issue may lead to inaccurate positioning when using the fusion imaging function of the product, so a voluntary recall was decided.

The above products are only part of the recalls of Mindray Medical in recent years, and an enterprise investigation shows that from July 2017 to the present, Mindray Medical has had a total of 26 recalls.

"The medical device industry is technically complex, the products are widely used, and the recall is to ensure the safety of patients and users, which is a common management measure in the industry. Stringent regulatory requirements and quality control standards have prompted companies to proactively recall potentially risky products to reduce safety hazards. However, frequent recalls may have a negative impact on a company's brand reputation, and users and the market will have a reduced level of trust in product quality. In addition, recalling products requires a lot of manpower, material and financial resources, including notifying users, returning goods, repairing, replacement, etc., which increases the operating costs of enterprises. Multiple recalls may lead to a disadvantageous position in the market competition, and customers switch to other competitors, affecting market share. Zhang Xuefeng said.

According to iFind data, from 2018 to 2022, Mindray's operating income growth rate and net profit growth rate have maintained more than 20%. At the end of 2023, Mindray's operating revenue growth rate dropped to 15% for the first time, which was the first time since 2017 that the revenue growth rate fell below 20%. In the first quarter of 2024, the growth rate of Mindray's operating income fell further to 12.06%.

The reporter sent a letter to Mindray Medical regarding the scrapped standard project, product recall and other incidents, but so far, no reply has been received.