How is the tender recovery translating into revenue?

  • In the third quarter of 2026, domestic medical equipment tender activity rose by approximately 20% year on year, reversing year-on-year declines in the first and second quarters. Medical device tenders showed a similar trend.
  • United Imaging Healthcare’s third-quarter revenue rose 24.1% year on year, with domestic revenue up 15.3%. Management said the domestic equipment market’s growth rate shifted from a decline of more than 5% in the first half of 2026 to growth of approximately 3% in the third quarter.
  • Mindray and New Industries Biomedical Engineering reported quarter-on-quarter domestic revenue growth of 2% and 19%, respectively, in the third quarter. JPMorgan believes Mindray’s performance supports its view that domestic tender wins are gradually converting into revenue and profit.

Why might centralized procurement rules benefit sector leaders?

  • Anhui’s centralized procurement program for large medical equipment categorizes products into tiers and hospitals into grades, matching demand with procurement budgets. JPMorgan believes this reduces direct price competition between products in different tiers and benefits companies with high-end platforms, broad product lines and service capabilities.
  • A National Health Commission notice issued in July 2026 requires each province to complete at least one round of centralized procurement for Class B large medical equipment before year-end. It emphasizes quality, total lifecycle costs, consumables and after-sales service, while also paying attention to abnormally low prices. JPMorgan believes the shift from a sole focus on low prices to overall value in procurement benefits United Imaging Healthcare and Mindray.

What else does the sector’s rise reflect?

  • The report said Mindray, New Industries Biomedical Engineering and United Imaging Healthcare rose 14%, 20% and 9%, respectively, over the past month. Over the same period, the Hang Seng Biotech Index fell 16%, the CSI 300 Health Care Index was flat, and the Hang Seng Index rose 2%.
  • JPMorgan believes capital may also be rotating into less geopolitically sensitive areas of Chinese healthcare. Leading medical device makers derive more of their revenue domestically, demand is policy-driven, and their overseas manufacturing and service networks are becoming increasingly localized; overseas growth comes primarily from product exports rather than out-licensing.
  • The bank attributed the recent market gains to a combination of fundamentals and sentiment. Among the medical device companies it covers, it favors Mindray most and rates it Overweight.