China Medical Technologies, Inc. (CMED) F4Q2010 Earnings Call June 2, 2011 8:00 am ET Executives Winnie Yam – IR Xiaodong Wu – CEO Sam Tsang – CFO Charles Zhu – SVP, Operations Analysts Jack Hu – Deutsche Bank Chris Li – Morgan Stanley Presentation Operator
As a reminder, this conference call is being recorded. A replay of this conference call will be available via webcast on China Medical’s website.Now allow me to turn the call over to Charles, who will give remarks on behalf of Mr. Wu. Charles? Charles Zhu Thank you, Winnie. Hello, everyone. We’re pleased with this quarterly result, in particular the continued growth of our molecular diagnostic business during this seasonally weak March quarter. We expect our FISH business and SPR HPV-DNA chip business to continue driving our future growth. For FISH business, our direct sales team kept driving the sales of recurring FISH probe revenue by increasing the test usage in existing FISH applications, in particular recent SFDA approved FISH applications in each hospital user, as well as expanding FISH applications in other clinical departments in the existing hospital users. We have received SFDA approval for the EGFR FISH detection kit and expect to receive SFDA approval for our prostate cancer FISH detection kit and TOP2A FISH detection kit within the next two months. We have submitted application to SFDA for several other FISH detection kits and expect to receive approval within the next 12 months. By then, we’ll further strengthen our market position as the dominant FISH player in China, but the largest and most comprehensive SFDA approval FISH product portfolio in China and are far ahead of our competitors in China. This will increase the entry barrier for our existing and potential FISH competitors in China as well. For SPR HPV-DNA chip business, we are pleased to see the increasing recurring revenue from the sales of HPV-DNA chips to our hospital customers to conduct the HPV test for their women patients. But over a 110 Tier 1 hospitals using our SPR analyzer and HPV chips. We expect to see a growing influential group to speak for the clinical benefits of our HPV chips in conducting HPV tests for cervical cancer screening.
In addition, we’re developing our second generation SPR analyzer, which will be more compact, more user-friendly and higher throughput. We believe that many hospitals and independent laboratories will be – will have strong interest to buy the analyzer after seeing the positive feedback from our existing Tier 1 hospital users. We believe HPV test market is in early stage of development in China and there is enormous potential in this market.For our ECLIA business, we have highlighted in previous earnings call and expected seasonal sequential decline in ECLIA revenue in March quarter due to the two New Year holidays. Although, we are facing the increasing competition in our ECLIA business, we’re encouraged to see the trend of higher usage of ECLIA test to replace ELISA test by hospitals, which give us confidence to expect a stable performance in our ECLIA business. To summarize, we are focused on the development of our molecular diagnostic businesses, including expanding our product offering in FISH probes and the development of a new SPR analyzer. We will leverage our established sales networks to introduce our new products to our hospital customers. Meanwhile, we’re also leveraging our brand name as the leading molecular diagnostic product provider in China to explore extensive partnership. We are actively working on several initiatives to support our sustainable growth, including discussion with the leading independent laboratory testing service group in China to promote the usage of molecular diagnostic test. As part of the China Healthcare Reform, the government is spending a lot of efforts and funds to improve the insurance coverage and the reimbursement rate. As a result, business of independent labs have achieved tremendous growth in past few years. Read the rest of this transcript for free on seekingalpha.com