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China IPO on deck: China Medical Technologies (CMED)

Aug. 09, 2005 4:00 PM ETGE, CMEDQ1 Comment
Ezra Marbach profile picture
Ezra Marbach

China Medical Technologies (proposed ticker: CMED) is expected to go public on Nasdaq tomorrow. Here is a look at the medical device company and analysis of its latest financial results:


  • Based in Beijing, China.
  • Medical device company that develops, manufactures and markets products using high intensity focused ultrasound, or HIFU, for the treatment of solid cancers and benign tumors in China.
  • 177 employees as of June 30, 2005.
  • Web site: See here.


  • Competitors for its HIFU therapy system include Chongqing Haifu Technology, and Shanghai A&S Science Technology Development.
  • ECLIA system competes with IVD systems and reagents offered in the China market by international companies, including Abbott Diagnostics, Bayer AG, Beckman Coulter, Diagnostic Products Corporation, or DPC, EG&G Wallac, Johnson & Johnson and Roche Group.

Institutional Ownership (% of ordinary shares owned prior to offering)

  • Chengxuan International (investment firm owned by CEO Wu): 54.9%.
  • Golden Meditech (BVI) Company: 24.95%.
  • General Electric International Operations -- subsidiary of General Electric (ticker: GE): 19.95%.

Market Statistics

  • According to market research firm Frost & Sullivan, the
    China market for medical devices and equipment is expected to grow from
    $5.9 billion in 2002 to $10.1 billion in 2006, at a compound annual
    growth rate of approximately 14%.

IPO Details

  • Ticker: CMED
  • Maximum aggregate offering: $92.0 million.
  • Offering 5 million ADSs representing 50 million ordinary shares.
  • Offering price: $14 - $16 per ADS.
  • Ordinary shares after the offering: 250,000,001.
  • Net proceeds to the company: $66 million (assuming $15 per ADS).
  • Use of proceeds: $12.0 million for remaining payments relating to acquisition; $8.0 million for R&D; $8.0 million for production equipment; and $5.0 million for sales and marketing.
  • Lead underwriter: UBS Investment Bank.
  • Lock-up: Existing shareholders have 180-day lockup-up period. Asset Managers and Neon Liberty subject to 270-day lock-up period.


This article was written by

Ezra Marbach profile picture
Ezra Marbach is a former investment banker who lived in Beijing in 2002-03 where he studied Mandarin Chinese and worked for a venture capitalist. Ezra previously worked for Internet-based venture capital firm UniversityAngels.com. Prior to that, he worked in the corporate finance department of Gerard Klauer Mattison, a NY-based boutique investment bank. Ezra graduated from Cornell University.

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Comments (1)

20 Sep. 2005
CMED looks really interesting, but I could not find much research on it. Besides what's already on this site, I would add it appears to be the only major player in China. There are other foreign companies that sell this, eg. EDAP TMS S.A., Focus
Surgery, and Insightec, but they have no exposure in China. Note that the ultrasound imaging system, the major component of the machine, is sourced from GE, who is also a shareholder. In addition, it has entered into a service agreement with GE to provide repair services for medical equipment GE sells in

Market potential appears huge. 150 HIFU machines have been sold to date. CMED
is targeting the approx 6,000 large and medium-size hospitals in China.

Any comments would be appreciated.
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