S’pore’s richest man Li Xiting gains almost S$5 billion on ventilators demand boom amid pandemic

Three founders of a company manufacturing ventilators have amasses a combined USD$7 billion (S$10 billion) to their wealth this year amid the unfolding impact of COVID-19 pandemic.
Driven by a spike in demand for the ventilators, the shares of Shenzhen Mindray Bio-Medical Electronics Co have risen 40 per cent. There has been a flood of patients brought by the pandemic, many are struggling to breathe.
The net worth of Chairman Li Xiting, a Singapore citizen and the city-state’s richest man has increased USD$3.5 billion (S$5 billion) in 2020 with a USD$12.5 billion (S$17.93 billion) wealth as of the end of Thursday, based on Bloomberg’s Billionaires Index. Thus, this registers him as the top fiver gainers worldwide. The world’s richest person, Jezz Bezos, saw an increase by USD$3.4 billion (S$4.88 billion) whereas Bill Gates saw a decrease of USD$15.3 billion (S$21.95 billion).
There is a shortage of ventilators amid the global health crisis, an equipment that is vital for treating the critically sick patients and keeping them alive. According to Mindray’s Board Secretary, Li Wenmei, with global demand at least 10 times the supply of ventilators at hospitals, other companies from General Motors to Ford Motor also rush in to increase production.
New York Governor, Andrew Cuomo said that in six days, there will be shortage of ventilators.
Infection numbers have topped one million whereas death toll globally is more than 52,000 individuals. The most impacted countries in Europe are Italy and Spain, but the pandemic is quickly spreading in the US as President Donald Trump cautioned of 100,000 or more mortality.
The US currently has around 200,000 ventilators but estimates by The Society of Critical Care Medicine suggest that 960,000 patients would be in need of ventilator support in the country. In Italy, which has the highest death toll, doctors have been forced to triage patients due to the chronic shortage of ventilators.
Until late March, the Food and Drug Administration (FDA) in the US authorised the use of Mindray’s ventilators in the current emergency to overcome the shortage. This is despite Mindray’s ventilators not having approvals in the US market. Thus, Mindray’s prospect has improved.
Analysts led by Tian Jiaqiang at Citic Securities Co. stated in a research note this week that the authorisation is “providing opportunities for Chinese ventilator products to enter the US market quickly”.
With over 3,000 ventilators output per month, Mindray is not the only manufacturer in China. Last month, FDA also authorised machines by Beijing Aeonmed Co, as stated on FDA’s website. Another manufacturer, Jiangsu Yuyue Medical Equipment & Supply Co has seen its shares increasing 91 per cent in 2020 in Shenzhen, increasing its market value to US$5.5 billion (S$ 7.90 billion).

Not without competition

According to Bloomberg Intelligence analyst Nikkie Lu, Mindray, which has USD$44 billion (S$63.18 billion) market capitalisation, still has the potential to expand its market share although it is not comparable in size to medical device titans such as Dublin-based Medtronic. She added that due Mindray’s products are able to enter Hong Kong and European markets and they have very good track records.
Mindray stated in an earnings filing this week that there was a dramatic increase in orders particularly from Europe, with Italy’s first batch order of close to 10,000 pieces of equipment including monitors and ventilators.
With presence in 30 countries and 17 subsidiaries in China, Mindray manufactures anaesthesia machines and infusion systems, health monitoring systems, defibrillators as well as ventilators. Based on its annual report, the company has a direct sales team in the US in addition to long-time global partners such as Cleveland Clinic, Mayo Clinic, Massachusetts General Hospital and Johns Hopkins Hospital.

Ventilator boom will not continue indefinitely

While there was spike in wealth of Mindary Chairman Li, his peers in Asia also experienced declines in net worth. Along with Xu Hang and Cheng Minghe, Mr Li founded the company in 1991.
Struggling with recession brought by the pandemic and political demonstrations last year, Hong Kong’s richest man, Li Ka Shing, lost USD$7.1 billion (S$10.18 billion) in 2020.
As for Singapore, it experienced the largest economic contraction in 10 years in Q1, and a severe recession is expected to be on the way for this year.
Ms Lu opined that the ventilator boom will not continue indefinitely. Demand for breathing-support equipment will increase as more societies age, but not to the extent that the pandemic brings about: “Sales will definitely drop after the outbreak.”