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Shaking Up China's Medical System
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Lewis Fan, an analyst with Brean Murray Carret & Co., questioned whether wealthy Chinese are willing to pay top-dollar for health care.
"I have my reservations whether they can get away with that kind of pricing," Fan said.
Earlier this month, following Chindex's $2.7 million fourth-quarter loss, investors backed away from Chindex stock, sending shares down nearly 30 percent to $6.17 that day. The company blamed the loss on one-time interest charges that it gained when it converted a J.P. Morgan bond that quarter and foreign exchange adjustment.
Its medical products division has experienced losses over the past three years caused by delays in product approvals from the Chinese government and the government's recent crackdown on imports that has caused many would-be equipment purchasers to stop buying.
Yet, the company's quarterly revenue rose 40 percent, to $34.6 million, and revenue for the year rose 23 percent, to $130.1 million. The stock has begun to climb again.
U.S. analysts credit the strong health-care services market.
"We expect China's healthcare environment will continue to grow as the Chinese government increases its healthcare spending budget in order to improve the quality of healthcare for the overall 1.3 billion population," Chen wrote in a research note.
Analysts and Chindex officials pointed to other factors that could help the company: pending regulatory approval of advanced robotic surgery tools, China's baby boom and Chindex hospitals' strict privacy rules.
Though competition is mounting, analysts doubt Lipson's influence in China is about to wane. She is one of the few entrepreneurs to navigate China's heavily regulated world of health care.
"What was available was so inadequate," Lipson said. "It was my moral imperative, something I just had to do."
In 1981, Chindex was one of the few companies to enter China's newly opened economy, pioneering importing Western medical equipment. In 1997 Chindex introduced private, for-profit health care.
"A lot of people have tried and it didn't work," Fan said. "But she succeeded."
Cha reported from Shanghai. Researcher Wu Meng in Shanghai contributed to this report.
