Emerging markets: Big medtech’s China strategies emerge

One year after some of the biggest players in the medical device industry announced their intentions to double down in China, MassDevice.com takes a look at the different approaches by 4 of the major medtech players.

Earlier this week, Medtronic (NYSE:MDT) VP Simon Li told the Chinese newspaper China Daily that the world’s largest pure play medical device maker was looking to expand its portfolio in China through a series of mergers and acquisition deals, which will be the centerpiece of its strategy for the People’s Republic.

Li told the paper that the Chinese companies it looks to buy "must have a common vision and business philosophy" with Medtronic and said the company has several prospects on tap already.

Medtronic hasn’t been active on the M&A front in the Omar Ishrak era. The company’s last acquisitions were announced July 7, 2011, about 3 weeks after Ishrak took office, and closed later that year. However, that hasn’t stopped rampant speculation about the company’s intentions in emerging markets. A recent report in India’s Business Standard said Medtronic was looking to invest $100 million into Indian device maker Trivitron Healthcare.

A spokeswoman told MassDevice last month that "Medtronic is always interested in discussing with other companies and see if there is a strategic fit," but didn’t offer any further details.

MDT said last August that it was looking to increase its total workforce in China to 2,000 by 2016. The company will announce its annual earnings report on August 21.

Boston Scientific (NYSE:BSX), Medtronic’s primary competitor in several business units has also significantly increased its focus on China.

Last July, the Natick, Mass.-based medical device company announced a 5-year, $150 million plan to expand Chinese commercial operations, including establishing a wholly owned manufacturing site and developing training centers for Chinese health care providers.

One year into the plan, BSX’s most significant move in China may be the hiring of Warren Wang to run the company’s operations in the People’s Republic.

Wang comes over from Johnson & Johnson (NYSE:JNJ) where he spent more than 10 years at J&J China, heading the country’s operations at both Ethicon Endo-Surgery and DePuy before becoming general manager for the healthcare giant’s China orthopedics group.

Boston Scientific will look to significantly increase its drug-eluting stent business in both China and India, officials said during its most recent earnings call. CRM president & incoming CEO Mike Mahoney told an audience at the MassDevice.com Big 100 Roundtable East in Waltham, Mass., last month that China was one of the most important areas for the company, citing the Asia-Pacific region as one of the fastest-growing markets in the world.

J&J has the deepest roots and the biggest lead on the competition in China. CEO Alex Gorsky pointed out recently that the company built an innovation center in China last year to design and develop medical devices and diagnostic products specifically for Asian markets. And in May the company made its first acquisition of a Chinese medical device company, buying Guangzhou Bioseal Biotech for an undisclosed amount.

Smith & Nephew (FTSE:SN, NYSE:SNN), which announced a significant investment in China last year, said its emerging markets business grew 10% last quarter and the company is in the 2nd year of an ambitious plan to realign the entire company to focus growth and invest $300 million in R&D with the intention of growing the company’s sales in BRIC countries from $120 million to $500 million within the next 5 years.

Most recently, SNN said it was expanding its manufacturing facility in Suzhou, China and company officials said in a conference call with investors said it was consolidating its older operations in Beijing into a newer manufacturing plant there by the end of the year.

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