Medtronic sets its sights on China — 5 things to know

Written by Laura Dyrda | May 27, 2015 | Print  |

China could be Medtronic PLC's new frontier.

The medical device company giant — and a leader in the spine device market — is on the prowl for acquisitions in China's fast-growing healthcare landscape, according to a Wall Street Journal report. Many companies are seeking prized acquisitions in the local China orthopedic device market as the emerging market shows high potential for future growth.


Here are five key notes on Medtronic as the company sets its sights on one of the biggest emerging markets in the world:


1. Medtronic is currently adding "value products" for patients who can't afford the more high-end offerings. This piggy-backs what other companies are doing to make devices more affordable to providers both in emerging markets and in western markets who are struggling to pay premium prices for new innovations, including Smith & Nephew's Syncera.


2. CEO Omar Ishrak reported the company is targeting community hospitals outside of China's urban areas to sell spinal implants, surgical tools and other devices at a lower cost than the premium lines. As a result, the company is looking for local acquisitions but Mr. Ishrak would not comment on any current talks.


3. There are regulatory shifts in China, which could be a potential challenge. China is currently investigating its former top healthcare official for bribery, and there could be future corruption and regulation changes, which poses a potential risk. But, Mr. Ishrak sees higher rewards in what could become the world's largest market.


4. Medtronic wants to increase annual sales in emerging markets 15 percent; the company's sales in China are currently 5 percent of global revenue. The medical device market in China is expected to become the third largest in the world and reach $18 billion in 2018, just a few years away.


5. Medtronic is likely to expand manufacturing in China to meet market demands. Medtronic currently owns China-based orthopedic implant company China Kanghui Holdings and its most recent acquisition, Covidien, has a big presence in China.


More articles on orthopedic devices:
Global surgical robot markets poised for rapid growth—5 key trends
NuVasive names Gregory Lucier CEO
7 things to know about the internal trauma fixation market

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