Article preview from IN VIVO - June, 2012
China’s international medical device leader Mindray Medical International Ltd. entered the rough-and-tumble Chinese orthopedics industry. The company accquired a controlling stake in Wuhan Dragonbio Surgical Implant Co. Ltd., a small China-based supplier of trauma, large joint and spine products.
Article preview from IN VIVO - June, 2012
With US and European orthopedics markets registering flat or even declining in annual sales, multinational players increasingly are looking to emerging markets, especially China, for their short-term future growth. At one time, established Western-based orthopedic players had firm holds on those markets but Chinese-based suppliers are mounting an effective challenge to grab a larger piece of their country’s orthopedic business.
Now, China’s largest medical device supplier Mindray Medical International Ltd. may be throwing its considerable weight into this fight. The company announced it will accquire a controlling stake in Wuhan Dragonbio Surgical Implant Co. Ltd., a small China-based supplier of trauma, large joint and spine products. [See Deal] Mindray paid out only $35.5 million in cash in the deal, which amounts to nearly five times the company’s 2011 annual revenue. Relative to larger China-based companies like China Kanghui Holdings, Shandong Weigao Group Medical Polymer Co. Ltd., and Trauson Medical Instrument Co. Ltd., Dragonbio is a bit player in the Chinese orthopedics market. But Mindray – which is projected to report $1 billion in sales this year – likely won’t be content with that place on the pecking order.
Mindray’s Chief Strategic Officer Minghe Cheng, in an announcement, says the acquisition of Dragonbio helped Mindray clear the “high barriers to entry” of the consumable orthopedics market. In the deal, Mindray obtained Dragonbio’s 39 approved orthopedic implants, including 13 in trauma, 10 in spine and eight in hip, “making it one of the few domestic companies with product offerings across all three lines,” writes analyst Katherine Lu, of Cowen & Company.
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