【产业新闻】中国医疗器械行业的投资与并购
发布于 2013-10-07 · 浏览 1859 · IP 浙江浙江
这个帖子发布于 11 年零 240 天前，其中的信息可能已发生改变或有所发展。
Chinese med-tech firm seeks to win in China, then disrupt U.S. market
By LARRY SCHUSTER
Medical Device Daily Asia Editor
SHANGHAI – In China, local med-tech manufacturers have successfully pushed multinationals' products to the side at least in some product lines, due to strong government incentives, their low cost and improved quality.
In 2002, for example, the market for drug stents was dominated by the multinational corporations (MNCs), said Geoffrey Martha, senior vice president of strategy & business development for Medtronic. The MNCs had 100% of the market in China. Now, local manufacturers have 70% of the market.
"The local market has become a very powerful thing," Martha said here at the China Healthcare Investment Conference. He said products designed for the Western world are too expensive for all but a small percentage of people in China.
The products for the so-called value segment are 40% lower cost than the Western products, he said.
So when Medtronic (Minneapolis) decided to participate in China, it knew it had to partner with a local company to accelerate its penetration. It did that, but the Chinese-branded "value" products that it acquired now threaten to disrupt the U.S. med-tech market, with Medtronic's full support.
Medtronic became an active participant in the coming disruption with its acquisition last November of orthopedic device maker China Kanghui Holdings (Changzhou, China) for $755 million (Medical Device Daily, Oct. 1, 2012).
When the deal was first reported, Medtronic emphasized that the transaction would accelerate its globalization and improve its position in the global orthopedic market. The news release also noted the deal would support Kanghui's further expansion in China and other emerging markets.
But just over four months from that acquisition announcement, the two companies now say they are aiming for a much bigger target with Kanghui's low cost products: Medtronic's home turf, the U.S.
In his comments at the investment conference, Martha said this about Libo Yang, president of the new Medtronic-Kanghui merged business unit known as Kanghui Orthopedics. "Libo's strategy is to win China and disrupt the markets in the U.S." He continued, that Kanghui's performance under Libo's leadership, "has strengthened our conviction that can be done."
And that vision was one of the keys that attracted Medtronic.
"They had a vision of exporting not just to India and other emerging markets, but the U.S. These value products will take off around the world."
"I personally agree there needs to be a value segment," Martha said.
So, he said, in anticipation of that vision, Libo set the manufacturing and quality to standards that would meet any market requirements to allow Kanghui to build value segments in all markets.
But with the common concerns of risk and trust in such a cross-border transaction, what allowed Medtronic to so warmly embrace Kanghui to become it's first fully integrated business unit outside the U.S.?
A key factor, Martha and other investors said, is the pedigree of Kanghui's management team: much of the team had deep background in MNCs. Libo, for example, was the business unit head of the orthopedic department at Johnson & Johnson in China. That meant the management teams from both sides had less hurdles to overcome to understand each other.
Next, because of their background in MNCs and their ambitions to go global, the Kanghui team and their advisors, were well prepared for Medtronic's rigorous due diligence review.
And finally, they had been listed on the New York Stock Exchange, which added another layer of comfort and transparency, Medtronic's officials said.
Plus, Martha said, "They innovate in a much more frugal way than we do in our premium segment."
It's not just a matter of defeaturing the premium products to serve the local low-cost market segments in China and elsewhere, Martha said. "You actually have to have engineers on the ground to design for much less cost and have the devices still work the right way."
"What they have is talented engineers who can take technology and make it work for the local, value segments. He said Kanghui and LifeTech Scientific (Shenzhen, China) another recent China-based investment opportunity for Medtronic, "are two of the best companies to do that."
In the Medtronic/LifeTech agreement first disclosed last fall (MDD, Oct. 18, 2012), the companies said the alliance will serve cardiovascular patients and clinicians who have been previously unreachable by either company alone and to develop a more robust cardiovascular platform. Medtronic agreed to purchase a 19% equity interest in LifeTech, and will receive the right to distribute current and future LifeTech products as well as the opportunity to acquire additional ownership upon the achievement of certain financial or development milestones.
Medtronic said it will purchase its initial equity investment for roughly HK$3.80 a share ($46.6 million). Medtronic will also purchase a $19.6 million convertible note representing an additional 7.4% equity on a fully-diluted post-conversion basis. The company will also have the opportunity to acquire additional convertible notes upon the achievement of certain revenue or development milestones
Importantly, Martha noted that Medtronic sought minimal changes in Kanghui, and the company remains a separate business segment. "The goal is to keep the cost structure and operating practices the same. We'll provide the technology."
By LARRY SCHUSTER
Medical Device Daily Asia Editor
SHANGHAI – In China, local med-tech manufacturers have successfully pushed multinationals' products to the side at least in some product lines, due to strong government incentives, their low cost and improved quality.
In 2002, for example, the market for drug stents was dominated by the multinational corporations (MNCs), said Geoffrey Martha, senior vice president of strategy & business development for Medtronic. The MNCs had 100% of the market in China. Now, local manufacturers have 70% of the market.
"The local market has become a very powerful thing," Martha said here at the China Healthcare Investment Conference. He said products designed for the Western world are too expensive for all but a small percentage of people in China.
The products for the so-called value segment are 40% lower cost than the Western products, he said.
So when Medtronic (Minneapolis) decided to participate in China, it knew it had to partner with a local company to accelerate its penetration. It did that, but the Chinese-branded "value" products that it acquired now threaten to disrupt the U.S. med-tech market, with Medtronic's full support.
Medtronic became an active participant in the coming disruption with its acquisition last November of orthopedic device maker China Kanghui Holdings (Changzhou, China) for $755 million (Medical Device Daily, Oct. 1, 2012).
When the deal was first reported, Medtronic emphasized that the transaction would accelerate its globalization and improve its position in the global orthopedic market. The news release also noted the deal would support Kanghui's further expansion in China and other emerging markets.
But just over four months from that acquisition announcement, the two companies now say they are aiming for a much bigger target with Kanghui's low cost products: Medtronic's home turf, the U.S.
In his comments at the investment conference, Martha said this about Libo Yang, president of the new Medtronic-Kanghui merged business unit known as Kanghui Orthopedics. "Libo's strategy is to win China and disrupt the markets in the U.S." He continued, that Kanghui's performance under Libo's leadership, "has strengthened our conviction that can be done."
And that vision was one of the keys that attracted Medtronic.
"They had a vision of exporting not just to India and other emerging markets, but the U.S. These value products will take off around the world."
"I personally agree there needs to be a value segment," Martha said.
So, he said, in anticipation of that vision, Libo set the manufacturing and quality to standards that would meet any market requirements to allow Kanghui to build value segments in all markets.
But with the common concerns of risk and trust in such a cross-border transaction, what allowed Medtronic to so warmly embrace Kanghui to become it's first fully integrated business unit outside the U.S.?
A key factor, Martha and other investors said, is the pedigree of Kanghui's management team: much of the team had deep background in MNCs. Libo, for example, was the business unit head of the orthopedic department at Johnson & Johnson in China. That meant the management teams from both sides had less hurdles to overcome to understand each other.
Next, because of their background in MNCs and their ambitions to go global, the Kanghui team and their advisors, were well prepared for Medtronic's rigorous due diligence review.
And finally, they had been listed on the New York Stock Exchange, which added another layer of comfort and transparency, Medtronic's officials said.
Plus, Martha said, "They innovate in a much more frugal way than we do in our premium segment."
It's not just a matter of defeaturing the premium products to serve the local low-cost market segments in China and elsewhere, Martha said. "You actually have to have engineers on the ground to design for much less cost and have the devices still work the right way."
"What they have is talented engineers who can take technology and make it work for the local, value segments. He said Kanghui and LifeTech Scientific (Shenzhen, China) another recent China-based investment opportunity for Medtronic, "are two of the best companies to do that."
In the Medtronic/LifeTech agreement first disclosed last fall (MDD, Oct. 18, 2012), the companies said the alliance will serve cardiovascular patients and clinicians who have been previously unreachable by either company alone and to develop a more robust cardiovascular platform. Medtronic agreed to purchase a 19% equity interest in LifeTech, and will receive the right to distribute current and future LifeTech products as well as the opportunity to acquire additional ownership upon the achievement of certain financial or development milestones.
Medtronic said it will purchase its initial equity investment for roughly HK$3.80 a share ($46.6 million). Medtronic will also purchase a $19.6 million convertible note representing an additional 7.4% equity on a fully-diluted post-conversion basis. The company will also have the opportunity to acquire additional convertible notes upon the achievement of certain revenue or development milestones
Importantly, Martha noted that Medtronic sought minimal changes in Kanghui, and the company remains a separate business segment. "The goal is to keep the cost structure and operating practices the same. We'll provide the technology."
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