Chinese Device Maker Weigao Banks On Medtronic’s Brand Name For International Backbone

SHANGHAI - A new joint venture formed with Medtronic will give Chinese device maker Weigao the international presence it needs to bring the international market to its orthopedic products.

The joint venture, announced Dec. 17, gives Medtronic 51 percent of the shares of the JV and an additional purchase of 15 percent stake in Weigao for $221 million (Also see "Medtronic Aims To Boost Ortho Presence In China With Weigao Joint Venture" - Scrip, 19 Dec, 2007.).

Sophia Wang, a Shanghai-based analyst at the healthcare department of Frost & Sullivan, a San Jose-based research company told PharmAsia News that the JV will definitely get Weigao international attention.

"Medtronic is a well-known multinational company, so the JV will certainly get Weigao global attention, and possibly potential clients from abroad," said Wang. "Today, Weigao is only popular in China."

Based out of Weihai, Shandong province, Weigao Group Medical Polymer Company is a Hong Kong-listed Chinese company, known for its orthopedic and trauma products, primarily for the hip, shoulder and spine, she said.

With a portfolio of more than 110 products, Weigao has a sales network in over 100 cities nationwide, with close to 4,000 clients including hospitals and blood transfusion stations.

There are roughly 10 international orthopedic manufacturers in China, as well as numerous Chinese domestic manufacturers that are mostly based in Jiangsu province, Wang said.

The orthopedic market in China, especially the plastic surgery market, is undergoing a stage of rapid growth, she said.

Meanwhile, Medtronic's aim in the new JV is to expand its current business in China only, Medtronic spokesman Charles Grothaus told PharmAsia News.

Medtronic will contribute its leading-edge products, technologies and training as well as extensive clinical, R&D capabilities to the JV, Grothaus said.

"Weigao will contribute broadly accepted local products, strategic market knowledge and key relationships as well as manufacturing and distribution capabilities," he said. "However, Medtronic will still use the Medtronic name for the products made under the JV, as the brand is well-known in China."

Medtronic will also be the exclusive distributor for both companies' orthopedics businesses in China, he said.

Minneapolis-based Medtronic has been in China since 1989, and has been doing business in other Asian countries including Japan. It has manufacturing and distribution facilities throughout Asia.

More than one million people in China undergo plastic surgery procedures every year. China, Japan and South Korea have the most demanding markets for hip, knee and trauma products, according to an August report by Guangdong-based Medicine Economic News, a state-owned local paper.

By the end of 2009, the whole Asian market value of plastic surgery is expected to reach $2 billion, according to the report.

The location and construction schedule for the JV has not been decided yet, Medtronic said.

-Wang Fangqing & Dai Jialing ([email protected])