Medtronic Expands in China with Weigao Joint Venture
BY LAUREN UZDIENSKI, DECEMBER 19, 2007
Medtronic announced plans yesterday to bring spine and orthopedic therapies to the Chinese market through a joint venture with Shandong Weigao Group Medical Polymer Company Limited. Under the joint venture agreement, the companies will sell spine and orthopedic products, including therapies for hip, shoulder and trauma. Medtronic will have a 51% interest and Weigao will have a 49% interest in the joint venture.
Additionally, Medtronic will acquire a 15% equity interest in Weigao for $221.0 million, which will grant Medtronic the right to nominate two non-executive directors to Weigao's board of directors. No projected closing date was given, and the announcement said closing was pending approval of Chinese regulators and Weigao's shareholders.
"China is key to our global strategy as we continue to expand our geographic footprint," Medtronic CEO Bill Hawkins said in the press release. China's demographics favor this expansion: the country has a population of about 1.3 billion people, and in addition to the demand for orthopedic products stemming from an aging population, factors such as China's notoriously dangerous workplaces create orthopedic and spinal injury patients. In fact, the Wall Street Journal reported (subscription required) that spinal-cord injuries occur in an estimated 60,000 Chinese each year, compared to about 11,000 new injuries in the U.S. annually, the result of workplace and car accidents. The presence of U.S. devicemakers could dramatically alter treatment options for China's thousands of orthopedic patients.
