Under the terms of the agreement, Lifetech will develop pacemaker and cardiac leads at its Shenzhen facility and Medtronic will provide technological support and training. The Minnesota device giant could also partner with Lifetech further down the line to commercialize the products once they’ve cleared the necessary regulatory hurdles, the companies said in a statement.
“We are delighted to partner with Lifetech in this new venture to bring lifesaving technology to Chinese patients,” Medtronic CEO Omar Ishrak said in a statement. “We expect these pacemakers to serve the local market and to meet the healthcare needs of significantly more Chinese patients.”
In 2012, Medtronic shelled out $66.2 million for a 19% stake in LifeTech, grabbing a bigger piece of the Chinese device sector and bolstering its long-standing goal of getting 20% of its revenue from emerging markets by 2016. The company has already made significant forays into the Chinese market, buying orthopedics company Kanghui Holdings for $816 million in September 2012 and launching a Beijing patient care center the same year.
Medtronic is not the only device outfit looking for its cut of the profits. Last year, Boston Scientific ($BSX) announced that it was forging ahead with major growth plans in China to achieve 30% annual sales increases over the next 5 years. Big names like Johnson & Johnson ($JNJ), Stryker ($SYK) and Covidien ($COV) are also looking for a seat at the table, launching manufacturing and R&D initiatives to introduce devices to the Chinese market and build its local presence.
Partnering with LifeTech could also help Medtronic stay a step ahead of local competitors, as domestic operations are developing patient-specific products for China’s aging population. Shanghai’s Kinetic Medical enjoys a nearly 50% market share in the country two years after filing its IPO, and co-founder Jay Qin touts the company’s technology and commercialization strategy as superior to that of multinational rivals.
“Unlike many of our Chinese competitors’ overseas strategy, we’ve been focusing on developed markets from the start,” Qin told Forbes. “Our products have the same quality as Medtronic’s. Lower price alone wouldn’t get you too far.”