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| Boston Scientific CEO Mike Mahoney |
Boston Scientific ($BSX) has partnered with Frankenman Medical Equipment to develop and manufacture products in China for that market. The pair also plans to jointly commercialize some products in China. The deal plays up Boston Scientific's strengths within its endoscopy group, which has struggled to keep pace with sales growth in the larger company.
Less-invasive endoscopic products are the focus of the deal; the China-based Frankenman already markets lines of surgical tools and endoscopic staplers. Boston Scientific expects that the deal will help give it better access to the major emerging market in China.
Under the deal, Boston Scientific will hold an undisclosed stake in Frankenman. Citic Private Equity is already an investor in Frankenman through its CPE China Fund; it is expects to continue to support the company's growth to align with the new partnership.
"Each year, more than one million bile duct stone removal procedures in China are performed as open surgeries. While less invasive endoscopic procedures can lead to better patient outcomes and reduced health care costs, access to these procedures is extremely limited," Warren Wang, managing director and VP in Greater China at Boston Scientific, said in a statement.
He continued, saying that Boston Scientific expects "to cultivate this relationship and leverage Frankenman's local market expertise in China while simultaneously sharing our proficiency in the endoscopy market to deliver the improved patient outcomes and economic benefits of less invasive care."
In its fourth quarter earnings, Boston Scientific noted that its endoscopy sales were flat on an as reported basis at $340 million--but that Latin America and Asia reported the strongest sales growth in that segment. In addition, biliary products led endoscopy sales growth. Overall that quarter, Boston Scientific reported $1.9 billion in worldwide net sales, an increase of 3% from the same period a year prior.
"It's our most global business," Boston Scientific President and CEO Mike Mahoney said on a February earnings call of the company's endoscopy group. "And the team is building a number of new capabilities to drive future revenue growth particularly in biliary in the emerging markets where there is a lot of under-penetrated patient demand as well as the need for greater physician training."
Frankenman expects that the deal will give China broader access to minimally invasive surgical tech. It also expects the partnership will help it develop new products and further address the market. The deal is slated to close during this half.
- here is the release