China, India threaten Cochlear's global hearing implant domination

Cochlear ($COH), the world's largest maker of hearing implants, is facing some serious upstart competition from emerging rivals in China and India.

Bloomberg Businessweek reports that China's Nurotron, which launched in 2005, has begun selling a competing cochlear implant (which helps restore hearing) in that country for $16,000, less than half the cost of imported rivals. India is going even further, the story notes; researchers backed by government funding are two years away from testing a locally developed and built cochlear implant that, at around $2,500, would be an even cheaper bargain.

Just as China and India have conquered the world with inexpensive consumer goods and textiles, their ability to develop cheaper cochlear implants could completely upend the global status quo. A billion-dollar market is at stake here. And as the article notes, Cochlear arguably has the most to lose. Analysts pointed out to Bloomberg Businessweek that Cochlear has a virtual monopoly of the industry (in excess of 70%) and has sold $600 million in cochlear implants in fiscal 2012. And with its market dominance, prices have barely changed, the story explains.

The new upstart competition from emerging markets will certainly cause Cochlear some long-term anxiety and added competitive pressure even as the company deals with its own internal problems. Cochlear faced some problems last year dealing with plunging profits and a push to relaunch its signature Nucleus CI500 after a recall.

Nurotron development head Fan-Geng Zeng tells Bloomberg Businessweek that he expects Nurotron to sell about 100,000 devices in China each year, now that approval is in place. The company is also mulling a Latin American expansion as well as contemplating pursuing approval in the U.S., he said. India's homegrown cochlear implant could hit human trials within two years, assuming it passes early clinical testing. And all of this gives Cochlear a finite amount of time to figure out how to compete.

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