Italian cardiac device giant Sorin will ally with a Chinese competitor to help it grab a stake in China's surging healthcare market.
Sorin said it is partnering with MicroPort Scientific in part to develop and make implantable pacemakers, defibrillators, cardiac resynchronization devices and other related equipment in Shanghai. They're investing a combined $20 million to get their venture off the ground. Dubbed MicroPort Sorin CRM (Shanghai), the joint venture will involve importing, selling and servicing Sorin's cardiac rhythm management devices across China, as well as focus on the local development and production of CRM-related products just for the Chinese market. Plans call for opening up for business in the first 6 months of 2014.
Sorin is investing $9.8 million into the venture, according to their deal announcement, giving it a 49% stake. MicroPort is committing $10.2 million and gets a 51% majority ownership.
MicroPort makes medical devices in the cardiovascular realm as well as in the orthopedic, electrophysiological, endovascular, neurovascular, surgery, diabetes care and endocrinal management spaces, the deal announcement noted.
André-Michel Ballester, CEO of Sorin Group, said in a statement that the deal represents a major step in the company's overall strategy to building a strong local presence in China, a goal that rivals from Medtronic ($MDT) to Boston Scientific ($BSX), Johnson & Johnson ($JNJ), Covidien ($COV) and others have all pursued in different ways. Ballester noted he expects CRM sales in China to expand at double-digit rates "in the foreseeable future."
That's an interesting prediction, considering that Sorin's new 5-year plan for growth counts on CRM sales to expand by 2% to 3%, even though the market has been otherwise flat, particularly in developed markets such as the U.S. and European Union. It's a good bet that execs are planning on China to be one way to boost those numbers. But Sorin also expects new devices to treat heart failure and mitral valve regurgitation to propel broader revenue expansion.
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