All eyes on China

Stryker CEO Kevin Lobo

Thanks to recalls, reimbursement cuts and ramped-up competition, the halcyon days of double-digit orthopedics growth have largely passed for most medical device outfits. But China, with its fast-liberalizing healthcare system and growing, aging population, promises to help turn those trends around for those who invest wisely.

That was Stryker's ($SYK) thinking when it spent $764 million on China's Trauson Holdings in a deal closed in March. Trauson is the country's largest trauma device manufacturer, posting sales of about $60 million in 2011. The deal gives Stryker a well-established brand to pave its way into the Chinese market, CEO Kevin Lobo said, and, considering the company's of-late international sales in trauma and reconstruction technologies, it could use the help.

Medtronic CEO Omar Ishrak

Same goes for Medtronic ($MDT), which has spent nearly $1 billion over the past year to expand its share of the Chinese market. In January, the world's largest device company traded $66.2 million for a 26.4% stake in China's LifeTech Scientific, maker of cardiovascular technology. That deal followed Medtronic's $816 million bet on China Kanghui Holdings, in which it acquired the company's portfolio of trauma, spine and joint reconstruction devices. CEO Omar Ishrak has long said he wants Medtronic to get 20% of its sales from emerging markets by 2016, and with an expanded beachhead in China, he's well on his way.

And China's allure isn't limited to devicemakers with softening sales. Diagnostics heavyweights Illumina ($ILMN) and Life Technologies ($LIFE) have been working to get their sequencing-based technologies distributed to the country's expanding patient population. Illumina has paired up with China's Kindstar Global to bring its TruSight technology into the country's hospital network, and Life is spending money to launch 10 assays for its now-SFDA-approved 3500xL Dx Genetic Analyzer.

All eyes on China