Medtronic Continues to Build Presence in China

Medtronic Continues to Build Presence in China
In late September, Medtronic Inc. announced the $816 million acquisition of Chinese orthopedic company Kanghui. It was Medtronic’s first purchase in the Asian nation, but now the medical device giant has taken another step toward what appears to be a forceful China strategy with the purchase of cardiovascular device company LifeTech Scientific Corp.

“China is key to our global strategy as we continue to expand our geographic footprint and strive to meet the needs of local cardiovascular patients, and this agreement reaffirms our commitment to this important market,” said Mike Coyle, executive vice president and president of the Cardiac and Vascular Group at Medtronic.

Minneapolis, Minn.-based Medtronic will take a 19 percent equity stake in LifeTech worth $46.6 million, and also will buy a $19.6 million convertible note that amounts to another 7.4 percent equity stake. According to terms of the deal, should LifeTech reach certain financial or developmental milestones, Medtronic will be able to obtain a larger part of the company.

In addition, Medtronic will have the right to sell LifeTech’s current and future products. The Shenzen, China-based company makes minimally invasive devices for cardiovascular and peripheral vascular diseases.

“LifeTech is a proven leader in the cardiovascular segment in China, with a diverse portfolio of products to treat a multitude of cardiovascular diseases, including structural heart defects, peripheral and aortic vascular disease, and heart valve disease,” Coyle said. “As such, it is an ideal strategic partner for the Cardiac and Vascular Group at Medtronic. With core competencies in materials research and manufacturing and a demonstrated track record of being awarded important state research grants and tenders, this relationship with LifeTech provides an opportunity to accelerate Medtronic’s access and competencies in China, so that together we may reach more patients.”

“As the world’s largest medical device maker, an alliance with Medtronic provides LifeTech with access to world-class expertise and leading-edge technologies, and allows us to expedite bringing those technologies to patients who need them in China and global markets,” said Michael Zhao, the executive director and CEO of LifeTech. “Together, we are committed to delivering quality products to new patients and new markets that neither company can reach today separately, and to provide enhanced value to physicians, patients and employees.”

The transaction is expected to close before the end of the year, following the receipt of requisite approvals from the shareholders of LifeTech and applicable Chinese and Hong Kong regulatory authorities. —MPO Staff