Stryker mimics Medtronic in move to buy Chinese orthopedics maker for $764M

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They say imitation is the best form of flattery.

In announcing that it was buying Chinese orthopedics company Trauson Holdings Company Limited, Kalamazoo, Michigan-based Stryker (NYSE:SYK) is following in the footsteps of medical device heavy weight Medtronic.

Barely four months ago, the Minnesota medical device maker announced that it was buying Kanghui Holdings, which described itself as  a top player in the spine and trauma market in China.

And Thursday, Stryker announced that Hong Kong-based Trauson is a “leading trauma manufacturer in China and a major competitor in the spine segment.”

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This is how Stryker’s CEO Kevin Lobo described the deal:

T”he acquisition of a leading player in the Chinese trauma and spine market underscores our commitment to strengthening our presence globally. With its research and development expertise, manufacturing capabilities and strength of its distribution network, Trauson is a compelling opportunity for Stryker to drive growth in China and other emerging markets for years to come.”

That statement hews pretty closely to the message that Medtronic’s Omar Ishrak delivered on his company’s first Chinese acquisition.

“Kanghui represents a significant investment in China, accelerating Medtronic’s overall globalization strategy with an established value segment distribution network and strong R&D and operational capabilities,” Medtronic’s CEO said in September.

Even the money that each agreed to shell out for their Chinese acquisitions is not too far apart. Stryker is paying $764 million in an all cash transaction with the transaction valued at $685 million, net of cash. Medtronic doled out $816 million in cash, though excluding Kanghui’s cash, the transaction was worth $755 million.

These two acquisitions underscore how much the medical device industry is banking on emerging markets for growth. Up until now, the industry has been behind other industries in capitalizing on the opportunity presented by globalization.

2013 might be the year to change all that.

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Arundhati Parmar

By Arundhati Parmar

Arundhati Parmar is the Medical Devices Reporter at MedCity News. She has covered medical technology since 2008 and specialized in business journalism since 2001. Parmar has three degrees from three continents - a Bachelor of Arts in English from Jadavpur University, Kolkata, India; a Masters in English Literature from the University of Sydney, Australia and a Masters in Journalism from Northwestern University in Chicago. She has sworn never to enter a classroom again.
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