Medtronic opens orthopedic R&D center with Weigao

The Medtronic Inc building in Singapore. According to experts, localized research and developmeng can help reduce costs. [Photo / Bloomberg]

BEIJING - The international medical equipment company Medtronic Inc is speeding up its business localization in China with the opening of a research and development (R&D) center in partnership with Shandong Weigao Group Co Ltd, the two announced in Beijing on Sept 14.

The Medtronic-Weigao Orthopedic Technological Support Center, involving a 20 million yuan ($3.13 million) investment in R&D equipment, will focus on the development of orthopedic technologies and devices mainly to fill local need.

"Localization has been our long-term development strategy in China," said Simon Li, president of Medtronic China. "The center's work will not only diversify our product portfolio but also help build our future product pipeline."

In addition to China, some of the products invented in the center will be exported to other emerging markets, such as Latin America and the Middle East.

Rob Fredericks, vice-president of finance, strategy and communications at Medtronic Inc, said the center's mission will be to innovate "faster and more globally".

The Minnesota-based company will provide equipment used in the treatment of about 7 million patients worldwide this year. "We have a goal (of helping to treat) 25 million patients worldwide in 2020, 6 million of whom would be from China," he said.

"How can we achieve this goal over only nine years? We must understand the local market, the needs of local patients - that's the value of the center," Fredericks said, adding that the center will also serve the company's global R&D network.

Medtronic and Weigao established a joint venture in 2008 - with the US company holding a 51 percent stake - which is engaged in developing and marketing Medtronic's vertebral and joint products around China.

Weigao has assets valued at 1.8 billion yuan and more than 9,000 employees. It was the sixth-largest Chinese medical-care company last year, a ranking compiled by the Ministry of Industry and Information Technology showed.

Weigao General Manager Zhang Huawei said that the center will concentrate on developing high-quality, reasonably priced products, taking full advantage of Weigao's deep knowledge of the local market and mature sales network in second- and third-tier cities as well as Medtronic's technological advantage and international brand.

According to the international business research and consulting firm Frost & Sullivan, orthopedic device sales in China will reach 16.6 billion yuan in 2015, with an average compound growth rate of 18.1 percent between 2011 and 2015.

Meanwhile, China is expected to surpass Japan to become the world's second-largest orthopedic equipment market in 2015, from the current No 3 and No 8 in 2005.

Localized R&D can help reduce cost and finally lower the price to satisfy unmet needs in China's vast rural areas. Cooperation with local partners offers foreign companies shortcuts to China's grassroots market, given the country's sales and distribution networks, said Qiu Guixing, an academic at the Chinese Academy of Engineering.

A number of multinational medical device companies, such as General Electric HealthCare and Royal Philips Electronics NV, have also built partnerships with Chinese counterparts and local universities and research institutes for the development of products tailored to China.