Medtronic's Decade of Commitment: Trillion-Yuan Changzhou Emerges as China’s Largest Orthopedic Device Cluster

Aug 01, 2024 19:05 CST Updated 19:05

Medtronic

Medical Device Manufacturer

▲ Source of the article: Eshare Medical Device Hub

▲Please indicate the above source at the beginning of the article when reprinting.

JulyCCTV-4 [China News] program in the "Investing in China - Openness and Win-Win Special" reported onMedtronic Kanghui Changzhou Science and Technology ParkConducted interviews and reports, indicatingMedtronicAsThe First BatchOne of the multinational medical technology enterprises entering the Chinese market has been increasingly focusing on the local full value chain layout in recent years.

Image source: Internet

Medtronic has built six factories in China, located in Shanghai, Changzhou, and Chengdu.

Shanghai has two facilities respectively established in Minhang Pujiang Town and Lingang.The two facilities in Changzhou are Medtronic and Kandy.Chengdu has two factories producing kidney dialysis products and diabetes products.

In April 2023, Medtronic Chairman and CEO Geoff Martha personally laid the foundation for the Changzhou Science and Technology Park, which will house a smart manufacturing center, a research and development excellence center, an innovation incubation center, and a customer experience center.To become a global production base for Medtronic and the global headquarters for Kanghui Medical.

In this regard,Medtronic has established a complete local value chain in China, covering R&D, production, sales, clinical training, incubation, and funding., which is also the relentless pursuit of Medtronic in China for over 30 years. In December, the Innovation Incubation Center of Medtronic Kanghui Changzhou Science and Technology Park was officially inaugurated, and the construction project of the new building also obtained certification as scheduled.

Upon careful counting, it will be discoveredChangzhou is not only Medtronic's promised land, but also the first choice for many medical device companies.

United Imaging HealthcareThe four major production bases are located in Shanghai, Changzhou, Wuhan, and Houston, USA.The Changzhou base is used for the production of MR, CT, XR, and radiotherapy systems, and is currently the only base in operation.

Source: Eshare Medical Device Hub

BiolightOwning Changzhou HuayueProduction Base for Hemodialysis Powder and Solution;Aohua EndoscopyHeadquartered in Shanghai, but also inTwo production bases are located in Hangzhou and Changzhou.

Changzhou, which only recently became the 25th trillion-yuan city in China in 2023, why does it repeatedly attract companies?

Changzhou Medical Device Market

Changzhou, located in the southern part of Jiangsu Province and in the heart of the Yangtze River Delta, is bordered by Wuxi to the east, Nanjing and Zhenjiang to the west, and Wuxi and Xuancheng of Anhui Province to the south. It is equidistant from the two major cities of Shanghai and Nanjing.Superior geographical location。

In terms of transportation, Changzhou has the Beijing-Shanghai High-Speed Railway, Shanghai-Nanjing Intercity Railway, Shanghai-Nanjing Expressway, Nanjing-Hangzhou Expressway, Yangtze River Expressway, National Highway 312, Beijing-Hangzhou Grand Canal, Changzhou Port of the Yangtze River, a national first-class port, and a civil international airport.Transportation by land, sea, and air is all very convenient.。

In addition to its locational advantages, Changzhou's medical device industry chain boasts a rich variety of products, covering multiple categories.Class 43In medical devices31 Major Categories, forming six distinctive细分 industries: surgical implants, polymer medical consumables, sanitary materials, surgical instruments, rehabilitation equipment, and diagnostic reagents.

1. A Mature Medical Device Cluster

Changzhou City has becomeGlobal OrthopedicsAn important production base for implantable devices, gathering more than 20 orthopedic device companies represented by Kanghui, Chuangsheng, Aosimai, and Baao Mi Te.

In addition,70% of China's syringe stoppersSupplied by Changzhou, more than half of China's disposable syringe manufacturers are located in Changzhou. Among the top ten disposable syringe companies in China, two are based in Changzhou: Jiangsu Kanghua Medical Device Co., Ltd. and Changzhou Huichun Medical Equipment Co., Ltd.

Stapler IndustryIt has also developed into a distinctive industrial cluster. Official local data shows that in 2022, there were 53 stapler manufacturers in Changzhou, accounting for approximately 60% of all stapler manufacturers in China.

2. Industry Scale

Changzhou GDP in 2023StepExceeding the trillion-yuan threshold, reaching 1.01 trillion yuan, with a growth of 6.8%`, ranking No. in the same type of cities in China`6Position.

The GDP of all five districts and one city under its jurisdiction is over 90 billion yuan,All ranked on the "Top 100 List of High-Quality Development in China", wherein, Wujin3222Yi Yuan, Xinzhu2118billion yuan, ranking 3rd and 7th respectively on the list of China's top 100 districts.

Changzhou has 534 manufacturing enterprises, including 136 high-tech enterprises, 4 specialized and sophisticated "little giant" enterprises, 3 listed companies, 2挂牌enterprises, 18 specialized and sophisticated small and medium-sized enterprises, and 119 technology-based small and medium-sized enterprises.

Image Source:EshareMedical Device Hub

3. Product Registration

As of December 31, 2023,Changzhou Medical Device Cumulative Product Registration Certificate Quantity Reaches 6,358, including 649 Class III medical device product registration certificates, 2,627 Class II medical device product registration certificates, and 3,082 Class I medical device product filings.

Image Source:EshareMedical Device Hub

The Past and Present of Changzhou Orthopedics

The orthopedic industry in Changzhou has grown under the pioneering efforts of a group of outstanding stapler entrepreneurs.

Jiang Yikang, as an outstanding representative in the Changzhou medical device field, not only...Founded Kanghui Medical, a leading enterprise in the orthopedic industry.`, which has also led the innovation in the stapler market and established the industry benchmark brand, Kangdi.`

Taking Kanghui Medical as an example, its development process profoundly reflects Jiang Yikang's foresight. In 1997, Kanghui Medical was established. In 2006, Jiang Yikang introduced a series of professional talents, including senior professional manager Yang Libo and quality management expert Wang Zhimin, etc., carried out comprehensive management innovation and equity incentives for Kanghui Medical, injecting new vitality into the enterprise.

After Yang Libo took over Kanghui Medical, he quickly launched a series of strategic initiatives:Attracting senior management talent from Global 500 companies, restructuring the R&D and production processes, optimizing marketing strategies while expanding overseas markets, and establishing a clear blueprint for IPOs and mergers & acquisitions.

This series of modernization transformation initiatives has enabled Kanghui Medical to stand out from confusion, establishing a clear development vision, corporate mission, cultural core, and strategic planning.

Four years later, in 2010,Concord MedicalThe season of harvest has arrived thanks to the hard work,Successfully Listed on the NYSE`, financing up to`$68.42 million，Initiated a rapid growth model of mergers and acquisitions both in China and abroad, along with global expansion. In the same year, the company's net profit surged to 15.1 million US dollars.An increase of 32.9% year-on-year demonstrates its strong market competitiveness.

Jiang Yikang's success has not only inspired individuals,This has sparked a wave of "involutionary" transformation in the Changzhou medical device industry.Affected by this, many stapler companies in Changzhou have followed suit, accelerating the establishment and improvement of modern enterprise management systems, enhancing market competitiveness, and promoting the standardization and scientific development of the entire industry.

Subsequently, this wave of change continued to sweep through, with leading players in China's stapler field such as Kangdi being fully acquired by Medtronic.Tri-Star OceanUnder the umbrella of American Compass Capital, andChangzhou Zhiye Medical, Boransensi, Evotek, Resonancehave also been successively integrated by Lepu Medical.

Over the past decade, Medtronic has continuously invested in capacity building at its Changzhou facility, achieving full alignment with Medtronic's global quality system.More than two-thirds of the thousands of production equipment are internationally advanced machining equipment.

Changzhou Science and Technology Park will serve the dual functions of Medtronic's global production base and Kanghui Medical’s global headquarters. While continuously providing high-quality surgical tools and implants to the global market, it will actively invest in local research, development, and production to offer Chinese patients a diverse range of premium orthopedic solutions.

What Did Changzhou Do Right?

Changzhou is a well-known major city for medical devices. In terms of planning for the medical device industry, how did Changzhou address the various issues mentioned in the "Changzhou City's 12th Five-Year Plan for Emerging Industry Development"?

1. Build a characteristic industrial park to create regional competitive advantages

At that time, the Changzhou Biomedical Industry Park mainly focused on five major industrial directions: medical devices and equipment, biotechnological new drugs and reagents, etc. After investing a large amount of resources, the Changzhou Biomedical Industry Park developed rapidly: in 2010, it was approved as a provincial-level science and technology industrial park; in 2011, it was awarded the title of Jiangsu Province Biomedical and Engineering Characteristic Industrial Base.

In 2013, the integration of Changzhou Biomedical Industry Park and Xuejia Town expanded the park area from 6.3 square kilometers to 20.7 square kilometers. The key development industries extended from the treatment field to the prevention and rehabilitation fields, and the strategic positioning was also upgraded to "Life Health Industrial Park."

Through the construction of specialized industrial parks, Changzhou's medical device companies have gradually gathered, reducing overall costs and forming regional competitiveness. The emergence of industrial chain enterprises has further refined social division of labor, ultimately improving corporate efficiency and enhancing market competitiveness.

2. Cultivate Scientific Research Talents, Bridge-building to Promote Innovation

Changzhou Vigorously Introduces Innovative Projects and Actively Invites Medical Device Projects from Countries like the United States and Israel to Settle. For example, through the efforts of investment promotion departments, Dekai Medical brought its world-first "bioabsorbable stapler” project to Tianning, Changzhou; Zimmer Biomet invested 15 million US dollars to build a factory in Changzhou; 188 Israeli wholly-owned and China-Israel cooperative enterprises settled in the China-Israel Changzhou Innovation Park.

In addition, Changzhou also helps enterprises to establish connections with scientific research institutions such as universities and research institutes. In 2015, Changzhou organized 38 entrepreneurs to visit Zhejiang University and held a technology matchmaking conference to discuss methods and approaches for cooperation between the two parties; In 2021, the Changzhou Science and Technology Bureau assisted Huasen Medical in connecting with Trendlines Group of Israel, facilitating their collaboration in jointly tackling the development of a new type of stapler.

3. Build a Financing Platform to Facilitate Investment and M&A

To address the lack of strategic projects in investment promotion, Changzhou is simultaneously building a financing platform to incubate local enterprises into industry leaders, while attracting well-known multinational medical device companies to promote investment and mergers and acquisitions among enterprises.

With the active choice of enterprises and the support of Changzhou, Medtronic acquired Kanghui Healthcare in 2012; Stryker acquired Trauson Healthcare for HKD 5.9 billion in 2013; Covidien acquired 65% of Kangdi Medical Stapler's shares in 2014; Vivo Capital and CDH Investments injected a total of RMB 100 million into Jianruibao Healthcare during 2013-2014.

Notably, during this period, mergers and acquisitions in the medical device sector were highly active, with Medtronic, Johnson & Johnson, Stryker, and other well-known multinational medical device companies primarily focusing their acquisition targets on Changzhou.

Note:The above content is for reference only and does not constitute investment advice. Due to the manual data collection, there might be some information gap. If you have any questions, please contact us in time. Thank you for your correction.

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