Stryker Corporation has struck into the middle trauma and spine markets of the Middle Kingdom by offering to acquire Chinese-based Trauson Holdings Company Limited for approximately $685 million.
Trauson is a leading manufacturer of instruments and implants for trauma and spine, and the market leader in trauma for the middle market. Founded in China in 1986 by Chairman Fuqing Qian, Trauson had sales in 2011 approximating $60 million, up 32% year-over-year. Trauson reported revenue in the first half of 2012 equivalent to $33 million, up 28% year-over-year from the prior year period.
Stryker and Trauson have maintained a relationship under an OEM (original equipment manufacturer) agreement for instrumentation sets since 2007. With this acquisition, Stryker will expand its presence in a key emerging market with a product portfolio and pipeline that is targeted at the large and fast growing value segment of the Chinese orthopedic market.
Access to 3, 000 Hospitals
The company has over 100 products marketed under its leading brands (Trauson and Orthomed), has an extensive distribution network covering 30 provinces and autonomous regions throughout China, and serves as a supplier of orthopedic products to over 3, 000 hospitals.
“The acquisition of Trauson is a critical step toward broadening our presence in China and developing a value segment platform for the emerging markets through a well-established brand, ” said Kevin A. Lobo, Stryker’s president and CEO, in a January 17 press release. “The 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.”
Piper Jaffray analyst Matt Miksic said Piper views the China middle market for medical devices as an attractive opportunity, and recognizes that the acquisition “nicely complements Stryker’s existing geographic footprint.”
