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Partnerships & Startups Helping to Expand Med Device Industry into the Emerging Markets BY ANDREW VAHRADIAN, DECEMBER 3, 2013

The once U.S.-centric medical device industry is maturing into a more globally connected industry as a greater number of U.S. medtech manufacturers are seeking to expand into emerging markets like China, India and Israel through investments in startups or partnering with established players settled in those countries.

Prominent emerging market deals include Medtronic's acquisition of Chinese orthopedics company Kanghui Holdings for $816 million last year, Johnson & Johnson's purchase of the Chinese surgical-device company Guangzhou Bioseal Biotech, and Stryker's acquisition of Trauson Holdings, a Chinese orthopedics company, for $764 million in January.

Furthermore, medical device startups are starting to originate more evenly across the world as management teams realize the significance of being able to innovate for non-Western patients. Traditionally, device companies have been primarily focused on the U.S. marketplace, but further strides have been made in recent years to ensure devices are efficient enough to be sold to patients overseas. And even though India is not a recognized global center of medtech, engineers there earn a fraction of what their counterparts receive in the United States., making it easier to create low-cost devices that locals can afford. Nishith Chasmawala, who co-founded Consure Medical two years ago in New Delhi, said that their company was able to go from a standing start to proof of concept for less than $10,000, adding that the company would have needed roughly 15x that amount to do the same in the United States.

Lastly, large device companies are also discovering the opportunities for partnerships with both startups and established businesses. In October, Medtronic announced a partnership with India’s Apollo Hospitals. The two companies will collaborate on products to treat kidney damage, with Medtronic investing 1.5 billion rupees ($24 million) in research, development, and manufacturing in India.

Still, there are limits to what companies can do outside the United States - it might be easier to be a startup, but significantly harder to be an operating company as Larry Jasinski, CEO of the Israeli startup Argo Medical Technologies, stated “In the U.S., you have talent that’s experienced in quality, regulatory, distribution.”

Mr. Chasmawala reinforced this point explaining some of the constraints of India: “In Silicon Valley, I can find 300 patent lawyers with specialty in medical devices. In India, there are probably three or four". The medical device sector is growing into a tale of two marketplaces, two marketplaces that can greatly benefit from one another through collaboration.

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