Medtronic plc (NYSE:MDT) recently launched the MedTech Innovation Accelerator at Pujiang International Science and Technology City in Minhang District, Shanghai. This is a first-of-its-kind approach by the med-tech major to expand in the field of early- stage med-tech innovation in China.
Over the past 30 years, the emerging economy of China has been one of the key focus areas for Medtronic. The company has expanded its base in the country through directsales, marketing, clinical training, R&D and product manufacturing. With the latest move, the company is now set to expand into early stage MedTech innovation via venture investments, incubation and acceleration.
More on the MedTech Innovation Accelerator
The MedTech Innovation Accelerator is a collaborative flagship platform which is slated to provide services to global med-tech start-ups and cater to unmet clinical needs within China. Through the accelerator, Medtronic has primarily made the commitment to invest in China’s preliminary list of med-tech portfolio companies.
Numerous med-tech start-ups, within as well as outside China, have enrolled with the Innovation Accelerator as the preliminary roster of portfolio companies.
These early-stage companies will be provided lab equipment at the Medtronic Technology Center. These companies will be guided by the Medtronic China R&D personnel in various stages of product development like prototype design, testing and quality control.
Support from Medtronic also comes in the form of guidance on clinical research, product registration, clinical training and manufacturing, among others. Equity investments by Medtronic China Ventures offer incentive for newer med-tech start-ups to join the platform.
The platform plans to focus on early stage innovation in AI, surgical robotics and neuromodulation in the days ahead.
Market Potential
China’s medical device industry has huge potential. It valued $18.8 billion in 2016 and is projected to reach a worth of $24 billion by 2019. The inauguration of the MedTech Innovation Accelerator is expected to upgrade China’s med-tech industry and strengthen Medtronic’s industrial foothold in the country. In this regard, in the last reported quarter, the company saw an impressive growth rate of 13% in China.
Recent International Developments
A key development by Medtronic in the international front has been the recent clearance and launch of Japan’s first bone grafting product for spine and orthopedic procedures.
In December 2018, the company announced a deal to acquire Israeli nutrition-related data services company, Nutrino Health Ltd. This acquisition is expected to strengthen Medtronic’s diabetes management segment.
Around the same time, Medtronic closed the acquisition of Israel-based Mazor Robotics. The buyout was made to integrate robotics-assisted spine surgery into Medtronic’s portfolio.
Price Performance
Over the past year, Medtronic has outperformed the industry it belongs to. The stock has rallied 16%, higher than the industry’s rise of 9.8%.
Zacks Rank and Key Picks
Currently, Medtronic carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader medical space are Stryker Corporation (NYSE:SYK) , Penumbra, Inc. (NYSE:PEN) and Varian Medical Systems, Inc (NYSE:VAR) . Notably, each of these stocks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stryker’s long-term earnings growth rate is projected at 10%
Penumbra’s long-term earnings growth rate is estimated at 20.9%.
Varian’s long-term earnings growth rate is projected at 8%.
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