Boston Scientific Corporation (NYSE:BSX) has reached a strategic alliance with Frankenman Medical Equipment in China. The deal allows Boston Scientific to tap in the vast market of surgical equipment in China. The two companies have also agreed to increase clinical awareness about less invasive endoscopic methods. The object of increased awareness is to make the procedures more accessible to a larger population. The deal is expected to be closed in the first half of 2015, but the financial details are still being kept secret.
The managing director and vice president of Boston Scientific in China, Warren Wang, stated that the company had been attracted by the huge untapped potential in the market. He also referred to statistics showing that more than one billion bile duct stone removals are performed through open surgeries in China. However, there are less invasive and cost effective ways to perform the procedure with better patient outcomes. Unfortunately, the access to such procedures is extremely limited and his company wants to change that fact.
Frankenman is already being backed by CPEChina Fund, which is a current shareholder in the company. The deal would further add Boston Scientific as another shareholder of the company. Further details included BSX providing services and expertise to help Frankenman in its expansion. BSX has also agreed to provide the company with assistance with products in its development pipeline and manufacturing procedures. In return, BSX would be able to manufacture some of its products in China, which would be geared towards the needs of the Chinese market. Additionally, the companies would be able to jointly commercialize on selective products.
The move is being seen as an attempt by Boston Scientific to compensate for the declining sales in developed markets, by extending towards the emerging ones. In 2014 alone, Boston Scientific Corporation (NYSE:BSX) was able to record a sales growth of 10% in some of these emerging markets. Additionally, the deal is part of a 5-year plan by BSX, involving $150 million to expand its services in China.
Boston Scientific Corporation (NYSE:BSX) closed at $18.40, gaining 1.32% on April 20. The company has 1.34 billion shares being traded in the market, with a 52 week range of $11.10-$18.40.