Boston Scientific Allies to Grow in Chinese Endoscopic Market - Analyst Blog

Boston Scientific Corporation 's BSX recent strategic alliance with Frankenman Medical Equipment Company, a maker of surgical staplers with deep local market expertise in China, is expected to expand its reach in the huge surgical devices market in the country. Financial terms of the deal were not disclosed. However, the transaction is expected to close in the first half of 2015.

We are encouraged by the huge untapped potential that lies for Boston Scientific in this market. Data shows that, eachyear more than one million bile duct stone removal procedures in China are performed through open surgeries. This is because despite better patient outcomes and reduced health care costs, access to the less invasive endoscopic procedures is limited.

Boston Scientific considers the partnership a vital one that will help it reach out to more clinicians and patients through training on less invasive endoscopic technologies, and thus create awareness about the clinical and economic benefits of the same.

Per the terms of the deal, Boston Scientific will become a shareholder of Frankenman and provide services and expertise to the latter to support its growth, development pipeline and manufacturing capabilities. The two companies will work together to develop and manufacture products suitable for the Chinese market, as well as jointly commercialize selected products in the region.

Against the backdrop of flattish or declining sales growth in developed markets like the U.S. and Europe, Boston Scientific is gradually strengthening its presence in the emerging markets, with countries like Brazil, Russia, India and China (BRIC) recording over 10% growth on a combined basis during 2014.

The company is currently exercising a 5-year plan involving $150 million worth of investment in China in a bid to expand its commercial presence in one of the world's largest and fastest-growing medical device markets. Moreover, the company plans to increase its employee count to more than 1,200 by 2016 over this 5-year period from 200 in 2011. We believe, this new partnership with Frankenman will add further impetus to Boston Scientific's goal to penetrate in China.

Zacks Rank

Currently, the stock carries a Zacks Rank #3 (Hold). Some top-ranked medical products stocks are GW Pharmaceuticals plc GWPH , LeMaitre Vascular, Inc. LMAT and SurModics, Inc. SRDX . All the three stocks hold a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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