China’s AK Medical Plans to Buy British Joint Implant Maker for USD23 Mln to Expand Market

China’s AK Medical Plans to Buy British Joint Implant Maker for USD23 Mln to Expand Market

Ma Xiaohua

Date: Wed, 04/11/2018 - 22:37 / source:Yicai
China’s AK Medical Plans to Buy British Joint Implant Maker for USD23 Mln to Expand Market
China’s AK Medical Plans to Buy British Joint Implant Maker for USD23 Mln to Expand Market

(Yicai Global) April 11 -- AK Medical Holdings Ltd., the only Chinese medical equipment company to commercialize 3D printing technology and apply it to joint and spinal replacement implants, will take over a British joint implant maker to further global expansion.

The company will acquire all the issued shares of JRI Orthopaedics Ltd. from Orthopaedic Research UK, a British charity in the field, via its wholly-owned unit, AK Medical Overseas Ltd., for HKD184 million (USD23 million), it said.

"We want to acquire JRI because its products can complement our product offerings and the deal can help us combine domestic with overseas sales channels,” Han Yu, secretary to the board of AK Medical, told Yicai Global.

Established in 1969, the Sheffield-based JRI is the first company to produce hydroxyapatite ceramic coated hip implant in the world.

“JRI has a large customer base in the UK as well as sophisticated distribution networks in the international markets,” Han said. “We will integrate our overseas distribution channels with JRI’s upon completion of the acquisition to boost our market shares in the international markets. Overseas sales account for less than 5 percent of our total sales now,” he told Yicai Global.

Both brands will continue to operate upon completion of the acquisition, Han said, adding that the merger will create a stronger group in the international orthopedics field and bring shared opportunities for global clients.

How Big Is Joint Implant Market?

AK Medical has a clear goal behind its acquisition of JRI. With an ageing population, China will see an increasing number of patients with orthopaedic degenerative diseases, and demand for joint replacement is set to grow.

"China has some 500,000 to 600,000 joint replacement surgeries a year, compared with 1.5 million in the US. Many factors contribute to the relatively low number of surgeries in China. In clinical practice, many patients do not trust artificial joints and are adopting a wait-and-see approach," an orthopaedic surgeon from a leading hospital told Yicai Global. “However, as lifestyles change and population ageing accelerates, demand for joint replacement is set to grow.”

The orthopaedic implant market consists of three major segments: trauma implants, spinal replacement implants and joint implants.

Between 2012 and 2016, the amount of surgeries and income from surgeries had a combined annual growth rate of 14.5 percent and 13.9 percent respectively in the joint implant market, the fastest-growing among the three segments, according to a report from consulting firm Frost & Sullivan. The amount of surgeries and income from surgeries had a compound annual growth rate of 14 percent and 13.6 percent in the spinal replacement implant market during that period.

By 2021, China’s joint implant market and spinal replacement implant market are expected to record CNY7.8 billion (USD1.2 billion) and CNY5.1 billion in revenue.

As an industry player, AK Medical also enjoys strong earnings growth. “We currently have a market share of about 15 percent in China. Our sales reached CNY373 million last year, with an annual growth rate of 30 percent,” Han told Yicai Global.

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Keywords: Assets Acquisition, UK., JRI Orthopaedics, International Market