Even as Americans fret about the use of Chinese-made drugs such as the blood thinner Heparin, many medical device makers are strengthening their ties to China. Philips (PHG), General Electric (GE), Medtronic (MDT), Siemens (SI), and others are stepping up manufacturing on the mainland, both to cut costs on equipment sold in the U.S. and to open up the Chinese market. The industry "will start to see more companies moving their manufacturing to China," predicts David Jin, chief executive for Greater China at Philips Health Care.
Plenty have already done so. Philips on Apr. 11 bought a company in the southern city of Shenzhen that makes patient monitoring equipment, and has formed a joint venture in China that produces MRI, CT, ultrasound, and X-ray gear sold in the U.S. Siemens in September opened a medical research and manufacturing center in Shanghai that will likely grow to 1,000 employees this year. Medtronic in December paid $221 million for a 15% stake in Shandong Weigao, a medical-equipment manufacturer. The two plan to produce instruments used in spinal surgery. And GE's health-care division in August said it would work with Premier Diagnostic Health Services, a Vancouver company with a Hong Kong subsidiary, to sell and operate medical scanners in China.