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GEN News Highlights : Sep 15, 2011

Covidien Plans Shanghai R&D Center as Flagship of China Research Operations

Facility set for July opening, and workforce is expected to expand from 25 to over 300.

Covidien will expand its R&D workforce more than eight-fold by opening a new research center next year in Shanghai. The company signed a memorandum of understanding with the Shanghai Caohejing Hi-Tech Park (CHJ), where the facility will be based. The 100,000-square-foot center, set to open by July 2012, will develop Covidien products tailored for the Chinese market and capitalize on China’s workforce to develop new medical device technologies.

In addition, the facility will include laboratory space and operating theater simulation suites for use by visiting healthcare professionals in the design and development of medical devices. “This collaborative approach will help us create products that are best suited to the needs of doctors in China and in other countries in Asia and, therefore, will be more likely to produce better patient outcomes,” states Dr. Dong Wu, Covidien’s vp, China R&D.

The new center, which will be the flagship of China research operations for Covidien, will allow the company to expand its R&D workforce to more than 300 from the current 25.

“One of the reasons we're putting R&D centers in Asia is also to leverage higher throughput in India and as well as China and Singapore,” Covidien vp of investor relations Coleman N. Lannum said just last week, during the the firm's analyst/investor day. “Our capabilities to realize higher returns is key. That's not about going from 2.9% to 4.6% of R&D spending over sales. It's about doing in the most effective and efficient way."

Covidien also plans to realize those higher returns by boosting its sales presence in China and other emerging markets. “Our emerging markets opportunities, primarily in China and India, in terms of adding significant amount of sales reps, our aspiration is that in 5 to 6 years, we're going to go from a $1 billion business to a $2 billion business.

“If you go to Brazil, you go to China, to India, what you see is a tremendous essential in the middle class. And what does the middle class want? They want wellness. Medical technology is a great space to be in, in those markets. Ongoing demographic trends support demand growth,” Lannum added.

“Why? Global population is aging. The fundamentals are there. And lastly, we made the right investments in healthcare economics and medical affairs. So we have the infrastructure to look forward to a space that becomes more demanding in the clinical needs of our customers, as well as the economic needs of our customers.”