Will Jeff Binder Follow Blackstone to China?

Is Biomet, Inc., CEO Jeff Binder going to China?

Xinrong Best Medical Instrument Co.

Blackstone Group LP, the lead Wall Street banker in the Biomet, Inc. private equity ownership group, announced on September 23, 2014 that it was acquiring an “unspecified” stake in China’s Xinrong Best Medical Instrument Co. Xinrong is a Chinese-based developer of orthopedic implants with trauma, spine and joint applications. Published reports quoting insiders say the deal is for $100 million.

With Zimmer Holdings, Inc.’s $13 billion offer to buy Biomet from Blackstone’s group, the company has cash to expand into China’s orthopedic market. When Zimmer and Biomet merge, the number of CEO chairs will presumably decrease to one. Binder is young and likely to seek high level challenges.

New CEO

Xinrong, founded in 2000, is one of the last independent medical devices companies in China and was reportedly interested in Blackstone’s ability to attract top-level managers. A team is apparently already assembled, including a new chief executive officer from a leading global orthopedic company. Blackstone will also help Xinrong with its marketing and sales efforts.

The Chinese company is also looking to draw experience from Blackstone’s other portfolio companies in the sector, according to published reports. Apparently, Blackstone was not the only suitor, nor did it have the highest bid. The trump card was Blackstone’s management stable.

Competitive Pricing

Xinrong is planning to target hospitals and other care organizations in tier-2 and tier-3 Chinese cities. Furthermore, the company is aiming to be more competitive on implant pricing than foreign competitors. China’s government reimburses about 70% of a patient’s costs, but 30% out-of-pocket is still beyond many of China’s patients.

According to Boston Consulting Group, where Binder spent five years, China’s orthopedic implant market will grow from $1.3 billion in 2013 to $4.1 billion in 2020, driven by an ageing population, increasing disease, improving treatment rate and growing affordability.

“With China’s ageing population and increasing disposable income, the market growth for orthopedic implants is significant, ” said Blackstone senior managing director Yi Luo in a statement. Luo is based in Shanghai and led the deal.

Binder should be used to air travel. When he took over as CEO of Biomet, he reportedly commuted by company jet from his home in Austin, Texas, to Warsaw, Indiana, on a weekly basis. He has an advanced degree in public affairs from the Woodrow Wilson School at Princeton University.