Arjo exits low-price medical beds to focus on premium sector
Arjo, a market-leading supplier of medical devices and solutions, signed an agreement to divest Acare – the group’s low-spec medical beds business – in order to focus on the premium market of medical beds.
The divestment will see Acare, a Chinese-based company producing simple low-priced beds which was acquired by the Getinge Group in 2012, join China-based CBL Group. In 2017, Acare sales amounted to approximately £6.8 million, sold through Arjo’s in-house sales organisation to primarily China and India.
The news of Arjo exiting the low-spec medical bed segment comes amidst the announcement from Drive DeVilbiss to relocate the production of its new electrically profiling bed model from Vietnam to West Yorkshire.
Originally, Arjo acquired the Zhuhai-based manufacturer to expand its presence in emerging markets but has shifted its strategy recently, deciding to focus on the premium segment for medical beds where Arjo says it already has strong market positions and where the profitability is significantly better.
“The divestment of Acare is part of the action plan that we have prepared to improve the group’s gross margin in the medical beds category. Our strength is found outside the value segment and that is also the area on which we will focus to maintain and further strengthen our leading positions in the market,” says Joacim Lindoff, President and CEO of Arjo.
With its head office situated in Guangzhou, CBL Group has around 1,200 employees and is better suited to Acare’s product offering, according to Arjo, with CBL already boasting an extensive range of products in the low and mid-price segment.,
Encompassing a production and sales unit in Zhuhai, as well as 186 employees, the divestment is expected to be completed at the end of 2018, with Arjo claiming the move will have no considerable effect on its cash flow or 2018 results.
Conversely, the Swedish-based supplier of medical, mobility and moving & handling equipment says the divestment is expected to have a positive annual effect of approximately £2.1 million on operating profit from 2019.