This year has seen fewer mergers and acquisitions in the medtech space so far than the equivalent period in 2011, and the total value of the deals has also fallen. In the first three quarters of 2012 $47bn was spent on acquiring medtech companies, compared with $65bn a year earlier. The fall of 27% is particularly concerning as nearly half of the 2012 total spend was from a single $20bn deal.
Analysis of data from EvaluateMedTech shows that the first three quarters of 2012 saw 38 M&A deals within medtech, compared with 60 in the same period in 2011. This 37% drop is partly due to the macroeconomic climate, and no doubt some of the blame can also be apportioned to the forthcoming US medtech sales tax, which is forcing companies into cost-cutting and limiting their takeover opportunities (see tables).
Largest pure medtech deal for seven years
By far the largest medtech acquisition of 2012 was that of the trauma specialist Synthes by Johnson & Johnson. The $19.7bn deal was worth more than five times as much as the next largest transaction, Hologic’s buyout of Gen-Probe for $3.7bn. It is a huge outlier, unlike anything in the first three quarters of 2011, where the top deal was worth less than twice the price of the second.
|Top 20 medtech M&A deals in first nine months of 2012|
|Rank||Acquiring company||Deal type||Target||Deal value ($m)||Status||Date|
|1||Johnson & Johnson||Company acquisition||Synthes||19,700||Closed||14 June 2012|
|2||Hologic||Company acquisition||Gen-Probe||3,700||Closed||1 August 2012|
|3||Asahi Kasei||Company acquisition||ZOLL Medical||2,210||Closed||26 April 2012|
|4||Agilent Technologies||Company acquisition||Dako||2,200||Closed||21 June 2012|
|5||Boston Scientific||Company acquisition||Cameron Health||1,350||Closed||8 June 2012|
|6||FUJIFILM Holdings||Company acquisition||SonoSite||995||Closed||29 March 2012|
|7||Thermo Fisher Scientific||Company acquisition||One Lambda||925||Closed||13 September 2012|
|8||Medtronic||Company acquisition||Kanghui Holdings||816||Open||27 September 2012|
|9||Haemonetics||Business unit||Blood collection, filtration and processing product lines of Pall||535||Closed||2 August 2012|
|10||Hill-Rom||Company acquisition||Aspen Surgical Products||400||Closed||26 June 2012|
|11||AngioDynamics||Company acquisition||Navilyst Medical||372||Closed||22 May 2012|
|12||Danaher||Company acquisition||IRIS International||338||Open||17 September 2012|
|13||Covidien||Company acquisition||BÂRRX Medical||325||Closed||05 January 2012|
|14||Baxter International||Company acquisition||Synovis Life Technologies||325||Closed||14 February 2012|
|15||Covidien||Company acquisition||Oridion||310||Closed||26 June 2012|
|16||Covidien||Company acquisition||superDimension||300||Closed||15 May 2012|
|17||Biomet||Business unit||Trauma business of DePuy Orthopaedics||280||Closed||15 June 2012|
|18||Teleflex||Company acquisition||LMA International||276||Open||14 August 2012|
|19||Getinge||Business unit||Therapeutic Support System business of Kinetic Concepts||275||Open||15 August 2012|
|20||STERIS||Company acquisition||U.S. Endoscopy Group||270||Closed||15 August 2012|
The deal was, in its way, also a response to economic pressures. J&J’s DePuy subsidiary already had a significant presence in the orthopaedic market, but much less in trauma, with a market share of around 6% before the acquisition, compared with 58% for Synthes. Because trauma care is a necessity, it is under less pricing pressure than procedures such as joint replacement (J&J needs to practice dealmaking arts in Synthes talks, April 18, 2011).
The Synthes deal was the largest acquisition of a pure-play medtech company since Boston Scientific’s 2005 acquisition of Guidant for $27bn. Boston has had significant difficulties digesting pacemaker developer Guidant and may only now be getting back on track (EP Vantage Interview – Boston Scientific remakes itself to face the future, October 22, 2012). J&J, being the biggest medtech company in addition to its pharmaceutical operations, ought to be able to absorb Synthes more easily.
The most expensive transaction to date in 2012 has had a knock-on effect in that it necessitated the 17th most expensive: Biomet bought the trauma segment of DePuy, which included fixation products used in the treatment of bone fractures, for $280m in June, in order to allay EU antitrust concerns resulting from the Synthes buy.
|Top 20 medtech M&A deals in first nine months of 2011|
|Rank||Acquiring company||Deal type||Target||Deal value ($m)||Status||Date|
|1||Danaher||Company acquisition||Beckman Coulter||6,800||Closed||30 June 2011|
|2||Thermo Fisher Scientific||Company acquisition||Phadia||3,438||Closed||23 August 2011|
|3||Terumo||Company acquisition||CaridianBCT||2,625||Closed||14 April 2011|
|4||DENTSPLY International||Business unit||AstraTech||1,800||Closed||31 August 2011|
|5||Stryker||Business unit||Neurovascular Division of Boston Scientific||1,500||Closed||3 January 2011|
|6||Medtronic||Company acquisition||Ardian||800||Closed||13 January 2011|
|7||Quest Diagnostics||Business unit||Athena Diagnostics||740||Closed||4 April 2011|
|8||Bausch + Lomb||Option||Technolas Perfect Vision||645||Open||8 September 2011|
|9||Elekta||Company acquisition||Nucletron||526||Closed||15 September 2011|
|10||Medtronic||Company acquisition||Salient Surgical Technologies||525||Closed||31 August 2011|
|11||Novartis||Company acquisition||Genoptix||525||Closed||31 August 2011|
|12||Boston Scientific||Company acquisition||Sadra Medical||470||Closed||7 March 2011|
|13||Boston Scientific||Company acquisition||Atritech||386||Closed||4 January 2011|
|14||QIAGEN||Company acquisition||Cellestis||375||Closed||3 March 2011|
|15||Hologic||Company acquisition||Interlace Medical||374||Closed||29 August 2011|
|16||Hitachi Medical||Company acquisition||Aloka||350||Closed||7 January 2011|
|17||Accuray||Company acquisition||Tomo Therapy||292||Closed||4 March 2011|
|18||Toshiba||Company acquisition||Vital Images||277||Closed||13 June 2011|
|19||Roche||Company acquisition||mtm laboratories||273||Closed||15 June 2011|
|20||Sekisui Chemical||Business unit||Genzyme’s Diagnostic Business||265||Closed||1 February 2011|
The most acquisitive firm in terms of deals is Dublin-based Covidien, which purchased no fewer than seven companies: BÂRRX Medical, Oridion, superDimension, Maya Medical, Newport Medical Instruments, CNS Therapeutics and MindFrame, for a total of $1.4bn.
BÂRRX is a developer of radiofrequency ablation catheters used to remove precancerous tissue from the gastrointestinal tract to treat conditions including Barrett's oesophagus. Maya Medical’s lead technology, the OneShot renal denervation system, also employs radiofrequency energy, but uses it to ablate nerves to control blood pressure.
Three further companies are active in the pulmonary area. Oridion develops devices that detect the proportion of carbon dioxide in a patient’s breath as a monitoring tool for use during anaesthesia and intensive care. The Israeli company superDimension has a product called the i·Logic system, which can extend the reach of conventional bronchoscopes to provide minimally invasive access to lesions deep in the lungs, to improve evaluation of lesions and enable safer tissue biopsies. Newport Medical Instruments develops ventilators. These companies are logical purchases given Covidien’s portfolio of pulse oximeters and other monitoring products.
MindFrame manufactures devices to aid rapid perfusion and clot removal to treat patients with ischaemic stroke. Lastly, CNS Therapeutics is a pharma company, bought by Covidien’s drugs subsidiary Mallinckrodt.
The most acquisitive company in the first three quarters of 2011 was Medtronic, which bought renal denervation specialist Ardian, surgery companies Salient Surgical Technologies and PEAK Surgical and Jolife, a Swedish firm that had developed a tool that administers non-stop chest compressions, spending a total of $1.5bn.
The medtech sector is growing faster than pharma. Though there have been fewer acquisitions so far in 2012 than in 2011, this trend is a recent one – 2011 saw more buyouts than 2009 – and there is no reason why it might not be reversed in 2013.
|Medtech mergers & acquisitions|
|Deal announcement date||Total deal value ($m)||Deal count|
|1st quarter 2011||5,778||16|
|2nd quarter 2011||48,334||22|
|3rd quarter 2011||10,839||22|
|1st quarter 2012||3,430||5|
|2nd quarter 2012||31,173||14|
|3rd quarter 2012||12,499||19|
To contact the writer of this story email Elizabeth Cairns in London at email@example.com