Boston gains Bard’s rhythm in $275m deal


Boston Scientific’s $275m purchase of C. R. Bard’s electrophysiology division, the second acquisition it has made in this fast-growing space in less than a year, is another sign that Boston is trying to fortify itself against the lacklustre performance of its core cardiac rhythm management and interventional cardiology units.

The company’s aggressive M&A strategy means that this is its fifth purchase within the last year or so. Investors will be curious to see how Boston integrates its new assets into a cohesive and profitable business.

Bard’s electrophysiology unit includes its line of cardiac ablation catheters, used to treat cardiac arrhythmias such as atrial fibrillation, as well as diagnostic catheters and intracardiac access devices. The unit made $111m of revenue for Bard last year.

The technology will join similar devices Boston acquired when it bought Rhythmia Medical for $90m plus $175m in milestones last October, and which hitherto had made up Boston’s entire electrophysiology business. Boston’s rationale for entering this space is clear: the world market for electrophysiology sits at about $2.5bn according to the company, and is growing at about 10% per year.

Historical strengths fading

And the company needs to be making a mark in growing areas to make up for the shrinking share of its traditional strongholds. Boston’s slice of the cardiac rhythm management market narrowed from 25% in 2008 to around 11% in 2012, according to analysts at Trefis, thanks to competition and safety issues related to its pacemakers and implantable cardioverter defibrillators (ICDs).

Its losses here prompted Boston to buy into new areas with a raft of acquisitions. A month after snapping up Rhythmia, it entered the red-hot renal denervation arena with its $425m purchase of Vessix Vascular (Boston Scientific gatecrashes renal denervation market with Vessix buy, November 9, 2012). It also bought BridgePoint Medical to gain its catheter-based system to treat blocked coronary arteries, and Cameron Health, obtaining a subcutaneous ICD.

Summary of Boston Scientific's Company Acquisitions, 2011-13
M&A Deal Date M&A Deal Type Target Company or Business Unit Main Technology Area Deal Value ($m) M&A Deal Status
01/06/2013 (announced) Business Unit Electrophysiology technologies of C. R. Bard Electrophysiology 275 Close expected 2H13
19/11/2012 Company Acquisition Vessix Vascular Renal Denervation 425 Closed
31/10/2012 Company Acquisition BridgePoint Medical Coronary Chronic Total Occlusion - Closed
31/10/2012 Company Acquisition Rhythmia Medical Electrophysiology 265 Closed
08/06/2012 Company Acquisition Cameron Health Subcutaneous ICD 1,350 Closed
03/03/2011 Company Acquisition Atritech Left Atrial Appendage   375 Closed
15/02/2011 Company Acquisition ReVascular Therapeutics Coronary Chronic Total Occlusion 36 Closed
05/01/2011 Company Acquisition Intelect Medical Deep Brain Stimulation 78 Closed
04/01/2011 Company Acquisition Sadra Medical Transcatheter Heart Valve 386 Closed

So if Boston wants to get into an expanding area, why does Bard want to get out? The company said that exiting electrophysiology would allow it to chase “opportunities where we believe we can achieve sustainable long-term leadership positions and provide attractive growth and returns to shareholders". Apparently growth of 10% a year is not enough.

A better explanation might be a pressing need for cash. Bard was forced to spend $26m on legal fees defending litigation over its vaginal mesh products, which have been linked with dangerous side effects. Last week it emerged that the polymer used to make some of these meshes might have been unfit for use in humans (Bard’s investors shrug off use of potentially dangerous plastic in implants, June 26, 2013).

Arrangements for the electrophysiology divestment would have been in train before this revelation, but nevertheless Bard would have known that a few hundred million dollars would come in handy.

To contact the writer of this story email Elizabeth Cairns in London at or follow @LizEPVantage on Twitter

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