Kalorama: Medical Device Firms Grow by Buying

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Jun 08, 2016, 10:51 ET

NEW YORK, June 8, 2016 /PRNewswire/ -- The low rate of organic revenue growth in the medical device market and the need to innovate finds many firms buying other companies for growth. This is the conclusion of healthcare market research firm Kalorama Information in its latest report on the topic of medical devices. There were over 150 acquisitions of significance related to medical device companies in 2015 and half of 2016, according to the report. The conclusion was made in Kalorama Information's yearly study on the medical device industry, The Global Market for Medical Devices, 7th Edition.

The Global Market for Medical Devices, 7th Edition, can be found at Kalorama Information: http://www.kaloramainformation.com/Global-Medical-Devices-10058730/.

Medical device companies need to constantly innovate and offer better and more cost-effective devices. But acquiring a new device is only part of the reason for the mergers, the firm says.

"The reasons for device mergers often go beyond the desire to acquire novel technologies," said Bruce Carlson, Publisher of Kalorama Information. "Medical device companies are seeking strategic acquisitions to fill gaps in their portfolios in a manner that will help them offer more complete solutions."

Kalorama also notes a trend toward consolidation driven by the necessity to reduce costs as pricing pressures mount from hospital customers. In 2015 and early 2016, key market players were active in M&A; among them Medtronic plc, Stryker, Smith & Nephew, and ResMed. The table in Kalorama's full research study, available for purchase on its website, contains a select listing of 153 mergers and acquisitions that occurred in the medical device market in 2015 and early 2016. In the report, Kalorama notes the following major medical device industry acquisitions this year and last:

Medtronic Acquires Covidien - In January of 2015 Medtronic completed the largest transaction in medtech history. The acquisition of Covidien created a company to overtake J&J's market leadership, one having a broader product line to compete more effectively. Covidien's business segments include medical devices, pharmaceutical products, imaging solutions, and medical supplies. Medtronic plc announced on January 26, 2015 that it had successfully completed the previously announced acquisition of Covidien plc. The transaction is valued at approximately $49.9 billion.
Medtronic Keeps Purchasing. In addition to Covidien, Medtronic has remained competitive with many acquisitions:
- Aircraft Medical (Edinburgh, Scotland) was acquired for $110 million in cash. Aircraft Medical is a privately held medical device company that develops affordable, handheld high-quality video laryngoscopes used by anesthesiologists and critical care professionals to intubate patients.
- Twelve, Inc. (Redwood City, CA) was acquired for up to $458 million, including $408 million at closing and $50 million on achievement of CE marking. Twelve, Inc. is a medical device company working to develop a transcatheter mitral valve replacement (TMVR) device.
- Medical device business RF Surgical Systems, Inc. was acquired for $235 million. The Carlsbad, California-based company focuses on detecting and preventing surgical items, such as sponges, gauze or towels, from being left inside patients after surgery. RF's system uses a low radio frequency signal embedded in towels and other surgical items that can be traced so the objects are not left behind.
- The assets of Aptus Endosystems, Inc. (Sunnyvale, CA) were acquired for approximately $110 million. Aptus is a privately held medical device company focused on developing advanced technology for endovascular aneurysm repair (EVAR) and thoracic endovascular aneurysm repair (TEVAR).
- Diabeter (The Netherlands), an independent diabetes clinic and research center dedicated to providing comprehensive and individualized care for children and young adults with diabetes, was acquired.
Stryker Buys Physio-Control, a maker of automated external defibrillators (AED), cardiopulmonary resuscitation (CPR) devices, and related accessories and disposables was purchased from Bain Capital Private Equity for nearly $1.3 billion, fortifying Stryker's emergency medical services (EMS) business, in addition to several other companies.
Smith & Nephew (S&N) Acquired Blue Belt Technologies, adding robotic technology to its next-generation portfolio of surgical products. Blue Belt makes the portable Navio system, which is designed to work with 8 different knee systems
Dentsply International and Sirona Dental Systems agreed to complete a $5.6 billion merger-of-equals that will result in the world's leading manufacturer of professional dental products and technologies. The combination will create a combined company with the largest sales and service infrastructure in dental with 15,000 employees globally.
Hill-Rom Completes Acquisition of Welch Allyn: Hill-Rom Holdings completed its $2.05 billion acquisition of Welch Allyn in September 2015. Welch Allyn joins Hill-Rom as part of a strategic acquisition designed to advance medical device innovation. The combination expands Hill-Rom's product portfolio with point of care diagnostics and testing. Together, Hill-Rom and Welch Allyn will leverage their respective infrastructures and product portfolios to provide improved diagnostics, sensing and patient monitoring technologies.

Kalorama Information expects more acquisitions for the 2^nd half of 2016. Its report contains a complete list of acquisitions, as well as profiles of major companies and an index of their performance in 2015.

The Global Market for Medical Devices, 7th Edition, can be found at Kalorama Information: http://www.kaloramainformation.com/Global-Medical-Devices-10058730/.

About Kalorama Information
Kalorama Information, a division of MarketResearch.com, supplies the latest in independent medical market research in diagnostics, biotech, pharmaceuticals, medical devices and healthcare; as well as a full range of custom research services. Reports can be purchased through Kalorama's and are also available on www.marketresearch.com and www.profound.com.

We routinely assist the media with healthcare topics. Follow us on Twitter, LinkedIn and our blog at www.kaloramainformation.com.

Contact:
Bruce Carlson
(212) 807-2622
[email protected]

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SOURCE Kalorama Information