M&A activity in the medtech sector is going strong. Lu Rahman looks at some of the recent deals taking place in the industry.
Chess
Early this year Matt Robida, Spectrum Plastics Group, explained to MPN Europe magazine how the company’s recent merger highlighted how the trend for medical consolidation.
Pexco, the Georgia-based specialty extrusion and custom plastics company with a growing position in medical plastics, and Kelpac Medical, the Wisconsin-based medical tubing manufacturer, merged and rebranded as Spectrum Plastics Group.
According to Robida, the merger “illustrates how the effects of consolidation at the major company level are impacting the supply chain. The highly fragmented $25 billion US medical contract manufacturing and outsourcing market, of which 40% is spent on plastics and which is estimated to be growing near 10% per year through 2020, is beginning to show the same signs of consolidation that the majors have been witnessing”.
He added that private equity firms and investment buyers, which annually are quite active in plastics manufacturing, as well as private or public Industrial strategic buyers, wishing to get in on the medical growth game, have been participating in and exacerbating this supply chain consolidation trend.
Deals between high calibre medtech companies within the supply chain continue to create interest within the sector.
Elizabeth Cairns, author of the EvaluateMedTech World Preview 2017, Outlook to 2022 summed up M&A movement in recent years: “After a slow year in 2016 as companies that had made large buys the year before paused to digest their purchases, M&A activity is once again on the up. At nearly $50bn, the total value of mergers closed in the first half of 2017 has already eclipsed the total for all of 2016. Despite this the number of deals struck has been falling; mergers are getting bigger, but also scarcer”.
Last year major drug delivery player Phillips-Medisize announced the acquisition of Medicom Innovation Partner of Denmark and its subsidiary in Cambridge, UK.
Medicom specializes in connected health drug delivery devices and employs a staff of 90 specialists in Denmark and the UK. This means that Phillips-Medisize now employs about 500 engineers throughout its global design and development network to develop injectable and inhalation devices for the global market.
Following this Phillips-Medisize itself was the subject of an acquisition when global manufacturer of connectors and interconnectors, Molex, bought the company.
Martin Slark, chief executive officer of Molex said: “Phillips-Medisize brings strong capabilities to Molex in the medical solutions market globally. Combining Molex’s expertise in electronics and our broad manufacturing presence with Phillips-Medisize’s talented and experienced team will help us better serve the growing needs of the global market for innovative connected health solutions.”
According to Robida, thanks to “continued globalization and higher demand for medical technology and services, medical OEMs are diversifying their product portfolio, scale-up operations and gaining market share to improve their negotiating power with hospital systems and the demands of a value-based healthcare model.”
Bolstering a company’s offering to the market is often a key factor in the decision-making process. Nolato recently acquired Polish Grizzly Medical, which is involved in the assembly, post-processing and quality assurance of medical device components and systems. The company has been a supplier to and partner of Nolato Medical since the 1990s.
Providing a route into or to strengthen a particular market can of course be a key driving force. Nelipak’s purchase of thermoforming company Computer Designs Incorporated – operating under the name Nelipak Healthcare Packaging – means that the business can strengthen its commitment to the North American healthcare market.
DePuy Synthes Products, part of Johnson & Johnson Medical Devices Companies recently acquired Innovative Surgical Solutions (Sentio). According to DePuy Synthes the acquisition underscores the business’ strategy of investing in what it describes as “faster growing segments with technologies that are designed to help improve patient outcomes and bring value to our customers”.
DePuy Synthes has also splashed out on 3D printing technology from Tissue Regeneration Systems (TRS). TRS’ 3D printing methods will help enable the company to create patient-specific, bioresorbable implants with a mineral coating intended to support bone healing. Depuy Synthes says the acquisition brings exciting new technology with the potential to personalise healthcare solutions in trauma.
M&A activity in the medtech sector doesn’t seem to be showing any signs of disappearing. It will be interesting to see how this bears out in 2018 and how this consolidation will affect the medical technology supply chain going forward.