So Fruitful Together: An M&A Roundtable

Call it the year of faltering firepower.

Life sciences M&A deal value and volume fell nearly 20 percent in 2017 as payer strength, external industry competition, and the regulatory environment sapped companies’ overall purchasing strength, according to an EY report released in early January. Experts at the multinational professional services firm anticipated a torrent of transactions based on “pent-up” acquisition demand and new policy initiatives such as U.S. tax reform and repatriation, but those forces materialized too late in the year to truly impact M&A activity.

The medtech sector, however, proved resilient to such dynamics, recording a 50 percent hike in deal value over 2016, EY’s report noted. The increase was fueled by therapeutic device companies seeking economies of scale in the face of mounting leverage from payers, experts said.

EY expects global life sciences deal value to top $200 billion this year (2017’s total), as companies focus on capital allocation strategies—including M&A—to generate inorganic growth.
“Given the pace of technological change and altered customer expectations, M&A must remain on the C-suite agenda,” the EY report states. “As we move into 2018, M&A becomes even more important for life sciences companies to meet their growth goals.”

Growth won’t be the only driver of M&A, though. Like last year, 2018 mergers will likely be influenced by increased competition, value-based care, product portfolio diversification, and the continued pursuit of economies of scale. The latter motive influenced two medtech megamergers in 2017 (both valued at $24 billion): the Luxottica-Essilor marriage, and the Becton Dickinson and Company-C.R. Bard Inc. union. The BD-Bard deal is significant not only for its size, but also for its potential to capitalize on the realignment and consolidation of large hospital systems.

Though it is thus far lacking in the megamerger deals of years past, 2018 has had its fair share of bolt-on acquisitions and strategic diversification partnerships. Boston Scientific Corp., for example, added to its repertoire a minimally invasive, radiofrequency-based treatment for enlarged prostate tissue through its $406 million purchase of privately held NxThera Inc., while Orthofix gained degenerative disc disease (DDD) treatment technology with its $105 million acquisition of Spinal Kinetics in mid-March. Sunnyvale, Calif.-based Spinal Kinetics manufactures the M6 disc, a product intended for DDD treatment in both the cervical and lumbar spine. The CE mark-approved product is designed to mimic natural disc anatomy with an artificial visco-elastic nucleus and fibrous annulus.

NN Inc., meanwhile, expanded into the medical market with its takeovers of Bridgemedica in late February and PMG Intermediate Holding Corporation—parent company of Paragon Medical Inc.—in early April. The pair of purchases, according to company executives, will help the diversified industrial firm broaden its portfolio and compete in previously untapped markets with strong growth potential.

“Firepower is amassing from outside the life sciences sector altogether,” EY’s report states. “In an October 2017 EY survey, life sciences executives pegged increased competition from companies outside the industry as the top disruptive force. This effect on the life sciences industry is too big to ignore, especially as several well-capitalized players such as Amazon, Apple, Alphabet, and Tencent openly muse about the future impact they may have on healthcare. Several of these companies are already placing bets alongside traditional life sciences plays, either as strategic investors or joint venture partners. Their investments follow major commitments to health care from the likes of IBM (Watson), Intel, and Samsung, among others.”

To better assess this impending onslaught from non-traditional healthcare entities as well as the breadth and depth of medtech’s M&A firepower this year (with “firepower” defined by EY as a company’s ability to perform an M&A transaction based on its balance sheet strength), Medical Product Outsourcing spoke with more than a half-dozen experts over the last few weeks. The insights and predictions that follow came from:

John Babbit, partner, Life Sciences, Transaction Advisory Services at Ernst & Young LLP.

Mark Bonifacio, president and founder of Bonifacio Consulting Services LLC, a Natick, Mass.-based manufacturing consultancy firm that helps medical device makers and OEMs optimize their operations and grow both organically and through M&A.

Elizabeth Cairns, medtech reporter for EP Vantage, a daily news service covering the pharmaceutical, biotechnology, and medical technology markets. The service was created by United Kingdom-based market intelligence firm Evaluate Ltd.

Ben Dunn, managing director with investment banking firm Covington Associates of Boston, Mass.

David J. Dykeman, a registered patent attorney and co-chair of the global Life Sciences & Medical Technology Group at international law firm Greenberg Traurig LLP.

Florence Joffroy-Black and Dave Sheppard, CEO/president and chief operating officer/principal of MedWorld Advisors, a healthcare mergers and acquisitions firm headquartered in Andover, Mass.

Patrick West, a partner at middle market investment banking firm Mirus Capital Advisors of Burlington, Mass.     

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Michael Barbella: What factors are driving M&A in the medical technology/medical devices arena? 
John Babbit: One of the main drivers is additional cash flow from U.S. tax reform. There is a need for growth with a lot of expansion into healthcare IT and digital.

Mark Bonifacio: You cannot have this discussion without talking about healthcare’s changing landscape and all of the factors driving down cost in the (medical) supply chain. The technological disruption, along with new technologies and new healthcare delivery models, are largely responsible for high M&A activity. Alongside, the continued backdrop of historically low interest rates, high cash on corporate and PE balance sheets, and the need for consolidation.

Elizabeth Cairns: Larger groups need to build scale in the face of continuing resistance on the part of payers such as insurance companies and healthcare systems to premium pricing for innovative technologies. Another factor is that the device makers’ customers are merging into ever-larger groups too. Hospital and home care chains across the United States and Europe are banding together, so medtechs need to offer the largest suite of products possible to hook one of the shrinking pool of potential clients as a repeat customer.

Ben Dunn: Globalization, cutbacks in internal R&D, value-based healthcare, and the importance of distribution channels.

David J. Dykeman: The trends of 2017 are continuing into 2018, and the most common exit for medical device companies is M&A. While biotech has had many IPOs that grabbed headlines, the same is not true for medtech, where M&A remains the most prevalent exit strategy. Wall Street seems enamored with the biotech narrative about revolutionary cures for large markets, and medical devices tend to be viewed as more of a tried-and-true solution.

In medtech, the factors driving M&A include big players seeking to treat unmet medical needs with new and promising technologies. Acquirers are very interested in disruptive technologies that improve patient outcomes and can help revolutionize markets. Medtech companies can position themselves for an M&A deal by de-risking the technology and their company. To de-risk, early-stage companies should conduct a self-assessment to determine where the pressure points of a deal might be. Areas that the big medtech acquirers focus on include FDA, competitors in the market, reimbursement, and IP issues.

Florence Joffroy-Black and Dave Sheppard: Some of the key factors for M&A growth in medical devices/technology include 1) Innovation—as the large strategic companies are slow to innovate, they often find that M&A is a viable pathway to add to their R&D pipeline for market introduction of novel emerging and growth technologies; 2) Market share—companies are seeking to increase market power through increasing market share within their core markets. This activity often allows for increased margin growth through synergies (both operational and channel); 3) Complementary market segmentation—“size matters” in this era of value-based pricing. Having a larger portfolio of products allows some of the key strategics to have enough products to impact outcomes in certain procedures or disease states. Examples of companies taking this approach include Medtronic and GE; 4) Similar to items 2 and 3, smaller companies need to find ways to gain size and inorganic growth is one key way to jumpstart market penetration within their market segments. 5) Geographical expansion—many companies in the United States are seeking ways to expand into the European Union and/or Asia. The same is true for companies based in those regions as they seek to expand global presence through both organic and inorganic methods; and 6) large companies have cash to spend and need to find productive ways to put it to use to appease their stakeholders.

Patrick West: Over the past decade hospitals have consolidated and become much more bottom-line focused. As part of this they are looking for broad competitive contracts from a reduced number of providers. Medtech companies have responded to this by aggressively growing through inorganic means to establish the critical mass necessary to meet these demands. Over the past four or five years we have seen a period of consolidation with large companies doubling or even tripling in size by acquiring similar-sized competitors as well as several of the stronger middle-market players in their space. Now, instead of having several large and a number of middle-market players in a given segment, there are less than a handful of very large companies.
Large vertical acquisitions appear to be winding down as it would seem that many companies believe they have achieved the necessary mass, valuations are too high and/or there are regulatory (HSR) concerns. Further, much of the middle market has been picked over and has markedly fewer players.

Going forward, it is more likely that horizontal and strategic long-term growth will drive M&A strategy. Most large medtech companies have a tremendous amount of cash on their balance sheets. CEOs are being challenged to deploy this in a strategic manner within the aforementioned constraints. Horizontal acquisitions open up new opportunities that can offer near-term returns. An example of this is Stryker’s deal for Physio-Control that allowed it to increase its footprint in an adjacency.

On the future growth side, companies are looking at structuring creative deals with early-stage companies that have unique technologies that in the past would have been venture funded. To this end, many of the large strategic players are becoming more adept at supporting earlier-stage companies to their own benefit. As examples: Johnson & Johnson has a very thoughtful approach with their innovation centers and J&J DC, and Philips is doing some really clever stuff with incubators and their venture fund. In addition to providing funding, we see more strategics willing to consider acquiring companies earlier than in the past. Mind you, these early-stage deals are typically heavily structured, creative deals.

This is an important dynamic, as after the crash in ‘08, much of the venture money for early-stage companies dried up and has not come back. As a result, we now have mega companies who would like to continue to grow through acquisition, but there are fewer and fewer quality properties available. Due to these dynamics, we believe that deal volumes may be flat to lower with valuations trending higher going forward.      

Barbella: What particular sectors do you expect to be active this year (cardiovascular, orthopedics, digital/mHealth, etc.) and why? Is this different than past years?
Babbit: We expect to see a lot of growth in diagnostics, analytics, wearables, monitoring, robotics, and three-dimension printing.

Bonifacio: When you look at the OEMs versus the contract manufacturers, you might see some different activity. In general, though, I don’t see a big shift in sectors other than possibly orthopedics—which has not been as active in the past couple of years—driving some deals going forward. The minimally invasive and cardiac markets continue to remain robust as new technology is being rolled out. I think the major OEMs are using M&A as more of an R&D vehicle these days.

Cairns: It is always very hard to predict where M&A activity will be strongest. So far 2018 has seen a surprising number of large acquisitions in the area of healthcare IT, with examples including the GE Healthcare-Veritas Capital deal and the Roche-Flatiron Health deal.

Dunn: Minimally invasive surgery remains hot and digital/mHealth will be active. There is still a lot of fragmentation but the [digital/mHealth] area is developing rapidly so I would expect there to be a lot of activity. The repatriation of foreign cash will help drive deals in the United States.

Dykeman: The 2018 outlook for medtech M&A is strong across the board, including traditional sectors like orthopedics and cardiovascular. The next wave of technologies is beginning to make an impact and will be in higher demand. For example, as mobile health continues to become more ubiquitous, digital and mobile health solutions are becoming increasingly important to traditional medical device companies. If a medtech giant is behind in mobile health, one way to catch the competition is through acquisition of an early-stage digital health solution.

Another hot area where new technology is entering the traditional medical device arena is big data. One of the challenges with the rise of digital health is the huge volume of data collected. With mobile technology, patients can benefit from continuous monitoring 24 hours a day, but the challenge is finding clean data in a form that is actionable by a technology and/or a physician. The golden nugget of big data is finding actionable data in a large data set and extracting it in time to adjust treatment and improve patient outcomes.

The intersection of big data and medical technology is a very exciting area. New software and computing tools that can minimize risk, improve the odds of treatment, and optimize patient outcomes will be in demand. The rise of big data, home monitoring, the Internet of Things, robotic surgery, and personalized medicine create opportunities to move the medical market out of the doctor’s office and into clinic and home-based care.

Joffroy-Black and Sheppard: All segments are “in play” for M&A. Market leaders (or “want-to-be” market leaders) in each segment will be using the current M&A tailwinds to achieve their innovation and growth goals. As digital health is a key buzzword, it may have an increasing share of medtech M&A simply because it’s a growing segment within the industry. However, opportunistic acquisitions will remain strong across all key medical technology sectors and geographies.

West: Cardiovascular has been active and we anticipate it will continue to be so. It would also appear that most companies are looking at the digital health/AI space and trying to figure out the right play. As it is such a dynamic sector, buyers appear willing to place multiple bets, suggesting that this will remain a very active area for the foreseeable future. In orthopedics and other areas such as women’s health, we believe you are going to start to see the lack of available properties have an impact. This will lead to flat to declining deal volume in these areas, but valuations will likely be higher.

Barbella: What trends/developments do you expect to see in the medtech M&A space this year?
Babbit: We expect in the second half of 2018 to see larger deals versus the first half. Scale matters in medtech to meet the changing customer, hospital, and payer requirements.

Cairns: A continuation of current patterns, i.e., large scale-building mergers for the reasons explained previously.

Dunn: We will continue to see the model where a large OEM purchases a portion or invests in an earlier-stage company and waits for it to be “de-risked” and then exercises a full buyout in the future. Private equity will continue to look for cash flow businesses that may not be core to larger OEMs. Divestitures should continue.

Dykeman: M&A follows the trends in the market. Mobile health, big data, and robotic surgery have been gaining traction over recent years, and traditional medical device companies are realizing the potential dramatic impact of these technologies for new treatment paradigms. None of the traditional medical device companies want to be left behind, so they need to either develop digital solutions in-house or acquire promising technologies from early-stage companies. As digital strategy becomes more important, we may be approaching the tipping point where traditional medical device companies are increasingly reliant on digital health and big data.

Joffroy-Black and Sheppard: There will be an increase in OEM supplier M&A activity, particularly of deals less than $100 million. Private equity firms are owning an increasing share of OEM medical technology companies. While they are always looking for larger platform companies (or technologies), PE firms are increasingly growing the strength of their portfolios through smaller bolt-on acquisitions (perhaps doing three or four deals of $10 million-$20 million versus one deal of $50 million).

West: As we previously noted, we anticipate fewer properties and more competitive deals with higher valuations but also more creative deals for earlier-stage properties. Another interesting dynamic is the emergence of private equity (PE) in the space. They have demonstrated that they will be relatively aggressive in pursuing the large properties that are still available. For instance, in the orthopedic space, TPG recently acquired Exactech, and Lima was acquired by the EU firm EQT.

This PE incursion into the medtech space is occurring in the lower middle market as well. As an example, we recently advised Belmont Instrument Company (life-saving blood and fluid infusion products) on its recapitalization by Audax. These additional players will only serve to make things more competitive in this space, particularly since firms like Audax tend to come in and not just buy one company but do multiple add-on acquisitions as well.
 
Barbella: What are the main challenges commonly facing acquirers when they pursue M&A as a means of creating shareholder value? What steps can they take to identify and minimize risks likely to cause future problems?
Babbit: One of the main challenges is doing accretive deals on a consistent basis. There is also a lack of viable targets. Strategics are becoming more active with their venture funds to source new deals. In 2017, corporate venture capital was ~$3 billion versus ~$1.5 billion historically.

Bonifacio: What we see time and again is the clashing of cultures as well as issues with integration and synergies that may not be realized. This can happen in any industry with almost any deal but it can be particularly prevalent in the medical device sector because the technologies and cultures may differ greatly amongst market competitors. The more due diligence and candid discussions companies have with existing management teams about the relationship and strategic objectives and goals can make the transition and integration easier for both parties.

Dunn: Buyers may improperly assess the market opportunity or the time and difficulty it takes for market adoption. Proper care and due diligence, and engaging the proper experts, is critical to evaluate this risk. Using a structured transaction approach or milestones is one way to ameliorate this risk.

Dykeman: Deals at all stages are getting done, but the major medical device players are willing to pay a premium for a company that has less risk and is further down the approval and commercialization path. As an early-stage company develops its M&A strategy, it should take a hard look in the mirror and conduct a thorough self-assessment. No matter how promising the technology, a company needs to assess where it is now and what are the hurdles to reaching the finish line. Medtech startups now need to address their IP, regulatory pathway, and reimbursement from the day the company is formed.

For an early-stage company, the uncertain regulatory pathway can be a big challenge, while its patent portfolio is one of its strongest assets. Companies need to think strategically about their patent portfolio from the start and supplement early patent filings to cover the latest innovations and improvements. Creating a “picket fence” of patent protection around the core technology by filing additional patent applications covering incremental improvements and new innovations can lead to greater market share and higher valuations in deals.

More established companies need to focus on adoption and sales. Large medical device companies are looking to acquire promising companies that can benefit from a stronger sales force to accelerate the commercialization curve. Thus, showing strong initial sales and adoption in hospitals and clinics is very important.

While large medical device companies have significant R&D budgets, they view early-stage companies as outsourced R&D laboratories on the leading edge of innovation. Early-stage companies can move faster and are often creating disruptive technologies with high market potential that are appealing to traditional medical device players. Acquirers are willing to pay a premium for next-generation products that can disrupt the medtech market. If the story is compelling, acquirers will pay for the promise of what the product can deliver in the market, even if regulatory approval is still years away.

Joffroy-Black and Sheppard: Integration execution remains one of the largest deal value killers. Often companies purchase other companies/technologies for their core assets, which often includes the core staff that built the acquired company. However, in some cases, the acquiring company finds that it loses the key staff through the acquisition transition. This can be avoided by performing better post-acquisition integration planning. Key stakeholders of the post-acquisition company need to be involved in the decision-making and communication needs to happen early and often with all employees. Integration execution can make or break the post-acquisition value of a deal so it needs to be on the forefront of acquisition planning. The acquisition transaction doesn’t end on the day of the deal closing and that has to be recognized by all parties involved.

West: Multiples are trending higher and higher. Companies therefore must be very thoughtful about how something slots in strategically to ensure that they are going to be able to justify the valuations they are paying. They must not only consider products and technology but company cultures, overall fit, and integration risks to ensure they are maximizing returns. From what we are hearing on the street, companies are doing well with most of their acquisitions, but I believe it will continue to be a challenge to maximize returns particularly as muliples and valuations continue to trend upwards.

Barbella: What should medtech executives bear in mind when thinking about their own M&A strategies?
Babbit: Keep M&A core to the company’s overall strategy. When the M&A strategy departs from the overall core mission of the company, organizations struggle.

Bonifacio: This is a difficult question to answer, as different organizations may have different goals. But in general, M&A is used as a vehicle for growth, to acquire potential gaps in a product portfolio, to gain manufacturing expertise, or capture global market share.

Dunn: They need to understand that this is likely going to be a core part of their business strategy moving forward. That means they need to dedicate the appropriate resources to ensure that it is successful, which involves not only people and partners, but also making the right decisions as to what to go after, how much to pay, how to structure, and how best to integrate.

Joffroy-Black and Sheppard: Medtech executives need to keep all key stakeholders in their scope of thinking as they plan and execute their M&A strategies. These stakeholders include suppliers, employees, management, shareholders, etc., of both the acquiring and acquired companies. Also, they should keep in mind to start the process well ahead of their target sale date. It will allow for a well-executed exit.

West: It is essential to consider cultural fit and be intellectually honest about the associated timeline, cost, and revenue ramp impact. It is not just about looking at products, technology, and sector, but fit from the ground up. How does a target fit my sales force call patterns? Am I going to have to develop new marketing and sales channels, and if so, how long is that going to take and how expensive will it be? If we are going to utilize an existing sales channel/sales force, is it going to fit within our commercial culture? Will their product development timeline be slowed given the more risk-averse culture of a large concern? Is there going to be a lot of angst or turnover?

One must be realistic about these integration challenges and build this into models, resourcing and timelines. Years ago, Stryker acquired Howmedica, which is seen by many as one of the more successful acquisitions in the medical device space and certainly the orthopedic sector. It was very difficult to take two cultures that were so different and amalgamate them. The acquisition was as successful as it was because Stryker accounted for how difficult it would be, developed an excellent plan, and allowed themselves the resources and the time to execute on it. Easy to say, hard to do. 

Barbella: How is consolidation among contract manufacturers impacting M&A strategies among OEMs?
Babbit: Overall this should benefit OEMs, as they can direct more work to fewer vendors and increase preferred provider collaborations. Ultimately, this should benefit the OEM’s M&A strategy by providing a more efficient supply chain to leverage and drive cost savings.

Bonifacio: We get this question all the time. I think some of the more obvious issues involve customer concentration, which is always makes for a very lively topic of discussion.

Dunn: It is another factor that OEMs need to consider when looking at a target. What is their current supply chain and what is likely to happen to it? It is just another risk and uncertainty they have to consider—the supply chain they are inheriting might change.

Dykeman: Over the last five years, the biggest story in medtech has been the consolidation of the large medtech players at the top and how that is filtering down to the middle market and even to early-stage medtech companies. That trend is here to stay, and we are seeing similar developments in the contract manufacturer and OEM spaces, where only the strong survive and thrive. To increase strength and competitiveness, many of the smaller operations are joining forces to succeed in the more competitive medtech marketplace.

Joffroy-Black and Sheppard: Industry supplier consolidation is actually being encouraged by some OEM policies. OEM companies are seeking to have less overhead by managing a smaller number of contract manufacturers/suppliers. Therefore, there is strategic value for some OEMs and contract manufacturers/suppliers to consolidate and gain leverage through their increased size.

West: I see the consolidation among contract manufacturers to some degree as being a response to the consolidation of OEMs. Say you were a small supplier with a unique product or process and you had a number of major and mid-sized customers. Suddenly in a period of three to five years, this may have consolidated into two or three very large customers, causing customer concentration risk to increase dramatically.

Acquisition and mergers are a necessary response, allowing contract manufacturers to broaden their product offering and reduce this risk. Instead of offering two or three products to a small number of demanding customers, they can offer multiple products or services to those same customers, and/or now instead of just supplying to only cardiovascular companies, for example, they may be supplying to women’s health and urology companies as well.  

Barbella: Do you expect more mega mergers to occur in the space?
Bonifacio: We certainly do see this trend continuing at least in the near-term. The general backdrop remains the same; market conditions, interest rates, availability of capital, and the need for continued consolidation all play well into keeping this M&A train rolling for at least the next year or so. One challenge we see is the availability of actionable assets in some of these (medtech) areas.

Dunn: Mega mergers will continue as long as there is plenty of capital to fuel such mergers and the market conditions favor large global players with well-established distribution channels. The potential threats to this are anti-trust and the dwindling number of large companies.

Dykeman: Every recent year has produced a headline-grabbing mega merger, and there is no reason to believe 2018 should be any different. Medtech companies are focused on global markets and the competition is fierce. Having the economies of scale that come with mega companies can help the balance sheet and that will continue to drive M&A among the major medtech players.

Joffroy-Black and Sheppard: Mega mergers always remain a possibility. However, they are becoming less likely in the current anti-trust regulatory environment in the EU and United States. When these large deals do happen, watch for creative approaches. For example, companies involved may be proactive in offering to sell off certain portions of their portfolio (the parts that may seem objectionable to regulators due to potential segment market share concerns). With that stated, don’t be surprised to see some larger companies sell part of their portfolios to other companies as they seek to focus on their core markets.

West: One need look no futher than the Bard/BD deal that closed early this year to suggest that acquisitons will continue. However, it is unlikely to be at the pace we saw in the middle part of the decade. As previously mentioned, there are likely going to be regulatory limitations as to just how much market share a company will be allowed to own in a particular vertical. Given that healthcare costs are already high on the political agenda, it is unlikely that further consolidation that reduces competition will play well. Further, it would appear that in many cases, companies have reached the necessary critical mass to be competitive in their specific verticals.

We believe, therefore, that mega mergers are more likely going to be horizontal plays—for instance, a very large orthopedic player merging with a very large cardiovascular player. As mentioned previously, however, multiples for these publicly-traded companies are quite high, making the economics of a deal like this challenging. 

Barbella: What impact will President Trump’s tax reform plan have on medtech M&A?
Babbit: U.S. tax reform is real and the incremental cash flow will likely lead to increased long-term investments in R&D and M&A as well as fueling additional short-term investments that will reward shareholders such as dividends and stock buybacks. 

Bonifacio: I’m not a tax expert but we may have seen some repatriation of funds, which I don’t think is a bad thing and can certainly help some companies. However, I do think it’s a bit early to determine what the impact will be and where (if) any of the savings that occur may be spent. I believe some of the details of the new code are still being hashed out.

Cairns: The effect the new U.S. tax legislation might have on the frequency of mega mergers is as yet unknown, but if U.S. companies find it easier to repatriate foreign cash, even greater sums could be spent on M&A in 2018.

Dunn: The tax reform plan has provided additional capital for M&A through the repatriation of foreign cash. In addition, the reduction in tax rates provides more cash flow for both buyers and their targets. While I’m not sure if this will accelerate the pace of consolidation, it will most likely enable the current strong market to continue longer than it otherwise would have.

Joffroy-Black and Sheppard: In the middle market companies (under $100 million), tax reforms have real potential advantages to both acquirers and to acquired companies AND will increase new capital spending. The tax incentives are strong for these types of transactions to take place. It allows for the opportunity for larger ROI benefits both short term and long-term. 

West: There’s a lot of cash on balance sheets already. More available cash may help to continue to support higher valuations, but will likely not help deal volume given the significant consolidation that has already occurred and lack of available properties.

To an earlier point, medtech companies clearly would like to continue to grow inorganically but there is significant under-investment in early-stage companies. Usually when you have this kind of demand, investment capital would respond appropriately, but this is just not happening in the medtech sector. Hopefully the additional capital available due to tax reform will find its way to supporting our all-important early-stage/entrepreneurial medtech sector.