Key Strategic M&A Insights from This Year’s Top 30 Companies Report

By now, loyal MPO readers have probably read this year’s installment of the Top 30 Medical Device Companies report. We are members of that group, and were intrigued by the fascinating particulars within the 2024 list—from Abbott’s 80% COVID-19 diagnostics shortfall and Baxter International’s “rebuild” year to Dentsply Sirona’s 8%-10% staff cut and reorganization into five global business units, Stryker Corp.’s completion of a 200-megawatt wind farm in Kansas, and EssilorLuxottica’s partnership with Facebook to make the Ray-Ban Meta smart glasses a reality.

As successful international M&A advisors, however, we found the inorganic activities of the Top 30 participants particularly interesting, since their strategic initiatives and transactions often fuel the innovation and growth that set the standards for the medtech industry’s small and medium enterprises. Thus, our comments/observations/analyses target some of the largest deals since last summer’s Top 30 list was published. The key transactions that have caught our attention follow.

Johnson & Johnson’s acquisition of Shockwave Medical: This purchase seems like the most obvious place to start, as J&J MedTech placed second on this year’s Top 30. At $13.1 billion, this deal (announced in April 2024) is by far the industry’s largest in value over the past 12 months. The acquisition highlights how important M&A is for J&J MedTech to accelerate its growth. Due to internal R&D challenges, many of J&J MedTech’s individual companies and market segments struggle to attain anything higher than single-digit growth. Consequently, it must consistently drive additional innovation and market opportunity through M&A. This specific investment also continues to highlight the competitive nature of the cardiovascular markets as well as the sector’s many business opportunities. J&J has fallen behind in both general medical technology and orthopedic-related enabling technologies (digital health and robotics) and will likely not catch up to its rivals for years to come. Therefore, the business unit will continue to need more M&A to maintain its number-two spot on the Top 30 list in the next five years.

BD’s purchase of Edwards Lifesciences’ Critical Care Unit: This is an interesting transaction because it highlights both a divestiture (by Edwards) and an acquisition (by BD) of two companies in the Top 30 list. In recent years, BD (ranked eighth in this year’s report) has been somewhat active in portfolio management as it eyes its “BD 2025” plan to grow, simplify, and empower its Interventional, Medical, and Life Sciences core business units. BD will likely continue its inorganic approach to portfolio management through both acquisitions and divestitures that improve its core focus, growth opportunities, and margins. An additional interesting note on this $4.2 billion cash transaction is the divestiture may result in Edwards falling out of the Top 30 next year (its current ranking is 21). Stay tuned.

Boston Scientific’s acquisition of Silk Road Medical: This $1.26 billion deal (announced in June this year) continues to expand Boston Scientific’s offerings in minimally invasive surgery. The focus with this purchase is carotid artery disease and stroke prevention. With its aggressive inorganic and organic growth, don’t be surprised to see Boston Scientific move into the top 10 in 2025 (it’s now knocking on the door at number 11).

Beyond these illustrative larger deals in the past year, meaningful insights also can be gleaned from the growth strategies of other top 10 companies.

•  Medtronic (No. 1): CEO Geoff Martha has mentioned several key themes about Medtronic’s current M&A activities, the most important of which is the pursuit of “tuck-in” acquisitions that can enhance the company’s current business units and accelerate growth in crucial areas. Medtronic’s size acts as a double-edged sword in the M&A realm: The upside is the company’s “tuck-in” transactions can be small deals worth millions of dollars to larger purchases costing billions. But the downside is Medtronic is subject to more acquisition-related antitrust scrutiny compared to its competitors. That scrutiny, as well as its unimpressive R&D results, should impel the firm to pursue innovation from early-stage companies to ensure its top spot in future core market segments.

•  Abbott (No. 3): Similar to Medtronic, Abbott must tread carefully with large deals. The company should focus on smaller deals in its core segments of diabetes, cardiovascular, and diagnostics. Fortunately, Abbott has market momentum and solid growth opportunities in glucose monitoring, which should allow the company to benefit from portfolio flexibility for quite a few more years.

•  Siemens Healthineers (No. 4): Since completing its $16.4 billion acquisition of Varian in 2021, Siemens has been somewhat quiet on the M&A front. The company continues to explore smaller deals in its core markets but don’t expect anything extraordinary from Siemens in this area.

•  Stryker Corp. (No. 5): With 22 distinct business units, there is always opportunity for Stryker to pursue “tuck-in” acquisitions for each of its market segments—and it has certainly taken advantage of those opportunities. Historically, one of the core foundations of Stryker’s growth has been expanding its market opportunities through aggressive acquisitions. While CEO Kevin Lobo has mentioned “tuck-ins,” it wouldn’t be out of the ordinary for Stryker to negotiate another major deal (or two) in the coming years, which could help the company unseat J&J MedTech or Abbott for the second or third spot on the top 30 list by 2029.

•  Philips (No. 6): This is a classic example of a company with opportunity that has failed to execute. Philips has had plenty of chances for aggressive growth but its conservative Netherlands ownership and background has been its own worst enemy. One effective way to recharge the company would be through an aggressive acquisition of a “smaller” billion-dollar company like Edwards Lifesciences or Terumo, which has adjacent spaces that can grow Philips’ market opportunities and leverage its current capabilities.

•  GE Healthcare (No. 7): Since spinning off from the GE “mothership” in January 2023, GE Healthcare has been aggressive with digital health M&A activities. Given that much of its core business is stuck in low-growth imaging categories, GE Healthcare seems to be transforming itself into an artificial intelligence (AI) and digital solutions provider in order to create a value-added offering that will set the company apart from competitors. For example, GE Healthcare currently has more AI solutions approved by the U.S. Food and Drug Administration than any of its rivals. It will be interesting to follow this strategy to assess its short- and long-term impact, but we think it will be successful. 

•  Cardinal Health (No. 9): Given its relatively low margins (by industry comparison at least), Cardinal Health has been under tremendous pressure for years to better manage its portfolio and sustain profitable growth. With such a history, there is likely to be many divestitures in the company’s future M&A growth plan.

• Baxter (No. 10): In the last 15 months, Baxter has sold its BioPharma Solutions business and negotiated an agreement to unload its Renal Care business (Vantive) to help reduce the debt it incurred from purchasing Hill-Rom for $12.2 billion in 2021, leaving the company little time to hunt for suitable acquisition targets. These sales hopefully will lead to a more focused and profitable core entity that eventually will join the aggressive M&A game again.

Collectively, the aforementioned M&A activity—including acquisitions and divestitures—reflect the medtech industry’s ongoing consolidation as well as a strategic realignment with many of MPO’s Top 30 companies that are striving to strengthen their technological capabilities, profit margins, and market positions.

Clearly, the deals orchestrated by major OEMs beget tuck-in opportunities and trends for SMEs in Asia, Europe, and the United States that eventually will reshape the industry and the overall healthcare market. It’s anybody’s guess what the next year in M&A will bring, though we can say with certainty it will probably result in more Top 30 list surprises.

Read MPO’s 2024 Top 30 Medical Device Companies Report here!

MORE FROM THESE AUTHORS: The Secrets of Medtech Enterprise Valuation for Sellers