04.09.12
As a result of the current economic downturn, mergers and acquisitions (M&A) have replaced initial public offerings (IPO) as the preferred exit strategy for medtech companies. The medical technology industry has seen investments and deals increase in the past two years, with annual industry growth rates picking up since the recession depths of 2009.
Despite these positive indicators, the medtech industry faces a wide range of long-term challenges. Uncertainty in the capital markets combined with regulatory challenges, pricing pressures, and continuing changes in the delivery of global healthcare are causing medical device companies to seek new ways to remaininnovative in the competitive marketplace. Funding challenges persist and IPOs in the stock market remain too unpredictable to be a feasible growth or exit strategy for even the most promising medtech companies.
In the wake of enduring financing obstacles, medical device companies increasingly are exploring M&A to leverage existing intellectual property (IP) assets and generate new sources of capital and revenue. A company’s success as an acquiring company or as a target company of a merger depends, in large part, on the value of the company’s patent portfolio.