Rank: #6 (Last year: #9)
Prior Fiscal: $12.10 Billion
Percentage Change: +32.1%
No. of Employees: 76,032
Global Headquarters: Franklin Lakes, N.J.
Vincent A. Forlenza, Chairman and CEO
Christopher R. Reidy, Exec. VP, CFO, and Chief Administrative Officer
Thomas E. Polen, President and COO
John A. DeFord, Exec. VP, Chief Technology Officer, Research and Development
William R. Sigmund, Exec. VP and Chief Medical Officer
Simon D. Campion, Exec. VP and President, Interventional Segment
Patrick K. Kaltenbach, Exec. VP and President, Life Sciences Segment
Alberto Mas, Exec. VP and President, Medical Segment
Perhaps the most exciting medtech M&A news last year was that there wasn’t any. The industry had recently grown accustomed to nearly annual blockbuster deals—Zimmer and Biomet merged in 2014, with Medtronic and Covidien close on their heels; Abbott and St. Jude married in 2016; and right in MPO’s backyard, Becton, Dickinson and Company (BD) and C.R. Bard (Bard) formed their union in 2017. Although there were several small- to mid-sized deals keeping analysts’ interest up last year, they all lacked the gravity of the megamergers of recent years that were fast becoming a trend.
“…we are now seeing a new class of what I like to call ‘Super OEMs’—Medtronic, Abbott, and now BD. That’s a list that will continue to grow,” Mark Bonifacio, founder and president of Bonifacio Consulting Services, told MPO when the BD-Bard deal was announced.
Though significant, the $24 billion deal was considered “more of the same” in terms of medical device M&A. But whether the string of megamergers is healthy for the industry remains to be seen. Consolidation in this way can certainly help patients because of the clinical and procedural synergies created when joining complementary product portfolios. BD reaps the benefits of greater hospital buying group penetration with strong, high-margin products—particularly in urology and oncology, where it had lacked in market share. Combining two major companies also streamlines the supply chain as the merged companies look to consolidate supply base spending, which can be beneficial for product safety and eases the regulatory burden. However…
“As good as it is for BD (and Bard shareholders), I question how good this is becoming for the industry,” Covington Associates VP Perry De Fazio told MPO. “It is easy to foresee a day with a ‘Big Three’ in each of the major clinical sectors (e.g., orthopedics, cardiovascular, neurology, etc.) with a couple of others sprinkled here and there. The ‘too big to fail’ problems we saw in the financial, automotive, and insurance industries (and still do, to an extent) may soon befall the medical device sector.”
The worry is not without merit, as medical device industry trends typically lag a few years behind other industries. And it’s not just the greater economic system in danger—lifesaving technologies and treatments may also become more complicated to access should a “super OEM” crumble.
Thankfully, there appears to be no danger of that happening to BD—at least, not anytime soon. Thanks to Bard’s full integration, the firm’s sales nearly touched $16 billion last year, rising a monumental 32.1 percent from the year prior. A 24.5 percent gain was attributed to Bard, with the remaining growth covered by volume increase and favorable foreign currency transactions.
As a result of Bard’s full integration, BD’s business structure was reorganized into three segments: Interventional, Medical, and Life Sciences. Last April, former Life Sciences president Alberto Mas was appointed as Medical Segment president, and former Agilent senior VP Patrick Kaltenbach was named to fill Mas’ spot. Bard’s former Surgery business president Simon Campion became the Interventional Segment’s president last August.
The newly formed Interventional segment, which consists primarily of portfolios gained from Bard, posted $3 billion last year. Last year, surgery products brought in $1.2 billion, peripheral intervention solutions earned $1 billion, and urology and critical care offerings provided $800 million.
ANALYST INSIGHTS: With the CareFusion and Bard acquisitions behind it, as well as the divestiture of the CareFusion respiratory division (now Vyaire) to Apax Partners, BD is poised for its next move. As the top 10 medical device companies grow even larger and the healthcare landscape continues to change at a rapid pace, BD looks to remain as part of the medtech giants.
—Mark Bonifacio, Founder and President, Bonifacio Consulting Services
BD acquired Austin, Texas-based TVA Medical for an undisclosed sum last July. TVA Medical, which develops minimally invasive vascular access products for chronic kidney disease patients needing hemodialysis, won de novo clearance for its everlinQ endoAVF hemodialysis device just two weeks before the deal closed. The device uses a pair of thin, flexible magnetic catheters inserted into the ulnar vein and artery through a small puncture. An electrode from the venous catheter then delivers radiofrequency energy to the artery and vein’s connection to create an arteriovenous fistula, allowing hemodialysis access without open surgery. BD changed the device’s name to WavelinQ EndoAVF upon TVA’s integration into its peripheral intervention business.
The Medical franchise garnered $8.6 billion last year, rising 16.1 percent from the previous year. Medication delivery products (which posted $3.6 billion in sales last year, blossoming 29.6 percent) acquired from Bard were the main driver of the increase. Other underlying revenue growth arose from robust vascular access and vascular care sales, more dispensing and infusion system installations, prefillable syringe sales, and revenue from pen needles for diabetes.
BD completed the sale of its remaining stake in its respiratory solutions joint venture Vyaire Medical to joint partner Apax Partners to the tune of $435 million last April. BD and Apax formed Vyaire Medical in 2016 around BD’s respiratory diagnostics, vital signs, and AirLife businesses. Upon closing, Vyaire became an independent company, establishing itself as “the leading pure-play medical device company in the respiratory space,” according to an Apax press statement.
Medication management solutions gathered $2.5 billion of revenue last year, swelling 7.7 percent from 2017. The company launched new software to help identify drug diversion—a critical component of the opioid epidemic—at last November’s American Society of Health-System Pharmacists Midyear Meeting. The latest in the BD HealthSight platform for enterprise-wide medication management, the BD HealthSight diversion management application leverages data from the BD Pyxis ES system and electronic medical records to gather actionable insights for diversion investigations.
The diabetes care and pharmaceutical systems franchises respectively achieved sales of $1.1 billion and $1.4 billion, growing 4.6 and 11.2 percent.
The Life Sciences segment accrued $4.3 billion of proceeds last year, rising 8.6 percent. All three organizational units contributed to the gain. Improved sales of core microbiology products and the BD MAX molecular platform, research reagents and instruments, and a more severe influenza outbreak last year also padded this segment’s growth.
BD sold its Advanced Bioprocessing business to Thermo Fisher Scientific for $477 million last October. With revenue of about $100 million, the business includes a strong technical services program with a variety of peptones to enhance cell culture media formulations, which improve yield and reduce variability in biopharmaceutical applications.
Preanalytical systems posted a 5.5 percent revenue increase with $1.6 billion, but an FDA warning letter issued last January concerning modified BD Vacutainer blood collection tubes somewhat derailed sales. The letter cited that BD had marketed these tubes without proper clearance or approval and failed to submit medical device reports within the required timeframe. The violations were discovered through a July 2017 inspection of BD’s N.J. facility.
The inspection also revealed the company had not evaluated or investigated a complaint regarding inaccurate blood lead test results when the modified tubes were used with Magellan Diagnostics’ LeadCare test systems. The maligned modification concerned specific Vacutainer tubes’ rubber stoppers. As BD came to discover, Magellan LeadCare testing systems’ Anodic Stripping Voltammetry (ASV) technology is not compatible with thiuram, which is found in the aforementioned rubber stoppers. Last March, BD advised clinicians not to use BD Vacutainer EDTA Lavender, Pink, and Tan top tubes and BD Vacutainer Lithium Heparin Green top tubes when using assays employing the ASV methodology.
ANALYST INSIGHTS: Since its recent acquisition of Bard, BD seems to be highly internally focused to ensure its business units are focused on profitability to pay for the acquisition. While it’s unlikely BD will make major M&A deals in the near future, watch for the possibility of smaller, incremental deals to bolster its product lines.
—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors
The PAXgene Blood ccfDNA (circulating cell-free DNA) tube launched in Europe last February. Developed by PreAnalytiX GmbH, a joint BD-QIAGEN venture, the plastic blood collection tube for ccfDNA molecular diagnostic testing applications (for example, cancer and non-invasive prenatal tests) includes a sample stabilization additive and BD Vacutainer Hemoguard technology to protect healthcare worker safety. Clinical labs can use it to stabilize samples when a sample cannot be processed on the same day it was collected.
Diagnostics systems proceeds amounted to $1.5 billion last year, growing 11.5 percent. This area experienced more new product launch, approval, and clearance activity than any other franchise.
Last January saw CE mark clearance shared with Check-Points Health B.V. for the BD MAX Check-Points CPO assay, a molecular screening test for antibiotic-resistant CPOs (carbapenemase-producing organisms, which are resistant to carbapenem, an antibiotic used to treat severe or high-risk bacterial infections). The assay can detect the five most common carbapenemase genes in under 2.5 hours. The Check-Points CPO assay replaced an earlier version of the test from Check-Points.
The BD Onclarity HPV (human papillomavirus) assay obtained FDA approval last February. The test detects 14 types of high-risk HPV from specimens collected in a Pap test in a liquid-based cytology vial. The assay also identifies HPV genotypes associated with cervical cancers. Onclarity HPV is used as a primary screening test to triage patients with abnormal Pap test results, or can be used in conjunction with a Pap test. The test is run on the BD Viper LT benchtop molecular platform.
The company unveiled a suite of diagnostic informatics and automation innovations at last April’s European Congress of Clinical Microbiology and Infectious Diseases. The new informatics and automation solutions for clinical laboratories included:
- The BD Synapsys microbiology informatics solution for secure connectivity across instruments and locations
- The BD COR high-throughput molecular platform, which supports assays for women’s health, STIs, and GI applications
- BD Kiestra ID/AST modules that automate processing steps for bacterial identification and antibiotic susceptibility testing
The FDA cleared the BD Phoenix CPO detect test a month later. The test helps hospitals identify CPO infections in under 36 hours to implement infection control procedures, begin appropriate antibiotic therapies, and contain the spread of antimicrobial resistance. The CPO detect test is available in two configurations as part of the BD Phoenix automated microbiology system and is included on BD’s gram-negative panels.
The BD MAX enteric viral panel, a molecular test to detect viral gastroenteritis pathogens, acquired FDA clearance last December. The nod completed BD’s suite of molecular tests for GI infection, which now includes enteric panels for intestinal bacterial, viral, and parasitic infections. The BD MAX enteric viral panel returns results for norovirus, adenovirus, human astrovirus, and sapovirus infections in less than 3.5 hours.
The biosciences business grew 9 percent last year, earning $1.2 billion.
The BD FACSymphony S6 cell sorter hit the market last April. The new platform leverages the FACSymphony cell analyzer to sort cell populations and better understand cell phenotypes for immunology and multi-omics research. The S6 instrument offers six-way sorting and can support analysis up to 30 parameters, and its ultra-quiet electronics system was adapted from the defense industry.
BD made two notable investments in U.S. operations last year as well. About $150 million was invested last June in its existing Sumter, S.C., blood collection device manufacturing facility to create 125 jobs over the next few years. Last October, the firm also invested $200 million in its Nebraska facilities to create 300 jobs statewide. Over the last two years alone, BD has invested over $340 million in its Nebraska operations.