Shinjiro Sato, President and CEO
Ryo Nishihata, CFO
Hikaru Samejima, President, Cardiac and Vascular Company
David Perez, President, Blood Management Company; President and CEO, Terumo BCT
Shoji Hatano, President, General Hospital Company
Juichi Takeuchi, President & CEO, Terumo Americas Holding Inc.
Richard Cappetta, President & CEO, MicroVention Inc.
James Rushworth, President & CEO, Terumo Medical Corp.
Paul Holbrook, President & CEO, Vascutek Ltd.
NO. OF EMPLOYEES: 22,441
GLOBAL HEADQUARTERS: Shibuya-ku, Tokyo, Japan
Medtech has become an industry where a strategic M&A scheme has transformed from one dimension of business into a critical element to help ensure a company’s survival. Organizations are leveraging acquisitions of other firms as a way to grow business with new customers, technology offerings, and market regions. Terumo utilized the plan to increase the size of each of its three Cardiac & Vascular Company businesses in the firm’s 2016 fiscal year (how Terumo refers to the coverage period in its 2017 annual report, which spans the 12 months from April 1, 2016 to March 31, 2017).
While the industry was surprised to hear of yet another megamerger being announced in April 2016—which ended up as the largest of the calendar year—Terumo capitalized on an opportunity. Specifically, the enormous deal saw Abbott making a $25 billion bid for St. Jude Medical. There was a hitch, however, which brought Terumo into the fold months later.
In October, Abbott announced it would sell some of St. Jude’s, as well as a portion of its own, medical devices to Terumo for approximately $1.12 billion. Abbott stated the divestiture of certain products was key to the completion of the St. Jude purchase (the aforementioned “hitch”); of course, the transaction with Terumo was also contingent on the completion of that buy. The Abbott/St. Jude deal ultimately did close in January 2017, which subsequently resulted in the completion of the Terumo arrangement only a few days later. The sale passed St. Jude Medical’s Angio-Seal and FemoSeal vascular closure product lines and Abbott’s Vado Steerable Sheath to Terumo. In addition, Terumo took in Kalila Medical Inc., a company Abbott had just acquired in February 2016, two months before the announcement of the St. Jude purchase. Kalila Medical, the company behind the Vado Sheath, was developing next-generation access technologies used in cardiac electrophysiology procedures. All of the deal’s assets became a part of Terumo Interventional Systems.
“The acquisition, which brings us vascular closure devices, will enable Terumo to provide customers with a comprehensive product offering in minimally invasive entry site management and lesion access,” said Yutaro Shintaku, then president and CEO of Terumo Corporation. “We expect the acquisition will enhance our presence in the United States, which is the largest market for medical devices.”
In June 2016, Terumo subsidiary MicroVention Inc.—a part of the Neurovascular business—entered into an agreement to acquire Sequent Medical for $280 million. According to a news release announcing the transaction, Sequent developed, manufactured, and sold a unique device that is the first commercial device in an important new category of aneurysm embolization systems referred to as intrasaccular flow disruptors.
“The acquisition of Sequent Medical by our parent company gives MicroVention the opportunity to market an important new device that is already being sold in Europe, and to the U.S. market at some point in the future,” said Richard Cappetta, MicroVention’s president and CEO. “The WEB System is intended especially for ruptured and unruptured intracranial aneurysms and other neurovascular abnormalities, such as arteriovenous fistulae or AVF. Importantly, it adds another unique and complementary technology to our portfolio of neurovascular products that provides us substantial advantages in the marketplace.”
While the device had obtained a CE mark for use in all major markets in Europe in 2010, FDA’s approval had not yet been secured. The technology, however, had already been used to treat more than 3,000 patients worldwide at the time of the sale to Terumo. It uses the company’s proprietary MicroBraid technology—a dense mesh constructed from a large number of extremely fine wires. According to MicroVention, the WEB System enables physicians to treat wide-neck bifurcation aneurysms with the familiarity of an intrasaccular approach while using established biomaterials.
Rounding out the Cardiac & Vascular Company’s M&A trifecta, the Vascular Graft business was also provided with new offerings during the company’s same fiscal year. In January 2017, Terumo announced it was purchasing Bolton Medical—a provider of endovascular solutions for aortic disease, including thoracic and abdominal stent graft systems—from its parent company, WerfenLife Group. The purchase price was not disclosed.
“The acquisition will enhance Terumo’s existing product portfolio in the global stent graft market and our vascular graft business will be further strengthened in the U.S., in what is the largest stent graft market today,” said Shinjiro Sato, then president of the Cardiac and Vascular Company.
In April 2018, Terumo merged Bolton Medical with Vascutek to create Terumo Aortic. The combined division is expected to post revenues of approximately $200 million. That would of course be combined with the revenue of a company that’s been, for the most part, on the rise over the last several years.
While Terumo’s 2017 fiscal year revenue was virtually flat against the prior year (514 billion yen in 2016 compared to 525 billion yen in 2015) the total has steadily risen from 2012’s 402 billion yen. The company also sees a fair share of those sales within its home country of Japan. The country provided Terumo with 187 billion yen (36 percent) of its net sales in fiscal 2016. The majority, however, still comes from the rest of the world—64 percent—representing 327.2 billion yen. Broken down, the Americas bring in the greatest amount in international sales at 139.7 billion yen (27 percent of the firm’s total net sales), followed by EMEA at 95 billion yen (19 percent), and Asia and others at 92.5 billion yen (18 percent).
Of Terumo’s three companies, the majority contributor to the sales total is the Cardiac and Vascular Company, which posted 261.5 billion yen—51 percent of the company’s net sales. Obviously, the aforementioned acquisitions in this segment helped the company’s sales in fiscal 2017 and will continue to do so, broadening the firm’s product portfolio in the cardiovascular therapy space.
Terumo’s General Hospital Company accounts for 31 percent of the net sales, notching 157.9 billion yen. This company is now divided into two segments—Hospital Systems and Alliance—reorganized from the previous three units. Hospital Systems provides products that support pharmaceutical needs and delivery such as infusion systems, blood glucose monitoring, peritoneal dialysis, and prefilled syringes. Alliance is a type of contract manufacturing service for pharmaceutical companies, fulfilling needs for prefillable syringes, intradermal injection devices, and needle packaging.
Contributing 18 percent of net sales (94.5 billion yen), Terumo BCT (the Blood Management Company) provides solutions for blood centers such as a blood bag system with leukocyte reduction filter, automated blood collection systems, and automated blood component processing systems, while also offering technologies for therapeutic apheresis and cell processing.
Further assisting with the company’s performance, in June 2016, FDA declared the company had successfully completed the second and final phase of its remediation activities at its Ann Arbor, Mich., facility. In its letter, the FDA stated, “Terumo is no longer enjoined under Paragraph 5 of the Consent Decree from manufacturing, packing, storing, installing, and/or distributing the above listed products from the Ann Arbor Facility.” The location served the Cardiac and Vascular Company, developing, manufacturing, and distributing electromechanical devices used in cardiac surgery, such as heart-lung machines and blood parameter monitoring systems.