03.11.15
It’s March 2015. Do you know where your medical device company is? The acquisition snowball in the medtech sector that started at the top of the hill last year continues its roll, grabbing big names as it barrels along and, without a doubt, reshaping the face of the medical device market. The trend also could create tighter competition in outsourced manufacturing as merging medical device OEMs streamline their lists of preferred suppliers.
Medical device firms aren’t the only ones with the itch to merge. Contract manufacturers also are acquiring one another. OEM acquisitions have led to, according to many sources, an uptick in outsourcing/contract manufacturing. But it also has led to consolidation among suppliers as they position themselves to compete.
“The highly fragmented medical contract manufacturing/outsourcing market is undergoing significant transformation, driven by the consolidation among OEM clients as well as sound macroeconomic conditions,” according to a research report released in February by P&M Corporate Finance LLC (PMCF). “Medical OEMs are increasingly aware of CMOs’ (contract manufacturing organizations) capabilities as true providers of lower-cost, time-sensitive and high-quality solutions. This versatility enables OEMs to improve their operational performance, and meet shorter product life cycles while maintaining focus on their core business. As a result, the outsourcing of manufacturing functions has increased, a trend that is expected to continue as OEMs seek one-stop solutions to accommodate their growing needs in terms of increased volume, product differentiation and compliance with a more stringent regulatory environment.”
According to PMCF analysts, the move toward outsourcing “likely will prompt further consolidation, particularly in the therapeutic, diagnostics and cardiovascular segments. Large CMOs are expected to lead this industry consolidation by acquiring smaller specialized companies with complementary services from engineering and precision machining to quality assurance. As their multi-faceted cost-saving capabilities broaden, large CMOs are better positioned to become the preferred supplier among OEMs and ultimately benefit from additional partnerships.”
Cordis Sold to Cardinal
On March 2, after months of rumor and speculation, Johnson & Johnson finally sold its Cordis division—manufacturer of stents, catheters and less-invasive treatments for vascular disease—to Cardinal Health Inc. for $1.94 billion cash (approximately $1.59 billion, net the present value of tax benefits). Cordis had $780 million in sales in 2014, with about 70 percent coming from outside the United States.
Dublin, Ohio-based Cardinal is primarily a drug wholesaler, but it has been growing its medical products business steadily.
Cardinal’s Chairman and CEO George Barrett said the company is focused on medical products that have become commoditized, as the potential for differentiation has become limited. Cardinal has focused its efforts on areas including wound management, cardiovascular and orthopedics.
Barrett said an aging global population and demand for less-invasive medical treatments makes the Cordis-Cardinal combination a sound move.
“The acquisition of Cordis reinforces our strategic position to address this need and strengthens an important growth driver in the Cardinal Health portfolio,” Barrett said.
The deal, subject to regulatory approval, is expected to close near the end of the year.
The divestiture is part of New Brunswick, N.J.-based JNJ’s strategy to shed its under-performing assets, reduce costs and focus on higher-growth businesses.
A decade ago, Fremont, Calif.-based Cordis was a market-leading golden child for JNJ, serving as one of the pioneers in the drug-coated stent market. JNJ acquired Cordis in 1996 for $1.8 billion. But rapid and fierce competition, along with research that raised questions about drug-coated stents’ true efficacy compared to traditional stents, led to shrinking sales and market share for Cordis. In 2011, the company got out of the drug-coated stent business.
According to David Lewis, a managing director and medical device market analyst for Morgan Stanley, the Cordis sale is consistent with JNJ’s efforts to streamline its device holdings.
“A divestiture would be in-line with management’s efforts to prioritize its medical device business and focus on faster growth assets where JNJ has strong competitive positioning,” Lewis wrote in a research note. “Cordis has a dominant franchise in catheters as well as market share in balloons, guidewires and vascular closure devices.”
Johnson & Johnson recently sold its Ortho-Clinical Diagnostic unit—which makes diagnostic tests—to a private-equity group for $4 billion. In 2014, JNJ’s medical device sales were $27.5 billion, a decrease of 3.4 percent from the prior year. Excluding the net impact of M&A activity, including the sale of Ortho Clinical Diagnostics, JNJ’s medical device business had underlying operational growth of 1.5 percent. The company’s pharmaceutical sales, by contrast, increased 14.9 percent to $32.3 billion in 2014.
When JNJ’s CEO Alex Gorsky was asked about the potential sale of Cordis during an earnings conference call in January, he said the company was interested in staying in the cardiovascular device market, but that it would be “focusing” its strategy. “We think we can really make a difference for patients, where we think the markets are promising for the future in terms of reaching more patients, expanding share, volume growth, some pricing stability,” he said. “And so, we’re going to continue to evaluate our portfolio to make sure that we’re consistent with our strategy as it relates to cardiovascular.”
Once the transaction is complete, the business will report to Don Casey, Cardinal Health’s Medical Segment CEO.
Casey said Cardinal Health and Cordis have complementary skills and expertise, creating a combined talent base that will be world class in cardiovascular solutions.
“We look forward to drawing heavily on the knowledge and innovative spirit of Cordis team members around the world. Additionally, Cordis’ global expertise and footprint provide an exciting opportunity to leverage scale in sourcing and manufacturing,” Casey said.
Sorin and Cyberonics Merge
Houston, Texas-based Cyberonics Inc., one of the industry’s early pioneers in the neuromodulation technology sector, is buying Milan, Italy-based cardiovascular company Sorin SpA. The merged company—to be based in London, United Kingdom—will have a combined equity value of approximately $2.7 billion based on the closing price of Sorin and Cyberonics shares on Feb. 25.
The all-stock deal values Sorin at about $1.4 billion, a 14.2 percent premium to the company’s market capitalization before the deal was announced. Cyberonics will hold a 54 percent stake in the new company and Sorin the rest. The business will apply for dual listing on Nasdaq and the London Stock Exchange. The transaction was approved by both companies’ boards of directors.
Under the terms of the transaction, Sorin and Cyberonics will combine under a newly formed holding company called NewCo. Each Cyberonics stockholder will receive one ordinary share of NewCo for every share of Cyberonics owned. Each Sorin shareholder will receive a fixed ratio of 0.0472 ordinary shares of NewCo for every Sorin share owned. NewCo will operate as three business units: Cardiac Surgery, Cardiac Rhythm Management and Neuromodulation, with operating headquarters in Mirandola, Italy; Clamart, France; and Houston, Texas, respectively. The combined company will have a strategic presence in more than 100 countries, with approximately 4,500 employees. While executives at both companies claim the move to merge was driven by strategic interests rather than tax motivations, the move to London indeed will help the new company cut its tax bill substantially.
Corporate tax in the United Kingdom is 21 percent compared with 35 percent in the United States. The proposed transaction will bring together global leaders in cardiac surgery and neuromodulation, and the combined company also will be a major player in cardiac rhythm management, especially in Europe and Japan.
NewCo will have several promising opportunities focused on multi-billion-dollar markets, including complementary research programs addressing heart failure, with an initial commercial launch in Europe anticipated in the coming weeks. Both companies bring minority equity investments that are complementary in different forms of sleep apnea. Sorin, in addition, has opportunities that address mitral valve regurgitation.
André-Michel Ballester, CEO of Sorin, will serve as CEO of NewCo. Dan Moore, CEO of Cyberonics, will become nonexecutive chairman.
“As one company we will be able to leverage our combined strengths, capture new opportunities and create new solutions to benefit patients and healthcare professionals alike,” said Ballester.
Cyberonics recently received CE mark approval of its Vitaria device delivering autonomic regulation therapy for the treatment of chronic heart failure and will commence a limited market launch in Europe in the coming weeks. Recently, Sorin announced the first successful implants of its Equilia vagus nerve stimulation system for heart failure patients. NewCo is expected to benefit from the developing market for active implantable treatments for sleep apnea with investments aimed at the under-addressed obstructive sleep apnea market, and also in central sleep apnea, recently launched in selected European countries. In addition, NewCo is expected to have new percutaneous mitral valve replacement/repair products with estimated initial market entry in 2017.
“This transformational transaction maximizes both companies’ strengths and leadership positions for the benefit of patients and our shareholders,” said Moore. “Sorin is an ideal partner, given its heart failure programs and the ability to combine vagus nerve stimulation with cardiac rhythm management technology. Sorin’s international operations are expected to accelerate our epilepsy growth strategy by enabling us to reach a larger number of potential new patients in the under-penetrated markets outside the U.S. while integrating Sorin’s technology expertise into future neuromodulation products. While each company has a strong track record of execution on its own, the geographic diversification, benefits of scale and strong financial profile of the combined company will create tremendous new opportunities to drive growth and build significant shareholder value.”
Cyberonics and Sorin currently have different fiscal year ends and report under different accounting standards and currencies. After the closing of the transaction, NewCo is expected to report on a calendar year basis, with reporting in U.S. dollars and on U.S. Generally Accepted Accounting Principles. The board of directors of NewCo will be equally divided, with four directors designated by Sorin and four by Cyberonics. One additional board member will be jointly selected.
The transaction is expected to close by Sept. 30.
More Movement in Neuromodulation
Medtronic plc has acquired Advanced Uro-Solutions, a privately held developer of neurostimulation products for the treatment of bladder control issues based in Elizabethton, Tenn.
Neuromodulation involves the targeted and regulated delivery of electrical pulses and pharmaceuticals to specific sites in the nervous system.
Terms of the agreement, which closed in December, were not disclosed.
Advanced Uro-Solutions develops and manufactures the Nuro percutaneous tibial nerve stimulation system, which consists of a small external stimulator and a single, reusable lead to provide temporary stimulation to the tibial nerve. This therapy is 510(k) cleared by the U.S. Food and Drug Administration (FDA) to treat patients with overactive bladder (OAB) and associated symptoms of urinary urgency, urinary frequency and urge incontinence. Medtronic is preparing to launch the Nuro system in the United States within the next 12 months.
More than 37 million adults in the United States—one in six—suffer from OAB, according to figures cited by Medtronic. By 2018, it is estimated that 546 million people worldwide will be affected by OAB.
With this deal, the company will be competing with Minnetonka, Minn.-based Uroplasty Inc., which also makes a neuromodulation device—Urgent PC—to treat OAB.
Both companies’ devices are similar. Advanced Uro-Solutions’ technology was cleared by the FDA toward the end of 2013 by proving that its device is substantially equivalent to Uroplasty’s.
“The acquisition of Advanced Uro-Solutions expands Medtronic’s portfolio of treatment options for those suffering from chronic symptoms of overactive bladder,” said Linnea Burman, vice president and general manager, gastro/urology therapies at Medtronic.
“Medtronic continues to invest in fully implantable bladder control and bowel control therapies, and the addition of the Nuro system to our existing portfolio of products will introduce more people suffering from bladder control issues to the benefits of neuromodulation.”
Since 2009, Advanced Uro-Solutions has been led by two founders, Brent Laing and John Green.
“Studies show that roughly 80 percent of patients prescribed oral medications to treat their OAB symptoms have stopped taking them at 12 months, and Medtronic shares our commitment to advancing neuromodulation and increasing patient access to advanced solutions intended to treat their symptoms,” said Green, former chairman and CEO of Advanced Uro-Solutions. “We are excited to take this step toward making this important therapy available to patients around the world.”
Medtronic’s Neuromodulation division includes implantable neurostimulation and targeted drug delivery systems for the management of chronic pain, common movement disorders, spasticity and urologic and gastrointestinal disorders.
Medtronic will include revenue from the Advanced Uro-Solutions product line as part of the Neuromodulation division within the Restorative Therapies Group.
Medtronic is based in Dublin, Ireland.
CMO Consolidation: TE Connectivity & AdvancedCath
TE Connectivity Ltd. has agreed to acquire AdvancedCath from its private-equity owner for $190 million in cash. Watertown, Mass.-based AdvancedCath makes catheter systems and, according to figures cited by TE Connectivity, is expecting 2015 revenues to total $60 million. AdvancedCath was formed via the merger of AdvancedCath Technologies, MP&E and TechDevice. The company works with medical device OEMs to design and manufacture catheter and guidewire systems used in complex interventional and endosurgical procedures. The firm is owned by Philadelphia, Pa.-based private equity firm Inverness Graham.
The acquisition complements and expands TE’s connectivity and sensor position in the interventional space of the outsourced manufacturing market, which is growing at 10 percent annually. It also will allow TE to provide more complete integrated solutions to customers, company officials said. TE’s medical business designs and manufactures connectors, sensors and components for use in surgical, interventional catheter, imaging, diagnostic and therapeutic healthcare applications. Upon the completion of the transaction, the AdvancedCath team will be part of TE’s Medical business unit, which in turn is part of TE’s Industrial Solutions segment.
“The acquisition of AdvancedCath expands TE’s Medical business and positions us to be a leading provider of connectivity and sensor solutions in the high-growth medical device market,” said Terrence Curtin, president, TE Connectivity Industrial Solutions.
“Today’s [medical device] OEMs are developing innovative procedures that are minimally invasive to improve outcomes and quality of care. The combination of TE’s connectivity and sensor solutions with AdvancedCath’s expertise in the medical device market provides customers with an unmatched set of capabilities and technologies that enable future innovations and medical advances. We look forward to welcoming AdvancedCath’s team to TE.”
“We can now offer customers an unmatched combination of sensor, material science, electrical and biomedical technologies and a single source of manufacturing expertise for advanced medical devices,” said Randall Sword, CEO of AdvancedCath. “With TE’s geographic footprint, we can provide better support to our global customers as they progress through development, clinical trials and volume manufacturing.”
The deal is subject to regulatory approval and other customary closing conditions, and is expected to close in late March.
TE is headquartered in Schaffhausen, Switzerland. It operates 100 manufacturing sites worldwide.
Medical device firms aren’t the only ones with the itch to merge. Contract manufacturers also are acquiring one another. OEM acquisitions have led to, according to many sources, an uptick in outsourcing/contract manufacturing. But it also has led to consolidation among suppliers as they position themselves to compete.
“The highly fragmented medical contract manufacturing/outsourcing market is undergoing significant transformation, driven by the consolidation among OEM clients as well as sound macroeconomic conditions,” according to a research report released in February by P&M Corporate Finance LLC (PMCF). “Medical OEMs are increasingly aware of CMOs’ (contract manufacturing organizations) capabilities as true providers of lower-cost, time-sensitive and high-quality solutions. This versatility enables OEMs to improve their operational performance, and meet shorter product life cycles while maintaining focus on their core business. As a result, the outsourcing of manufacturing functions has increased, a trend that is expected to continue as OEMs seek one-stop solutions to accommodate their growing needs in terms of increased volume, product differentiation and compliance with a more stringent regulatory environment.”
According to PMCF analysts, the move toward outsourcing “likely will prompt further consolidation, particularly in the therapeutic, diagnostics and cardiovascular segments. Large CMOs are expected to lead this industry consolidation by acquiring smaller specialized companies with complementary services from engineering and precision machining to quality assurance. As their multi-faceted cost-saving capabilities broaden, large CMOs are better positioned to become the preferred supplier among OEMs and ultimately benefit from additional partnerships.”
Cordis Sold to Cardinal
On March 2, after months of rumor and speculation, Johnson & Johnson finally sold its Cordis division—manufacturer of stents, catheters and less-invasive treatments for vascular disease—to Cardinal Health Inc. for $1.94 billion cash (approximately $1.59 billion, net the present value of tax benefits). Cordis had $780 million in sales in 2014, with about 70 percent coming from outside the United States.
Dublin, Ohio-based Cardinal is primarily a drug wholesaler, but it has been growing its medical products business steadily.
Cardinal’s Chairman and CEO George Barrett said the company is focused on medical products that have become commoditized, as the potential for differentiation has become limited. Cardinal has focused its efforts on areas including wound management, cardiovascular and orthopedics.
Barrett said an aging global population and demand for less-invasive medical treatments makes the Cordis-Cardinal combination a sound move.
“The acquisition of Cordis reinforces our strategic position to address this need and strengthens an important growth driver in the Cardinal Health portfolio,” Barrett said.
The deal, subject to regulatory approval, is expected to close near the end of the year.
The divestiture is part of New Brunswick, N.J.-based JNJ’s strategy to shed its under-performing assets, reduce costs and focus on higher-growth businesses.
A decade ago, Fremont, Calif.-based Cordis was a market-leading golden child for JNJ, serving as one of the pioneers in the drug-coated stent market. JNJ acquired Cordis in 1996 for $1.8 billion. But rapid and fierce competition, along with research that raised questions about drug-coated stents’ true efficacy compared to traditional stents, led to shrinking sales and market share for Cordis. In 2011, the company got out of the drug-coated stent business.
According to David Lewis, a managing director and medical device market analyst for Morgan Stanley, the Cordis sale is consistent with JNJ’s efforts to streamline its device holdings.
“A divestiture would be in-line with management’s efforts to prioritize its medical device business and focus on faster growth assets where JNJ has strong competitive positioning,” Lewis wrote in a research note. “Cordis has a dominant franchise in catheters as well as market share in balloons, guidewires and vascular closure devices.”
Johnson & Johnson recently sold its Ortho-Clinical Diagnostic unit—which makes diagnostic tests—to a private-equity group for $4 billion. In 2014, JNJ’s medical device sales were $27.5 billion, a decrease of 3.4 percent from the prior year. Excluding the net impact of M&A activity, including the sale of Ortho Clinical Diagnostics, JNJ’s medical device business had underlying operational growth of 1.5 percent. The company’s pharmaceutical sales, by contrast, increased 14.9 percent to $32.3 billion in 2014.
When JNJ’s CEO Alex Gorsky was asked about the potential sale of Cordis during an earnings conference call in January, he said the company was interested in staying in the cardiovascular device market, but that it would be “focusing” its strategy. “We think we can really make a difference for patients, where we think the markets are promising for the future in terms of reaching more patients, expanding share, volume growth, some pricing stability,” he said. “And so, we’re going to continue to evaluate our portfolio to make sure that we’re consistent with our strategy as it relates to cardiovascular.”
Once the transaction is complete, the business will report to Don Casey, Cardinal Health’s Medical Segment CEO.
Casey said Cardinal Health and Cordis have complementary skills and expertise, creating a combined talent base that will be world class in cardiovascular solutions.
“We look forward to drawing heavily on the knowledge and innovative spirit of Cordis team members around the world. Additionally, Cordis’ global expertise and footprint provide an exciting opportunity to leverage scale in sourcing and manufacturing,” Casey said.
Sorin and Cyberonics Merge
Houston, Texas-based Cyberonics Inc., one of the industry’s early pioneers in the neuromodulation technology sector, is buying Milan, Italy-based cardiovascular company Sorin SpA. The merged company—to be based in London, United Kingdom—will have a combined equity value of approximately $2.7 billion based on the closing price of Sorin and Cyberonics shares on Feb. 25.
The all-stock deal values Sorin at about $1.4 billion, a 14.2 percent premium to the company’s market capitalization before the deal was announced. Cyberonics will hold a 54 percent stake in the new company and Sorin the rest. The business will apply for dual listing on Nasdaq and the London Stock Exchange. The transaction was approved by both companies’ boards of directors.
Under the terms of the transaction, Sorin and Cyberonics will combine under a newly formed holding company called NewCo. Each Cyberonics stockholder will receive one ordinary share of NewCo for every share of Cyberonics owned. Each Sorin shareholder will receive a fixed ratio of 0.0472 ordinary shares of NewCo for every Sorin share owned. NewCo will operate as three business units: Cardiac Surgery, Cardiac Rhythm Management and Neuromodulation, with operating headquarters in Mirandola, Italy; Clamart, France; and Houston, Texas, respectively. The combined company will have a strategic presence in more than 100 countries, with approximately 4,500 employees. While executives at both companies claim the move to merge was driven by strategic interests rather than tax motivations, the move to London indeed will help the new company cut its tax bill substantially.
Corporate tax in the United Kingdom is 21 percent compared with 35 percent in the United States. The proposed transaction will bring together global leaders in cardiac surgery and neuromodulation, and the combined company also will be a major player in cardiac rhythm management, especially in Europe and Japan.
NewCo will have several promising opportunities focused on multi-billion-dollar markets, including complementary research programs addressing heart failure, with an initial commercial launch in Europe anticipated in the coming weeks. Both companies bring minority equity investments that are complementary in different forms of sleep apnea. Sorin, in addition, has opportunities that address mitral valve regurgitation.
André-Michel Ballester, CEO of Sorin, will serve as CEO of NewCo. Dan Moore, CEO of Cyberonics, will become nonexecutive chairman.
“As one company we will be able to leverage our combined strengths, capture new opportunities and create new solutions to benefit patients and healthcare professionals alike,” said Ballester.
Cyberonics recently received CE mark approval of its Vitaria device delivering autonomic regulation therapy for the treatment of chronic heart failure and will commence a limited market launch in Europe in the coming weeks. Recently, Sorin announced the first successful implants of its Equilia vagus nerve stimulation system for heart failure patients. NewCo is expected to benefit from the developing market for active implantable treatments for sleep apnea with investments aimed at the under-addressed obstructive sleep apnea market, and also in central sleep apnea, recently launched in selected European countries. In addition, NewCo is expected to have new percutaneous mitral valve replacement/repair products with estimated initial market entry in 2017.
“This transformational transaction maximizes both companies’ strengths and leadership positions for the benefit of patients and our shareholders,” said Moore. “Sorin is an ideal partner, given its heart failure programs and the ability to combine vagus nerve stimulation with cardiac rhythm management technology. Sorin’s international operations are expected to accelerate our epilepsy growth strategy by enabling us to reach a larger number of potential new patients in the under-penetrated markets outside the U.S. while integrating Sorin’s technology expertise into future neuromodulation products. While each company has a strong track record of execution on its own, the geographic diversification, benefits of scale and strong financial profile of the combined company will create tremendous new opportunities to drive growth and build significant shareholder value.”
Cyberonics and Sorin currently have different fiscal year ends and report under different accounting standards and currencies. After the closing of the transaction, NewCo is expected to report on a calendar year basis, with reporting in U.S. dollars and on U.S. Generally Accepted Accounting Principles. The board of directors of NewCo will be equally divided, with four directors designated by Sorin and four by Cyberonics. One additional board member will be jointly selected.
The transaction is expected to close by Sept. 30.
More Movement in Neuromodulation
Medtronic plc has acquired Advanced Uro-Solutions, a privately held developer of neurostimulation products for the treatment of bladder control issues based in Elizabethton, Tenn.
Neuromodulation involves the targeted and regulated delivery of electrical pulses and pharmaceuticals to specific sites in the nervous system.
Terms of the agreement, which closed in December, were not disclosed.
Advanced Uro-Solutions develops and manufactures the Nuro percutaneous tibial nerve stimulation system, which consists of a small external stimulator and a single, reusable lead to provide temporary stimulation to the tibial nerve. This therapy is 510(k) cleared by the U.S. Food and Drug Administration (FDA) to treat patients with overactive bladder (OAB) and associated symptoms of urinary urgency, urinary frequency and urge incontinence. Medtronic is preparing to launch the Nuro system in the United States within the next 12 months.
More than 37 million adults in the United States—one in six—suffer from OAB, according to figures cited by Medtronic. By 2018, it is estimated that 546 million people worldwide will be affected by OAB.
With this deal, the company will be competing with Minnetonka, Minn.-based Uroplasty Inc., which also makes a neuromodulation device—Urgent PC—to treat OAB.
Both companies’ devices are similar. Advanced Uro-Solutions’ technology was cleared by the FDA toward the end of 2013 by proving that its device is substantially equivalent to Uroplasty’s.
“The acquisition of Advanced Uro-Solutions expands Medtronic’s portfolio of treatment options for those suffering from chronic symptoms of overactive bladder,” said Linnea Burman, vice president and general manager, gastro/urology therapies at Medtronic.
“Medtronic continues to invest in fully implantable bladder control and bowel control therapies, and the addition of the Nuro system to our existing portfolio of products will introduce more people suffering from bladder control issues to the benefits of neuromodulation.”
Since 2009, Advanced Uro-Solutions has been led by two founders, Brent Laing and John Green.
“Studies show that roughly 80 percent of patients prescribed oral medications to treat their OAB symptoms have stopped taking them at 12 months, and Medtronic shares our commitment to advancing neuromodulation and increasing patient access to advanced solutions intended to treat their symptoms,” said Green, former chairman and CEO of Advanced Uro-Solutions. “We are excited to take this step toward making this important therapy available to patients around the world.”
Medtronic’s Neuromodulation division includes implantable neurostimulation and targeted drug delivery systems for the management of chronic pain, common movement disorders, spasticity and urologic and gastrointestinal disorders.
Medtronic will include revenue from the Advanced Uro-Solutions product line as part of the Neuromodulation division within the Restorative Therapies Group.
Medtronic is based in Dublin, Ireland.
CMO Consolidation: TE Connectivity & AdvancedCath
TE Connectivity Ltd. has agreed to acquire AdvancedCath from its private-equity owner for $190 million in cash. Watertown, Mass.-based AdvancedCath makes catheter systems and, according to figures cited by TE Connectivity, is expecting 2015 revenues to total $60 million. AdvancedCath was formed via the merger of AdvancedCath Technologies, MP&E and TechDevice. The company works with medical device OEMs to design and manufacture catheter and guidewire systems used in complex interventional and endosurgical procedures. The firm is owned by Philadelphia, Pa.-based private equity firm Inverness Graham.
The acquisition complements and expands TE’s connectivity and sensor position in the interventional space of the outsourced manufacturing market, which is growing at 10 percent annually. It also will allow TE to provide more complete integrated solutions to customers, company officials said. TE’s medical business designs and manufactures connectors, sensors and components for use in surgical, interventional catheter, imaging, diagnostic and therapeutic healthcare applications. Upon the completion of the transaction, the AdvancedCath team will be part of TE’s Medical business unit, which in turn is part of TE’s Industrial Solutions segment.
“The acquisition of AdvancedCath expands TE’s Medical business and positions us to be a leading provider of connectivity and sensor solutions in the high-growth medical device market,” said Terrence Curtin, president, TE Connectivity Industrial Solutions.
“Today’s [medical device] OEMs are developing innovative procedures that are minimally invasive to improve outcomes and quality of care. The combination of TE’s connectivity and sensor solutions with AdvancedCath’s expertise in the medical device market provides customers with an unmatched set of capabilities and technologies that enable future innovations and medical advances. We look forward to welcoming AdvancedCath’s team to TE.”
“We can now offer customers an unmatched combination of sensor, material science, electrical and biomedical technologies and a single source of manufacturing expertise for advanced medical devices,” said Randall Sword, CEO of AdvancedCath. “With TE’s geographic footprint, we can provide better support to our global customers as they progress through development, clinical trials and volume manufacturing.”
The deal is subject to regulatory approval and other customary closing conditions, and is expected to close in late March.
TE is headquartered in Schaffhausen, Switzerland. It operates 100 manufacturing sites worldwide.