• Login
    • Join
  • FOLLOW:
  • Subscribe Free
    • Magazine
    • eNewsletter
    Checkout
    • Magazine
    • News
    • Opinions
    • Top 30
    • Research
    • Supply Chain
    • Device Sectors
    • Directory
    • Events
    • Resources
    • Microsites
    • More
  • Magazine
  • News
  • Opinions
  • Top 30
  • Research
  • Supply Chain
  • Device Sectors
  • Directory
  • Events
  • Resources
  • Microsites
  • Current / Back Issues
    Features
    Editorial
    Digital Edition
    eNewsletter Archive
    Our Team
    Editorial Guidelines
    Reprints
    Subscribe Now
    Advertise Now
    Top Features
    Cybersecurity Challenges Leave Medical Device Makers Insecure

    OEMs Are Demanding Designs that Challenge Suppliers

    Diabetes Technology Manufacturers Seemingly on a Sugar Rush

    Post-Pandemic Partnerships: A Full-Service Outsourcing Discussion

    Discovering the Value of Surface Treatments and Coatings for Medtech
    OEM News
    Supplier News
    Service / Press Releases
    Online Exclusives
    Press Releases
    People in the News
    Product & Service Releases
    Supplier News
    Medtech Makers
    Technical Features
    International News
    Videos
    Product & Service Releases
    Live From Shows
    Regulatory
    Financial/Business
    Top News
    New Patents Add Value to Know Labs' Bio-RFID Tech

    Ra Medical Granted Patent for Catheters With Expanded Ablation Area

    ReCor Medical Presents Data from Two Randomized Trials

    Nihon Kohden America Launches Life Scope G5 and G5Max

    HeartFlow Appoints Monica Tellado as CFO
    From the Editor
    Blogs
    Guest Opinions
    Top Opinions
    Cybersecurity Challenges Leave Medical Device Makers Insecure

    OEMs Are Demanding Designs that Challenge Suppliers

    Diabetes Technology Manufacturers Seemingly on a Sugar Rush

    Post-Pandemic Partnerships: A Full-Service Outsourcing Discussion

    Discovering the Value of Surface Treatments and Coatings for Medtech
    Top 30 Medical Device Companies
    Market Data
    White Papers
    Top Research
    Injecting Neurostimulators into Blood Vessels (We Swear, It’s Not Sci-Fi)

    Understanding the Costs of Care in the OR

    Sick of Being Sick: Pandemic Fatigue Flares at AAOS

    Managing Critical Healthcare Supply Chains in Turbulent Times

    To Drive Value, Human Capital Leaders Turn to Outsourced Solutions
    3D/Additive Manufacturing
    Contract Manufacturing
    Electronics
    Machining & Laser Processing
    Materials
    Molding
    Packaging & Sterilization
    R&D & Design
    Software & IT
    Testing
    Tubing & Extrusion
    Cardiovascular
    Diagnostics
    Digital Health
    Neurological
    Patient Monitoring
    Surgical
    Orthopedics
    All Companies
    Categories
    Company Capabilities
    Add New Company
    Outsourcing Directory
    Xact Wire EDM Corp.

    Fusion Biotec Inc.

    Trademark Plastics Inc.

    Arthur G. Russell Co. Inc., The

    BMP Medical
    MPO Summit
    Industry Events
    Webinars
    Live From Show Event
    Industry Associations
    Videos
    Career Central
    eBook
    Slideshows
    Top Resources
    3D Printing in Dental Prosthodontics, Orthodontics, and Surgery

    What New Tech Can Improve Your Medical Manufacturing Plant?

    Why Medical Device Firms Must Navigate the Muddy Waters of ESG Requirements

    Medical Device Servicing vs. Remanufacturing

    Digital Marketplaces for Medical Equipment Come of Age
    Companies
    News Releases
    Product Releases
    Press Releases
    Product Spec Sheets
    Service Releases
    Case Studies
    White Papers
    Brochures
    Videos
    Outsourcing Directory
    Xact Wire EDM Corp.

    Fusion Biotec Inc.

    Trademark Plastics Inc.

    Arthur G. Russell Co. Inc., The

    BMP Medical
    • Magazine
      • Current/Back Issues
      • Features
      • Editorial
      • Columns
      • Digital Editions
      • Subscribe Now
      • Advertise Now
    • News
    • Directory
      • All Companies
      • ALL CATEGORIES
      • Industry Associations
      • Company Capabilities
      • Add Your Company
    • Supply Chain
      • 3D/Additive Manufacturing
      • Contract Manufacturing
      • Electronics
      • Machining & Laser Processing
      • Materials
      • Molding
      • Packaging & Sterilization
      • R&D & Design
      • Software & IT
      • Testing
      • Tubing & Extrusion
    • Device Sectors
      • Cardiovascular
      • Diagnostics
      • Digital Health
      • Neurological
      • Patient Monitoring
      • Surgical
      • Orthopedics
    • Top 30 Company Report
    • Expert Insights
    • Slideshows
    • Videos
    • eBook
    • Resources
    • Podcasts
    • Infographics
    • Whitepapers
    • Research
      • White Papers
      • Case Studies
      • Product Spec Sheets
      • Market Data
    • MPO Summit
    • Events
      • Industry Events
      • Live From Show Events
      • Webinars
    • Microsite
      • Companies
      • Product Releases
      • Product Spec Sheets
      • Services
      • White Papers / Tech Papers
      • Press Releases
      • Videos
      • Literature / Brochures
      • Case Studies
    • About Us
      • About Us
      • Contact Us
      • Advertise with Us
      • eNewsletter Archive
      • Privacy Policy
      • Terms of Use
    Columns

    Medtech M&A Off to a Strong Start in 2018

    ...

    Medtech M&A Off to a Strong Start in 2018
    Related CONTENT
    • Freudenberg Medical
    • Hyperfine Names Paykel, Teisseyre to Executive Leadership Roles
    • Accu-Tube Appoints Matthew Haddle as CEO
    • Heraeus Acquires Mo-Sci Corporation, ETS Technology Holdings
    • Boston Scientific Agrees to Acquire Devoro Medical
    Mark Bonifacio, President, Bonifacio Consulting Services05.03.18
    The medical device industry seems to be experiencing a bit of déjà vu this year.

    Though the start of 2018 was tinged with uncertainty over changes in the global healthcare market and the fate of Obamacare’s medical device tax, the industry appears to be heading down a familiar path in its annual M&A jaunt. Reflecting on Q1, OEM and contract manufacturing consolidation look to be on a similar pace to last year’s record as M&A deals continue to flourish.

    Stage Set for Growth
    A number of factors indicate that medtech’s bull market is still going strong:

    • A confluence of new technologies, innovation, connected health, informatics, robotics, biologics, and gene therapies are disrupting healthcare with varying degrees of influence. Some will impact the market sooner than others, but change certainly is coming, like it or not.
    • The global aging population, coupled with longer life spans and a growing middle class (around the world, but especially in Asia and other developing countries) set a perfect stage for continued growth in the healthcare and medical technology markets.
    • Private equity and strategic OEM buyers continue to compete for assets in all sectors of medical contract manufacturing, and OEMs are still broadening their portfolios or investing in new technologies in an area they already serve.

    Notable First-Quarter Deals
    In January, I predicted a strong year for M&A activity in the sector, and the first quarter’s deal-making proved me right (so far).

    In January, Baxter International Inc. agreed to acquire two hemostat and sealant products from Mallinckrodt plc: RECOTHROM Thrombin topical (Recombinant), and PREVELEAK Surgical Sealant, which is used in vascular reconstruction. Sales of the proposed acquired products totaled roughly $56 million in the 12 months preceding Sept. 29, 2017. Upon closing, the deal is expected to be modestly accretive to Baxter’s 2018 adjusted earnings and increasingly accretive thereafter. Under the terms of the agreement, Baxter is buying the two products for $153 million and potential future contingent payments. The deal is expected to close by June 30.

    Orthofix, meanwhile, is shelling out $105 million on Spinal Kinetics Inc. and its M6 cervical disc implant. The deal calls for $45 million in up-front cash, plus another $60 million in milestones pegged to U.S. Food and Drug Administration approval of the M6 cervical device and trailing 12-month sales targets. The transaction is expected to close in the second quarter.

    Johnson & Johnson further distanced itself from its diabetes business in March by accepting a $2.1 billion offer for its LifeScan blood glucose monitoring unit from private equity firm Platinum Equity. The deal—likely to be approved in the coming months—emanated from a strategic review the company conducted of its LifeScan, Animas, and Calibra Medical diabetes businesses last year. That review prompted J&J to shutter its Animas insulin pump subsidiary in October 2017.

    On the acquisition front, J&J beefed up its surgical robotics capabilities by purchasing French software-enabled surgery technology developer Orthotaxy. The deal, according to executives, aims to help the healthcare conglomerate create a more wide-ranging robot-assisted platform for total and partial knee replacement procedures. “Our goal is to bring to market a robotic-assisted surgery technology that is an integral part of a comprehensive orthopedics platform,” Ciro Römer, chairman of J&J’s DePuy Synthes orthopedics business, said when the acquisition was announced.

    In the personalized medicine/CRO space, Precision Therapeutics (formerly Skyline Medical), converted a previous $500,000 loan with Helomics into a 5 percent equity stake, increasing the company’s ownership in the Pittsburgh, Pa.-based firm to 25 percent. The mid-March investment followed a January preferred stock purchase that gave Precision Therapeutics a 20 percent stake in the company. Helomics’ competitive advantage lies in its proprietary D-CHIP database, which contains de-identified data compiled from more than a decade of clinical testing of tumor responses to drugs, coupled to an Artificial Intelligence-powered bioinformatics engine that generates actionable scientific insights from this data.

    LivaNova PLC bolstered its cardiac surgery platform with the (aptly timed) Valentine’s Day purchase of TandemLife, a privately held developer of advanced cardiopulmonary temporary support solutions. The Pittsburgh-based company offers four product systems, all built around a common pump and controller; the systems are complementary to LivaNova’s cardiac surgery offerings.

    None of the first quarter deals will significantly reshape the industry, but the robust pace of activity shows M&A is still a prevalent R&D strategy among OEMs looking to acquire new technologies and/or expand their portfolios around the continuum of care or disease state “ownership” (offering products from diagnosis to treatment).

    Q1 M&A activity was just as robust among contract manufacturers. In February, GTCR’s Regatta Medical made a strategic investment in Resonetics, and diversified global industrial firm NN Inc. completed the purchase of Bridgemedica LLC, a provider of design, development engineering, manufacturing, and packaging services to the medtech sector. The deal—expected to add breadth to NN’s medical and life science sales—could be the first of many as the company attempts to augment its (medical) organic growth.

    Spectrum Plastics Group—itself a merger byproduct (Pexco LLC-PPC Industries Inc.)—didn’t waste any time entering the M&A fray, expanding its specialty products and design engineering offerings through the acquisition of Apex Resource Technologies just two weeks after it was purchased by private equity group AEA Investors in late January. The Apex acquisition is Spectrum’s first under new ownership and likely won’t be its last.

    UFP Technologies Inc., a Newburyport, Mass.-based designer and custom converter of foams, plastics, and specialty materials, added to the February flurry of M&A activity with its purchase of Dielectrics Inc. UFP executives said the deal will help the company “create more powerful synergies” and address customer needs in a more comprehensive manner. Founded in 1954, Dielectrics designs, develops, and manufactures medical devices using thermoplastic materials. “In addition to its strong medical customer relationships, Dielectrics brings a superb management team and profitable book of business,” R. Jeffrey Bailly, chairman, CEO, and president of UFP Technologies, said. “We are committed to expanding our medical business, due to its excellent growth potential and high barriers to entry. It’s our largest market, and we expect this acquisition to enhance our manufacturing capabilities and add to our earnings right away.”

    Clearly, there are many forces that helped shape the first quarter’s numerous deals. Perhaps most importantly, the hookups prove there are various types of entities attracted to the medtech industry for its attractive margins, stable business base (compared to other industries), regulated environment (a double-edged sword at times), and need for continued consolidation. Such lure is evidenced by entrants like UFP, a diverse industrial smaller public company with $200 million in annual sales (after the Dielectrics acquisition) as well as NN, a similar global industrial player looking to grow the medical portion of its revenue. Expect to see more deals in the future from these and other similar players.

    In addition to robust M&A activity, the first quarter also logged considerable medtech private equity investment (AEA-Spectrum and GTCR-Resonetics). Ampersand Capital Partners, Golden Gate Capital, Riverside Partners, Onex Corporation, Sverica Capital Management LLC, and others have already successfully invested in the space and are looking to repeat their achievements if possible.

    Looking Ahead
    The transactions detailed in this column are just a fraction of the total that transpired during the first three months of 2018. There certainly will be more as the year progresses, with some likely initiated by non-conventional players.

    While valuations remain on the high side, many pureplay medical operations are trading at multiples in the low teens—and higher in some instances where additional synergies or a strong strategic fit (1+1=4) exist. How long this will continue is hard to predict, though the durability of these valuations may hinge on interest rates and leverage ratio levels. However, the amount of free cash on private equity and strategic OEM balance sheets indicate this ride is not yet over. As OEMs continue to consolidate, contract manufacturing mergers will likely continue as well.

    The availability of actionable assets always remains a challenge—especially for mature, well-run companies of any scale. Buyers are now pursuing smaller assets than they may have in the past, and also are considering European Union (EU) assets that may be a bit more affordable. Cross-border activity between Asia, EU, and the United States remains robust as well and should continue throughout 2018.

    I’ll check back in later this year near the end of Q3 to review the latest deals, analyze the trends driving those purchases, and speculate on the impact Congressional midterm elections may have on 2019 and beyond. 


    As president and founder of Bonifacio Consulting Services, Mark Bonifacio works with medical device OEMs and contract manufacturers to help them grow organically and through mergers and acquisitions. Mark leverages his education, decades of global manufacturing experience, and extensive international network to provide unique value. In his early career, Mark worked for several major medical device OEMs, then co-founded APEC, a medical device contract manufacturer. Mark built APEC from the ground up, and sold it to Freudenberg Medical in 2007. He established Bonifacio Consulting Services soon after. Today, Mark assists organizations in business growth, strategy and tactical execution, M&A, joint ventures, and licensing. He also advises on cost-reduction initiatives, operational, and organizational improvements. Notable clients include TE Connectivity, MedPlast, Wendel, Onex, Medtronic and Millipore, among others. With a B.S. in plastics engineering from the University of Lowell (now UMASS-Lowell), Mark brings deep engineering and operational expertise along with an entrepreneurial drive. Mark is well known in medical device manufacturing and is a regular speaker and contributor for industry events and publications. 
    Related Searches
    • device tax
    • baxter
    • pump
    • corporation
    Suggested For You
    Freudenberg Medical Freudenberg Medical
    Hyperfine Names Paykel, Teisseyre to Executive Leadership Roles Hyperfine Names Paykel, Teisseyre to Executive Leadership Roles
    Accu-Tube Appoints Matthew Haddle as CEO Accu-Tube Appoints Matthew Haddle as CEO
    Heraeus Acquires Mo-Sci Corporation, ETS Technology Holdings Heraeus Acquires Mo-Sci Corporation, ETS Technology Holdings
    Boston Scientific Agrees to Acquire Devoro Medical Boston Scientific Agrees to Acquire Devoro Medical
    CE Mark Granted to Predictive Software for Kidney Allograft Survival CE Mark Granted to Predictive Software for Kidney Allograft Survival
    Electroducer Raises 3 Million Euros to Market Heart Valve Disease Tech Electroducer Raises 3 Million Euros to Market Heart Valve Disease Tech
    Precision Coating Merges with N2 Biomedical Precision Coating Merges with N2 Biomedical
    Medical Devices Market to Top $671.49 Billion by 2027 Medical Devices Market to Top $671.49 Billion by 2027
    Indago Announces $10 Million Financing Close and Name Change Indago Announces $10 Million Financing Close and Name Change
    Molli Surgical Molli Surgical's Breast Tumor Marker
    Vertigo Treatment Receives FDA Breakthrough Device Designation Vertigo Treatment Receives FDA Breakthrough Device Designation
    RapidPulse Closes $15 Million Series A Financing RapidPulse Closes $15 Million Series A Financing
    Quanta Raises $245 Million in Series D Funding Round Quanta Raises $245 Million in Series D Funding Round
    Midwest Products & Engineering Acquires MindFlow Design Midwest Products & Engineering Acquires MindFlow Design

    Related Content

    • Freudenberg Medical

      Freudenberg Medical

      ...
      Holly Bruning, Marketing 10.20.21

    • Hyperfine Names Paykel, Teisseyre to Executive Leadership Roles

      Hyperfine Names Paykel, Teisseyre to Executive Leadership Roles

      Neela Paykel is serving as general counsel and Tom Teisseyre assumes the chief product officer position.
      Business Wire 09.22.21

    • Tubing & Extrusion
      Accu-Tube Appoints Matthew Haddle as CEO

      Accu-Tube Appoints Matthew Haddle as CEO

      Haddle has a track record of leading organizations through strategic expansions across the medical device, aerospace, and industrial sectors.
      Accu-Tube 09.22.21


    • Heraeus Acquires Mo-Sci Corporation, ETS Technology Holdings

      Heraeus Acquires Mo-Sci Corporation, ETS Technology Holdings

      The two deals will strengthen Heraeus' healthcare and medtech portfolio.
      Heraeus 09.22.21

    • Boston Scientific Agrees to Acquire Devoro Medical

      Boston Scientific Agrees to Acquire Devoro Medical

      Advances its efforts to ensure physicians have the right tools to improve procedural efficiencies.
      Boston Scientific 09.21.21


      Breaking News
      • Vivasure Medical Raises $23 Million in Series D Financing Round
      • New Patents Add Value to Know Labs' Bio-RFID Tech
      • Ra Medical Granted Patent for Catheters With Expanded Ablation Area
      • ReCor Medical Presents Data from Two Randomized Trials
      • Nihon Kohden America Launches Life Scope G5 and G5Max
      View Breaking News >
      CURRENT ISSUE

      May 2022

      • Cybersecurity Challenges Leave Medical Device Makers Insecure
      • Contract Design for Medtech
      • Diabetes Medical Device Technology Update
      • Medtech Full-Service Outsourcing Q&A 2022

      Cookies help us to provide you with an excellent service. By using our website, you declare yourself in agreement with our use of cookies.
      You can obtain detailed information about the use of cookies on our website by clicking on "More information”.

      • About Us
      • Privacy Policy
      • Terms And Conditions
      • Contact Us

      follow us

      Subscribe
      Nutraceuticals World

      Latest Breaking News From Nutraceuticals World

      Nootropics and Adaptogens Respond to Demand for Mind and Mood Support
      Sabinsa Honors 70th Anniversary of Diplomacy Between India and Japan
      Solvay Invests in Suanfarma’s Vanillin Production
      Coatings World

      Latest Breaking News From Coatings World

      DIC’s Indian Subsidiary Begins Construction of Coating Resins Production Facility
      Celanese Declares Force Majeure on Acetyl Chain and Acetate Tow Products
      CPI Announces New Hybrid Professional Development Program for 2022
      Medical Product Outsourcing

      Latest Breaking News From Medical Product Outsourcing

      New Patents Add Value to Know Labs' Bio-RFID Tech
      Ra Medical Granted Patent for Catheters With Expanded Ablation Area
      ReCor Medical Presents Data from Two Randomized Trials
      Contract Pharma

      Latest Breaking News From Contract Pharma

      Evotec SE and Sernova Corp Announce Partnership in the Field of Diabetes
      Emergex COVID-19 Vaccine Candidate Successfully Coated onto Zosano Micro-Needle Patch
      Thabor Therapeutics Appoints Jérémie Mariau as CEO
      Beauty Packaging

      Latest Breaking News From Beauty Packaging

      Bite Beauty Is Closing Later This Year
      Johnson & Johnson Names CEO & CFO of Planned Consumer Health Company
      LaJeanell Launches Men’s Duo Skincare Product Set
      Happi

      Latest Breaking News From Happi

      Nautica Introduces Oceans Pacific Coast Vegan & Sustainable Fine Fragrance Collection
      Dip Powder Nail Brand Nailboo, Expands Into Retail Exclusively At Sally Beauty
      Bite Beauty Is Closing Down Operations by the End of 2022
      Ink World

      Latest Breaking News From Ink World

      Nazdar Ink Technologies to Manufacture VFP Ink Technologies Electronic Inks for US
      Sun Chemical Heads to Flexo and Labels 2022
      PETRONAS Chemicals Group to Acquire Perstorp Group
      Label & Narrow Web

      Latest Breaking News From Label & Narrow Web

      Essentra Packaging invests in Landa Nanographic press
      Nazdar to manufacture VFP electronic ink for US Market
      SunDance moves into flexible packaging with HP Indigo
      Nonwovens Industry

      Latest Breaking News From Nonwovens Industry

      Thinx Launches Moist Panties Campaign
      Kimberly-Clark to Expand Diaper, Wipes Production in Suzano, Brazil
      Bambo Nature Diapers Now Feature Paper Packaging
      Orthopedic Design & Technology

      Latest Breaking News From Orthopedic Design & Technology

      Paragon 28 Launches Grappler Suture Anchor System
      Paul Stellato Appointed Chief Accounting Officer at Zimmer Biomet
      DuPuy Synthes’ INHANCE Shoulder System Cleared by FDA for Reverse Total Shoulder Arthroplasty
      Printed Electronics Now

      Latest Breaking News From Printed Electronics Now

      Jabil Strengthens Additive Manufacturing Offerings
      Avery Dennison, Wiliot Partner to Build and Scale the Future of IoT
      HP Delivers Enhanced Platform Capabilities to Accelerate Additive Manufacturing Production at Scale

      Copyright © 2022 Rodman Media. All rights reserved. Use of this constitutes acceptance of our privacy policy The material on this site may not be reproduced, distributed, transmitted, or otherwise used, except with the prior written permission of Rodman Media.

      AD BLOCKER DETECTED

      Our website is made possible by displaying online advertisements to our visitors.
      Please consider supporting us by disabling your ad blocker.


      FREE SUBSCRIPTION Already a subscriber? Login