Florence Joffroy-Black and Dave Sheppard, MedWorld Advisors11.10.21
And so it begins, the onslaught of retrospects that invade the collective consciousness as one year fades into the next. With the countdown to 2022 underway, a contemplative look at the past year is inevitable yet necessary to better prepare for the road ahead. Thus, it’s an ideal time to reflect upon the 2021 performance of medtech’s largest OEMs and portend their growth prospects for the coming year. The focus for the purposes of this discussion is on the 12 highest-grossing companies in MPO’s Top 30 report. This elite group has a huge impact on the medical device industry and the underlying ecosystem in which thousands of smaller companies participate.
Medtronic: Having assumed the reins in 2020, CEO Geoff Martha has used the pandemic to imprint his signature on the company’s culture, structure, and opportunities. He’s trying to improve organizational speed by decentralizing and shifting the company’s decision-making to 20 focused operating units. Martha’s also focused on developing new technology through innovation and “tuck-in” acquisitions. Additionally, Medtronic is launching its HUGO RAS (Robotically Assisted Surgery) solution in Europe. The company has spent years to prepare itself to battle Intuitive Surgical for share of the robotic surgery market, and it is now ready to engage. It will be interesting to watch how this skirmish plays out in 2022.
J&J: While CEO Alex Gorsky has announced his retirement in 2022, Ashley McEvoy (executive vice president and worldwide chair of medical devices) remains firmly at the helm of the company’s medical device strategy. Utilizing its digital surgery systems (Velys, Monarch and Ottava), J&J also plans to make short-term inroads into the increasingly crowded robotic surgery sector. In the long-term, McEvoy seems to be directing J&J to take moonshots to treat patients with kidney, bladder, and lung cancer. She’s also very bullish on eye care. Watch for innovations in these areas.
Abbott Laboratories: Similar to Medtronic, Abbott is an industry behemoth with a new leader at the helm. CEO Robert Ford was able to opportunistically utilize Abbott’s diagnostics capabilities for growth and innovation while assisting the healthcare system with critical COVID-19 testing solutions. Going forward, Ford has made it clear that Abbott will be about diagnostics, diabetes, and digital solutions. Watch for continued impacts of its digital strategy across Abbott’s entire platform.
Philips: Contrary to the leadership changes occurring at rival firms, CEO Frans van Houten has been in the corner office for the last 10 years. He has successfully transformed Philips from a holding company with various industry segments to a focused health technology solutions firm. With that stated, overshadowing Philips’ many successes is the major recall this past summer in its CPAP business. The recall has given the company a significant black eye in the industry, and more importantly, with consumers. As Philips has further infiltrated the health technologies space, it has tried to get closer to the consumer. Philips will need an effective recovery strategy to overcome this critical challenge to its business performance and reputation.
GE Healthcare: 2022 promises to be an interesting year for the company with Peter Arduini (Integra LifeSciences chief executive) beginning his reign as CEO Healthcare in January. Arduini spent 15 years at GE Healthcare, heading up the CT and molecular imaging, healthcare services, and U.S. sales segments. He fostered double-digit growth at Integra through a strategy of acquisitions and R&D investments. His arrival should bring a renewed energy to the Healthcare unit, which acquired BK Medical (ultrasound) for $1.45 billion in September. The deal certainly will help expand GE Healthcare’s diagnostics portfolio into surgical and therapeutic interventions.
BD: Rounding out the top six, BD also recently (in 2020) brought in new leadership with CEO Tom Polen. Under his direction, BD is spinning out its diabetes business next year to sharpen its focus and foster its own future growth. Post-separation, BD will continue to strengthen its core technology and portfolio through organic innovation and minor acquisitions. It has the cash flow from robust sales of its COVID-19 diagnostics and vaccine supplies.
Siemens Healthineers: Having finally closed the blockbuster Varian Medical Systems acquisition deal in the third quarter, Siemens is poised for continued growth in various cancer segments, from diagnosis to treatments. Additionally, the pandemic gave the company’s diagnostics business some new legs to grow with its rapid antigen assays. Expect Siemens to be a strong force in 2022 in its core markets with some possible tuck-in acquisitions rather than major deals. Focus and commercial execution will beget positive results for its current objectives.
Cardinal Health: Due to its legacy portfolio, Cardinal Health was negatively impacted by COVID-19. Loss of routine healthcare procedures and hospital activities hurt its core business units. For 2022, the company is focusing on execution and cash flow generation, so there likely won’t be any major M&A activity for the next year.
Stryker Corp.: Expect the company’s aggressive M&A streak to continue in 2022. When not making major acquisitions (i.e. Wright Medical), Stryker is forging smaller “tuck-in” deals to bolster both its portfolio and innovation capabilities. The orthopedic behemoth will continue its opportunistic shopping spree, buying companies of all sizes to bolster its market share. Stryker’s core businesses should return to positive growth next year as the pandemic eases (if it eases). Stryker also will continue to focus on and market its MAKO robotic platform, one of its core strengths in recent years.
Baxter: Heading into 2022, Baxter will be integrating its newest purchase (Hillrom) into the fold. CEO Joe Almeida has no qualms about aggressively creating innovation and segment disruption—whether it’s internally driven or by acquisition. If industry speculation is to be believed, MPO Top 30 bottom-dweller Hillrom will mark the start of an active M&A period for Baxter. The company will continue to focus next year on obtaining technology and products that expand its portfolios and enhance its growth opportunities.
Boston Scientific Corp.: Pre-pandemic, Boston Scientific had been on a decade-long winning streak under CEO Mike Mahoney’s leadership. While COVID-19 created an unanticipated (financial) bump in the road from lower procedural volumes in its core markets, the company seems to be back on track with sustainable growth in 2022 and beyond. Boston Scientific also continued its M&A success this year with the $1.07 billion acquisition of Lumenis and a few smaller deals. Expect the company to ensure its future growth through a combination of strong commercial execution and tuck-in M&A.
B. Braun: Contrary to its brethren in the top 12, B. Braun’s growth comes primarily through organic innovation and activities and rarely thru M&A. B. Braun had a flat year in 2020 due to COVID-19 and somewhat rebounded this year with positive growth. The company is embracing a “digital is the new normal” philosophy as it approaches future sales activities, product development, and customer engagement. Since digital is rapidly developing, the next year or two will determine whether B. Braun can keep up with the technology on its own or seek outside help via M&A activity. Stay tuned.
These top 12 companies have mostly flourished throughout the pandemic. Being industry leaders, they understand how to use dynamic times to execute their respective strategies to their advantage. Additionally, it was impressive to observe some of them rapidly adopting new approaches to exploit some of the changing market opportunities created by COVID-19. In many cases, the change of leadership helped some of these companies adopt new game plans more quickly. The next year will certainly be an interesting one as pandemic-induced supply chain strains and globalization challenges force companies to revisit their long-term growth strategies. A “new normal” is taking shape. Companies will have to embrace it in order to survive.
To borrow an all-too familiar phrase: Out with the old, in with the new.
Florence Joffroy-Black, CM&AA, is a longtime marketing and M&A expert with significant experience in the medical technology industry, including working for multi-national corporations based in the United States, Germany, and Israel. She currently is CEO at MedWorld Advisors and can be reached at florencejblack@medworldadvisors.com.
Dave Sheppard, CM&AA, is a former medical technology Fortune 500 executive and is now focused on M&A as a managing director at MedWorld Advisors. He can be reached at davesheppard@medworldadvisors.com.
Medtronic: Having assumed the reins in 2020, CEO Geoff Martha has used the pandemic to imprint his signature on the company’s culture, structure, and opportunities. He’s trying to improve organizational speed by decentralizing and shifting the company’s decision-making to 20 focused operating units. Martha’s also focused on developing new technology through innovation and “tuck-in” acquisitions. Additionally, Medtronic is launching its HUGO RAS (Robotically Assisted Surgery) solution in Europe. The company has spent years to prepare itself to battle Intuitive Surgical for share of the robotic surgery market, and it is now ready to engage. It will be interesting to watch how this skirmish plays out in 2022.
J&J: While CEO Alex Gorsky has announced his retirement in 2022, Ashley McEvoy (executive vice president and worldwide chair of medical devices) remains firmly at the helm of the company’s medical device strategy. Utilizing its digital surgery systems (Velys, Monarch and Ottava), J&J also plans to make short-term inroads into the increasingly crowded robotic surgery sector. In the long-term, McEvoy seems to be directing J&J to take moonshots to treat patients with kidney, bladder, and lung cancer. She’s also very bullish on eye care. Watch for innovations in these areas.
Abbott Laboratories: Similar to Medtronic, Abbott is an industry behemoth with a new leader at the helm. CEO Robert Ford was able to opportunistically utilize Abbott’s diagnostics capabilities for growth and innovation while assisting the healthcare system with critical COVID-19 testing solutions. Going forward, Ford has made it clear that Abbott will be about diagnostics, diabetes, and digital solutions. Watch for continued impacts of its digital strategy across Abbott’s entire platform.
Philips: Contrary to the leadership changes occurring at rival firms, CEO Frans van Houten has been in the corner office for the last 10 years. He has successfully transformed Philips from a holding company with various industry segments to a focused health technology solutions firm. With that stated, overshadowing Philips’ many successes is the major recall this past summer in its CPAP business. The recall has given the company a significant black eye in the industry, and more importantly, with consumers. As Philips has further infiltrated the health technologies space, it has tried to get closer to the consumer. Philips will need an effective recovery strategy to overcome this critical challenge to its business performance and reputation.
GE Healthcare: 2022 promises to be an interesting year for the company with Peter Arduini (Integra LifeSciences chief executive) beginning his reign as CEO Healthcare in January. Arduini spent 15 years at GE Healthcare, heading up the CT and molecular imaging, healthcare services, and U.S. sales segments. He fostered double-digit growth at Integra through a strategy of acquisitions and R&D investments. His arrival should bring a renewed energy to the Healthcare unit, which acquired BK Medical (ultrasound) for $1.45 billion in September. The deal certainly will help expand GE Healthcare’s diagnostics portfolio into surgical and therapeutic interventions.
BD: Rounding out the top six, BD also recently (in 2020) brought in new leadership with CEO Tom Polen. Under his direction, BD is spinning out its diabetes business next year to sharpen its focus and foster its own future growth. Post-separation, BD will continue to strengthen its core technology and portfolio through organic innovation and minor acquisitions. It has the cash flow from robust sales of its COVID-19 diagnostics and vaccine supplies.
Siemens Healthineers: Having finally closed the blockbuster Varian Medical Systems acquisition deal in the third quarter, Siemens is poised for continued growth in various cancer segments, from diagnosis to treatments. Additionally, the pandemic gave the company’s diagnostics business some new legs to grow with its rapid antigen assays. Expect Siemens to be a strong force in 2022 in its core markets with some possible tuck-in acquisitions rather than major deals. Focus and commercial execution will beget positive results for its current objectives.
Cardinal Health: Due to its legacy portfolio, Cardinal Health was negatively impacted by COVID-19. Loss of routine healthcare procedures and hospital activities hurt its core business units. For 2022, the company is focusing on execution and cash flow generation, so there likely won’t be any major M&A activity for the next year.
Stryker Corp.: Expect the company’s aggressive M&A streak to continue in 2022. When not making major acquisitions (i.e. Wright Medical), Stryker is forging smaller “tuck-in” deals to bolster both its portfolio and innovation capabilities. The orthopedic behemoth will continue its opportunistic shopping spree, buying companies of all sizes to bolster its market share. Stryker’s core businesses should return to positive growth next year as the pandemic eases (if it eases). Stryker also will continue to focus on and market its MAKO robotic platform, one of its core strengths in recent years.
Baxter: Heading into 2022, Baxter will be integrating its newest purchase (Hillrom) into the fold. CEO Joe Almeida has no qualms about aggressively creating innovation and segment disruption—whether it’s internally driven or by acquisition. If industry speculation is to be believed, MPO Top 30 bottom-dweller Hillrom will mark the start of an active M&A period for Baxter. The company will continue to focus next year on obtaining technology and products that expand its portfolios and enhance its growth opportunities.
Boston Scientific Corp.: Pre-pandemic, Boston Scientific had been on a decade-long winning streak under CEO Mike Mahoney’s leadership. While COVID-19 created an unanticipated (financial) bump in the road from lower procedural volumes in its core markets, the company seems to be back on track with sustainable growth in 2022 and beyond. Boston Scientific also continued its M&A success this year with the $1.07 billion acquisition of Lumenis and a few smaller deals. Expect the company to ensure its future growth through a combination of strong commercial execution and tuck-in M&A.
B. Braun: Contrary to its brethren in the top 12, B. Braun’s growth comes primarily through organic innovation and activities and rarely thru M&A. B. Braun had a flat year in 2020 due to COVID-19 and somewhat rebounded this year with positive growth. The company is embracing a “digital is the new normal” philosophy as it approaches future sales activities, product development, and customer engagement. Since digital is rapidly developing, the next year or two will determine whether B. Braun can keep up with the technology on its own or seek outside help via M&A activity. Stay tuned.
These top 12 companies have mostly flourished throughout the pandemic. Being industry leaders, they understand how to use dynamic times to execute their respective strategies to their advantage. Additionally, it was impressive to observe some of them rapidly adopting new approaches to exploit some of the changing market opportunities created by COVID-19. In many cases, the change of leadership helped some of these companies adopt new game plans more quickly. The next year will certainly be an interesting one as pandemic-induced supply chain strains and globalization challenges force companies to revisit their long-term growth strategies. A “new normal” is taking shape. Companies will have to embrace it in order to survive.
To borrow an all-too familiar phrase: Out with the old, in with the new.
Florence Joffroy-Black, CM&AA, is a longtime marketing and M&A expert with significant experience in the medical technology industry, including working for multi-national corporations based in the United States, Germany, and Israel. She currently is CEO at MedWorld Advisors and can be reached at florencejblack@medworldadvisors.com.
Dave Sheppard, CM&AA, is a former medical technology Fortune 500 executive and is now focused on M&A as a managing director at MedWorld Advisors. He can be reached at davesheppard@medworldadvisors.com.
