What Piqued My Interest from the 2023 MPO Top Company Reports

Another year and another round of the MPO top company reports contained within another July/August issue. And, as always, with those reports come observations I made while writing my own reports (Mike Barbella, Sam Brusco, and I are each responsible for authoring 10 reports), as well as proofreading the others.

I don’t know that any of the following insights offer earth-shattering revelations, but I thought they were interesting trends worth sharing. If you’re able to read through all 30 reports (first, bless you to anyone who does so) or even if you just review a few, I’d love to hear your observations. Feel free to reach out to me with any of your comments. Now, with that said, onto what I noted.

First, and probably most prominent, the medtech industry has been “slimming down.” Not in terms of revenue, but companies seem to be truly reevaluating their businesses and the clinical segments upon which they are focused. As a result, there seems to have been an increase in divestitures and spinouts. Perhaps this is the direct result of so much M&A activity over the last decade, but regardless, it’s made for some interesting news.

Among this year’s reports, there are a variety of examples. Medtronic announced it would be shedding its respiratory and patient monitoring businesses; first announced as a spinout, but speculation has it being acquired by another big medtech firm. Cardinal Health sold off its Cordis business, which it hadn’t owned for all THAT long. Elsewhere, Danaher separated from its EAS business, which is now a standalone firm. Not new news but still valid to the discussion, BD split off its Diabetes business to become embecta. GE HealthCare is now an independent entity with a laser focus on healthcare; 3M will be following closely on its heels. Within the orthopedic space, ZimVie was created from the spine and dental businesses of Zimmer Biomet.

Also, the artificial intelligence (AI)/digital revolution is in full swing and it’s not being led by the invading tech giants like Google, Amazon, Facebook, or any of the others prognosticated to turn healthcare on its head. It is, in fact, the medical device firms, which are experts in serving this industry, leading the charge. Sure, there might be opportunities to partner with the aforementioned companies to create a unique solution, but more often than not, medical device firms are developing (or buying) innovations to help facilitate digital health products for healthcare professionals. The value of big data, AI, machine learning, analytics, and other technologies for healthcare is clearly being recognized and incorporated into new devices. Now if they can just get a better handle on cybersecurity (it IS getting better).

Another interesting aspect is the diminishing revenues companies (mostly those involved with diagnostics) are seeing after the pandemic. The last fiscal year still presented inflated figures for a number of companies, but 2022 may be the last period those types of sales are seen. Going forward, companies will continue to offer COVID-19 diagnostic products, but the resulting revenue will be significantly reduced. The potential takeaway here, however, is what these companies do in the face of an educated consumer base and the increase in demand for at-home healthcare. Will we see new at-home diagnostic offerings being sold to consumers at CVS and Walgreens for other diseases and viruses that haven’t been previously available? There are already “3-in-1” collection kits for a single swab sample to test for COVID-19, flu, and RSV. Will an at-home test be far behind? What others could follow?

Another observation: M&A activity appeared to be down within the reports. Sure, some firms like Boston Scientific were still fairly active, and I haven’t done an analysis of number of deals or deal value, but anecdotally, it seemed like acquisition activity was down compared to previous years. Again, are firms truly taking a hard look at their business first before going forward or was it more of a pause among many of the common players to reset and reload for 2024 (or even second-half 2023)? I guess time will tell on this one.

My final note involves one of the firms among the top 30—Edwards Lifesciences. Just speculation, but they seem to be an attractive target for acquisition. No idea if that’s even an option or if a company would be interested, but they have a fantastic portfolio that puts any firm directly into the thick of the TAVR space with this buy. This is hardly new speculation though, as I saw articles as far back as 2008 speculating on this move, but perhaps with the retirement of Mussallem, it brings the idea up again. We’ll see.

Enjoy the 2023 reports and I hope you gain insights from them; again, share those with me should you be so inclined! 

Sean Fenske, Editor-in-Chief
[email protected]