Med tech deals expected to surge as reform woes wane

by Diana Bradley, Staff Writer | October 22, 2012
From the October 2012 issue of HealthCare Business News magazine

“As one comprehensive enterprise, DePuy Synthes is dedicated to advancing patient care through innovative, total solutions that are developed from a deep understanding of our customers’ needs,” says Michel Orsinger, worldwide chairman, DePuy Synthes Companies of JNJ. “The combination of these two respected leaders – Synthes and DePuy -- will enable us to better serve clinicians and patients worldwide, bring new innovations to the marketplace in orthopedics and neurologics, and strengthen our ability to compete in developing markets.”

Despite record levels of cash on corporate balance sheets, no other eye-popping deals have occurred thus far in 2012. Dustin blames this on the political uncertainty in the U.S. and the debt crisis in Europe.

“The development and innovation culture within the major med tech device developers and manufacturers is broken,” he says. “They don’t want internal competition for their high-dollar legacy systems and thus avoid making many of these acquisitions. Even if there may not be an internal competition, it’s often difficult for the major med tech companies to see the market potential for new devices.”

Some other significant deals have occurred this year, including Hologic Inc.’s August acquisition of Gen-Probe Incorporated, for a total net purchase price of approximately $3.8 billion. Hologic develops, manufactures and supplies premium diagnostic products, medical imaging systems, and surgical products; while Gen-Probe makes genetic tests for screening blood and diagnosing infectious diseases.

“This is a very interesting transaction, dramatically expanding Hologic’s molecular diagnostic area,” says

Meanwhile, Thermo Fisher Scientific Inc., the world’s second-largest maker of health care equipment, agreed to acquire One Lambda Inc. in July for about $925 million to expand in specialty diagnostics. One Lambda is a leader in the field of transplant diagnostics, which assess whether a patient is an appropriate organ match. The company had revenues of $182 million in 2011. Burkhardt says this was a wise acquisition.

“As we have heard from other market studies, [transplant diagnostics] is a $500 million market, and it’s growing dramatically,” he says.

Additionally, in June, Boston Scientific Corporation completed its acquisition of Cameron Health Inc., a San Clemente, Calif.-based device manufacturer that has developed a new implantable cardioverter defibrillator. Boston Scientific has agreed to pay $150 million to acquire Cameron Health and another $150 million if the device receives FDA approval. The company could pay up to $1 billion in milestone

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