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Report: Medtech M&A Activity Skyrockets in 2006
Cohen |
In 2006, the medical device industry saw mergers and acquisitions
(M&A) activity increase dramatically, both in the number of deals
reported and the average size of the transactions. Throughout 2007,
medical device executives can expect to see continued consolidation
in core device areas, with smaller companies seeking to fill niches
left open by larger companies.
In this article, Richard Cohen, a principal at the Walden Group
Inc. (Tarrytown, NY), explores the trends in medtech M&A revealed
by the firm's Strategic Healthcare M&A Report for the fourth quarter
and full year 2006. For a comprehensive look at the latest
developments in the medical device industry's hottest
sectors—including major M&A activity—look for "The Medtech
Marketplace in 2007" in the January/February issue of MX:
Business Strategies for Medical Technology Executives. [ More ]
Supreme Court Ruling Opens Door to Patent Challenges
Barquist |
On January 9, the U.S. Supreme Court issued a ruling that allows
biotech firm MedImmune Inc. (Gaithersburg, MD) to pursue a court
case challenging a patent agreement with Genentech Inc. (South San
Francisco, CA). The decision could provide companies that have
licensed patents with more leeway to challenge the validity of
those same patents.
"This decision allows companies that have taken out licenses to
challenge the validity of a patent while also enjoying the benefits
of that very same patent," says Charles Barquist, a patent litigator
for Morrison & Foerster LLP (Los Angeles). "MedImmune turns all
fundamental assumptions about the stability and finality of a patent
license completely on their head. The court has upset the
risk-benefit calculation that underlies virtually every patent
license."
[ More ]
GE to Buy Two of Abbott's Diagnostics Units
Immelt
|
Seeking to establish a competitive position in the $32 billion
global market for in vitro diagnostics (IVDs), the General Electric
Co. (GE; Fairfield, CT) announced an agreement earlier this month to
buy two of the three diagnostic business units belonging to Abbott
Laboratories (Abbott Park, IL). In the $8.3 billion, all-cash
transaction, GE will pick up Abbott's highly regarded in vitro
diagnostics unit as well as the company's point-of-care diagnostics
business.
Describing Abbott's diagnostics business as "the premier platform in
this industry," GE chairman and CEO Jeffrey R. Immelt said the
acquisition fits well with the company's healthcare strategy.
"Abbott's global position in the growing diagnostics field is
aligned with our objective to deliver a comprehensive array of
diagnostic products to customers around the world."
Many analysts thought Abbott may have gotten the better part of the
deal, considering that GE left Abbott's molecular diagnostics
business on the table. Others were quick to note, however, that GE
is already well positioned in the sector as a result of its $9.5
billion acquisition of Amersham plc in 2004. The Abbott deal, which
gives GE its first stake in the IVD market, is expected to close
before the end of the second quarter, pending shareholder and
regulatory approval. [ More ]
Advanced Medical Optics to Buy IntraLase
Mazzo |
Seeking to further ensure its leading position in the laser vision
correction market, Advanced Medical Optics Inc. (AMO; Santa Ana, CA)
plans to acquire IntraLase Corp. (Irvine, CA) in an all-cash deal
valued at $880 million. Although AMO controls about 60% of the
worldwide surgical instrument market for laser-assisted in-situ
keratomileusis (LASIK) procedures, use of IntraLase's femtosecond
laser is increasingly seen as the standard of care in many
ophthalmic surgery suites around the world. The laser replaces
traditional handheld blades and enables surgeons to provide greater
accuracy and patient safety in creating a corneal flap, which
is the initial step in the LASIK procedure.
"This acquisition offers significant strategic value by further
establishing AMO as the global refractive technology leader,
positioning us with a broad range of technologies and expertise to
serve the needs of comprehensive refractive practices," said Jim
Mazzo, AMO chairman, president, and CEO. "We believe the transaction
benefits eye care practitioners and their patients by bringing
together state-of-the-art technologies to define a new standard of
care in laser vision correction." [ More ]
Medtronic Kicks Off DTC Marketing Campaign
for ICDs
Mahle |
Earlier this month, Medtronic Inc. (Minneapolis) launched medtech's
first direct-to-consumer (DTC) marketing campaign for the
cardiovascular sector. Announced with limited details in August,
the massive publicity effort is designed to raise awareness of
sudden cardiac arrest and the role of implantable
cardioverter-defibrillators (ICDs) in preventing death and enhancing
the overall quality of life for individuals with serious heart
arrhythmias. The campaign includes print, television, and online
advertising, augmented by information brochures and a toll-free
number for patients. It also includes physician education programs
on the use of ICDs. The company will reportedly spend up to $100
million on the marketing initiative.
"Today, nearly 1000 Americans will die of sudden cardiac arrest—many
of these deaths could have been prevented with ICD therapy," said
Steve Mahle, president of Medtronic's cardiac rhythm management
division. "We believe that more can be done to reach the hundreds of
thousands of people who we know could benefit from ICD therapy, but
remain unprotected. Ultimately, we believe this campaign will help
save more lives."
Medtronic's announcement came just days after FDA asked Congress for
permission to impose a new fee on pharmaceutical manufacturers to
cover the cost of monitoring DTC drug ads.
[ More ]
Cleveland Clinic Spin-Off Receives $4 Million Infusion
Coburn |
In late December, Cleveland Clinic announced the formal launch and
funding of CSF Therapeutics, a spin-off company that develops
technologies to fight neurodegenerative diseases. Venture capital
firm Norwich Ventures, which specializes in medical devices, is
investing $4 million in the company, in which Cleveland Clinic
maintains an ownership stake.
"We are pleased that Norwich has invested in this exciting technology
and are looking forward to an outstanding partnership," said
Christopher Coburn, executive director of CCF Innovations, the
technology commercialization arm of Cleveland Clinic. "The launch of
CSF Therapeutics presents a significant opportunity to develop new
medical devices and therapies to treat neurodegenerative diseases
for which there have been limited treatment options to date." [ More ]
Kodak to Sell Health Group for $2.5 Billion
Perez |
Eastman Kodak Co. (Rochester, NY) plans to sell its health group to Onex Healthcare Holdings Inc., a subsidiary of Onex Corp. (Toronto),
for up to $2.55 billion. Kodak's health group—which reported $2.54
billion in revenue for the 12 months ended September 30, 2006—is a
provider of medical imaging and healthcare information technology
solutions, including digital x-ray systems, molecular imaging
systems and x-ray film, as well as dental imaging products,
software, and services.
"Kodak's health group is a business with significant market presence
and intellectual property assets," said Antonio M. Perez, Kodak's
chairman and CEO. "This sale maximizes shareholder value by obtaining
a full and fair valuation for this business, and allows Kodak to
increase its financial flexibility."
[ More ] |
