Healthcare Sector Comment – June 2017 – Medical Devices

This month we saw Becton Dickinson and Co. (BD) announce its intention to acquire C. R. Bard Inc. (CRB), the medical technology company specialising in vascular, urological and oncological products, for €18.3bn. The deal comes two years after BD acquired CareFusion Corp., another medical technology business providing infusion and dispensing systems, for €7.6bn. CRB continues to drive BD’s diversification plans and enhances BD’s medication management and infection prevention business division. CRB’s portfolio of products provides BD with access to high-growth products and increasingly high-growth geographical markets.

With the changing industry dynamics, we’re witnessing customer consolidation with a large number of hospital mergers. Most medical device companies’ recent growth strategies are aimed at providing comprehensive solutions to customers, by providing additional ancillary products and services such as consulting and advice at lower costs based on value-based payments. Focusing on better clinical outcomes and offering a ‘one stop’ solution creates a strong partnership model with healthcare providers who are looking for cost effective solutions.

BD are not the only company to pursue this type of strategy, in the past year we have seen:

  • Abbott Laboratories’ acquisition of St. Jude Medical, the listed US-based developer of cardiovascular medical devices, for €26.3bn;
  • Medtronic’s acquisition of Covidien, the US-based manufacturer of products for use in clinical and home settings, for €33.9bn; and
  • Zimmer’s acquisition of Biomet, the US-based producer of musculoskeletal and biotechnology solutions to form Zimmer Biomet Holdings, for €9.7bn.

In a rapidly changing healthcare environment where providers want to see value-based payment models, at Clearwater International we expect  to see medical device companies react through strategic acquisitions to broaden their offering.


A taste of recent deals

Medical Equipment & Supplies

Nordson Corporation, the US-based producer of precision dispensing equipment acquired the advanced technologies business of Vention Medical, comprising manufacturing of minimally invasive interventional delivery devices, catheters and advanced components, for €664m.

Svenska Cellulosa Aktiebolaget SCA, the Sweden-based developer of personal care products, tissues, forest products, and packaging solutions acquired BSN Medical GmbH, the Germany-based manufacturer of medical devices covering compression therapy, wound care and orthopaedics, for €2.7bn.

General Electric Company, the listed US-based diversified technology and financial services company acquired Asymptote Limited, the UK-based specialist in cryochain technology for sensitive cellular therapies.

Beaver-Visitec International, Inc., the US-based manufacturer of ophthalmic and other specialty micro-surgical products acquired Malosa Medical Ltd., the UK-based manufacturer of single-use ophthalmic surgery instruments.

Allergan plc, the listed Ireland-based producer of branded and generic drugs and provider of pharmaceutical research and development acquired ZELTIQ Aesthetics, Inc., US-based provider of energy-based cold sculpting aesthetic devices, for €2.1bn.

Charlesbank Capital Partners LLC, the US-based private equity firm acquired Tecomet the US-based contract manufacturer of orthopaedic implants and critical components for the cardiovascular, medical imaging and aerospace markets.

G Square Private Equity, the UK-based private equity firm acquired Duo-Med Instruments NV, the Belgium-based distributor of surgical instruments.

Boston Scientific Corporation, the listed US-based manufacturer of medical devices for use in various interventional medical specialties acquired Symetis SA, the Switzerland-based developer of heart valve replacement devices and systems, for €405m.

 Direct Healthcare Services Ltd, the UK-based manufacturer of pressure area care solutions acquired The Kirton Healthcare Group Limited, the UK-based manufacturer and supplier of specialist seating and other products for the elderly and disabled. Clearwater International was involved in identifying and approaching the target and raising the debt to fund the acquisition.


Health & Social Care

Busy Bees Nurseries Limited, the UK-based childcare and education services provider acquired Treetops Nurseries Limited, the UK-based operator of 61 nurseries and childcare services, including education and nutrition for €107m.

Warburg Pincus, the US-based private equity firm acquired a majority stake in CityMD, the US-based operator of 32 urgent care centres in the New York Metro area, for an approximate €530m.

American Securities LLC, the US-based private equity firm acquired Air Methods Corporation, the listed US-based provider of emergency aeromedical transportation and medical services, for €2.3bn.

Jacobs Holding AG, the Switzerland-based private equity firm acquired Southern Dental Limited, the UK-based dental healthcare business operating 80 NHS and private practices.

DaVita HealthCare Partners Inc., the listed US-based provider of kidney health services, including dialysis services, has agreed to acquire Renal Ventures Management, LLC, the US-based company engaged in providing dialysis care and information for people living with chronic kidney disease, for €365m.

Penta Capital Partners Limited and Toscafund Asset Management LLP, both UK-based private equity firms acquired a 73.3% stake in Circle Holdings plc, the listed UK-based healthcare provider operating hospitals, rehabilitation and health services, for €65m, which subsequently delisted from AIM on 1st June.

Attendo AB, the listed Sweden-based provider of medical services and products for senior and disabled citizens acquired Mikeva Oy, the Finland-based provider of residential and therapy services, for €150m.


Pharmaceuticals & Biotechnology

LGC Limited, the UK-based life sciences measurement and testing company acquired Axolabs GmbH, the Germany-based custom research organisation, providing services in the field of nucleic acid therapeutics.

Aspen Pharmacare Holdings Limited, the listed South Africa-based manufacturer of branded and generic pharmaceutical products, infant nutritionals, and consumer healthcare products acquired an anti-tumour drug package from GlaxoSmithKline plc, the listed UK-based drug maker.

Ipsen S.A., the listed France-based provider of primary and speciality care drugs acquired the oncology assets of Merrimack Pharmaceuticals, Inc., the listed US-based biotechnology company developing drugs for the treatment of immunological diseases, for €544m.

Agile Pharma B.V, the Netherlands-based manufacturer of generic drugs acquired Generis Farmaceutica S.A., the Portugal-based manufacturer of generic drugs covering analgesics/anti-inflammatory, anti-infectives and antihistamines, for €135m.

Lonza Group Limited, the listed Switzerland-based manufacturer of chemical intermediates, active ingredients and biopharmaceuticals acquired PharmaCell B.V., the Netherlands-based contract manufacturing company for cell therapy and regenerative medicine.

 Ashland Inc., the listed US-based distributor and provider of specialty chemicals acquired Pharmachem Laboratories, Inc., the listed US-based developer, manufacturer and supplier of custom and branded nutritional and fragrance products, for €621m.

Chiltern International Limited, the UK-based contract research organisation, has acquired Integrated Development Associates Co. Ltd., the Japan-based drug development services firm with specialisms in Pan-Asian clinical pharmaceutical trials.