MPO Top 30: M&A Scorecard Since 2022
To view this article on the Medical Product Outsourcing Magazine website, click here.
2023 marks the 20th consecutive year MPO magazine has compiled such a list.
MPO’s top companies report has long served as a valuable tool for assessing the major medtech OEMs’ past performance. Since it is published shortly after the midpoint of the calendar year, we have begun our own tradition of assessing the M&A activity of these corporate behemoths to determine their overall financial health and future prospects.
Before providing a “play-by-play” analysis on the M&A activity of any specific company, let us first reexamine the deals that are sure to have a significant future impact on the industry.
GE HealthCare’s (GEHC) independence from its former corporate parent (GE) is bound to have repercussions downstream. As noted later, GEHC has been more aggressive in acquiring technology since becoming a public entity. That is likely to force competitors like Philips, Siemens Healthineers, Boston Scientific, and others to become more aggressive as well in acquiring new technology.
Globus Medical’s $3.1 billion merger with NuVasive Inc. is another transaction with wide-ranging impact. As these two companies were ranked seventh and eighth on ODT’s top companies list last year, this combination is certain to have a dynamic effect within orthopedics and specifically within the spine segment.
Now let’s review the M&A activity for the top 12 highest-grossing medtech companies.
Abbott Laboratories: With 42 deals in its history, including 32 acquisitions and eight divestitures, it is safe to conclude that Abbott is active in portfolio management. Its major addition in the last 12 months was CSI (Cardiovascular Systems Inc.) for $890 million (3.8x revenue for those keeping the “multiple score”). Top 30 fun fact: The core portion of ZimVie’s spine solution (formerly Zimmer Biomet Spine & Dental) came from Abbott.
Medtronic: With 63 transactions—59 acquisitions and four divestitures—in its history, Medtronic has traditionally been one of the industry’s most active M&A players. However, it was a relatively slow year on the “buy side,” as the company completed only two smaller add-on acquisitions in the last 12 months. The most important announcement of the year was last fall’s revelation that Medtronic will divest its Patient Monitoring and Respiratory Interventions business in early 2024. Analysts speculate this business unit will be acquired by another industry strategic (GEHC, Philips, etc.) before it gets the chance to go public on its own. Stay tuned.
Johnson & Johnson: Another strong portfolio manager, as evidenced by its 41 acquisitions and 18 divestitures. Key activity in the past year included the $16.6 billion purchase of Abiomed (a 15.7x revenue multiple) and the $41 billion divestiture of its Consumer Health business (now called Kenvue) this past May. Top 30 fun fact: A core part of J&J’s opthmalmic business (AMO) came courtesy of an Abbott divestiture.
Siemens Healthineers: Established in a 2016 spinoff from its corporate parent (Siemens AG), this OEM has been relatively inactive, completing only two major acquisitions since its birth—Corindus Vascular Robotics ($1.1 billion, August 2019) and Varian Medical Systems ($16.4 billion, August 2020). Top 30 fun fact: Siemens is one of only two MPO top 12 entrants that have not made any acquisitions since 2020.
Becton Dickinson (BD): With 34 deals—27 acquisitions and seven divestitures—BD has been rather active in portfolio management over the years but its $93 million acquisition of pharmacy tech firm MedKeeper was the only one in 2022. Top 30 fun fact: Vyaire Medical was a BD divestiture to a private equity group.
GE HealthCare: As previously mentioned, GEHC has been aggressively pursuing new technology since its January (2023) launch. Its first major grab was Caption Health, which added artificial-intelligence-powered ultrasound guidance technology to its own multibillion-dollar ultrasound portfolio. Top 30 fun fact: GEHC’s core Patient Monitoring Business is derived from two previous key acquisitions—one was in Finland (Instrumentarium’s Datex-Ohmeda division, $2.05 billion) and the other was in Milwaukee (Marquette Medical Systems Inc., $808 million). Back in the day, one could “have a pint” in a conference room at either company’s facility while working on a Friday afternoon.
Stryker: Stryker has been surprisingly quiet on the M&A front, having had no deals in its queue in the last 12 months. But that is likely to change, given its history of 44 acquisitions and five divestitures. Top 30 fun fact: While considered an orthopedic company, Stryker owns Physio Control, a major producer of automatic external defibrillators, which was formerly owned by Medtronic. It’s interesting that an orthopedic company owns Physio Control rather than a cardiac solutions provider.
Philips: Given all the challenges in its respiratory business in the past year (see the company’s report on page 100 for details), it’s not surprising to find that Philips also has not made an acquisition during this time. Historically, the company has been a very active deal-maker, having completed 33 acquisitions and 14 divestitures. Once it navigates past its recall issues, expect Philips to jump back on the M&A bandwagon to keep up with GEHC, Siemens Healthineers, ResMed, and others in its core markets. Top 30 fun fact: Once known for consumer products such as domestic appliances and lightbulb), Philips has conducted 11 divestitures of non-medical businesses to become a mostly healthcare-focused company.
Cardinal Health: In its search for higher margins as demanded by shareholders, Cardinal Health is a highly conflicted portfolio company, as evidenced by its $1.94 billion acquisition of Cordis in 2015 and the $1 billion divestiture of that business six years later. Historically, Cardinal has been an active M&A player—it has conducted 48 deals (39 acquisitions and nine divestitures). The company has been quiet lately but that could change if the right deal came along. Top 30 fun fact: Cordis was originally purchased from J&J.
Baxter: An active M&A participant with 20 acquisitions and five divestitures historically, Baxter announced plans in May (2023) to divest its BioPharma Solutions business to Advent International and Warbug Pincus in a $4.25 billion deal. Top 30 fun fact: Baxter chairman, president, and CEO José (Joe) E. Almeida was the chief executive at Covidien when it was purchased by Medtronic for $42.9 billion in 2015, still the largest pure-play medtech M&A deal.
Boston Scientific (BSC): This top entrant can always be counted on for interesting acquisition activity (and there have been many intriguing deals among its 60 acquisitions and six divestitures). For example, in May 2023, the company decided to walk away from its $230 million purchase of South Korean gastrointestinal and airway stent maker M.I.Tech over regulatory concerns. Yet it still plans to collaborate with M.I.Tech and has signed a new agreement that would give it a minority stake in the company, representing a share of about 9.9%. Top 30 fun fact: During the pandemic (in conjunction with MassMedic), Dave Sheppard moderated a Strategic M&A webinar that included interviewing Charlie Attlan, Boston Scientific’s senior vice president of corporate development.
Essilor Luxottica: Also a key M&A player with 54 acquisitions and one divestiture under its belt, Essilor has recently been a bit quiet in the past year. Top 30 fun fact: Established in 1849, Essilor may be one of the oldest medtech companies.
One final note on the remaining top 30 companies and interesting M&A activity: 3M’s plan to divest its $8 billion Healthcare business by the end of this year is likely to unleash some interesting 2024 deal activity as 3M Healthcare pursues new technologies for competitive advantages (similar to GEHC).
Final fun facts on MPO’s Top 30 companies: It’s the 20th consecutive year the magazine has compiled such a list. Nine of the top 30 companies were established in the 1800s and at least 12 are more than 100 years old. And all of them have been acquisitive, which proves that portfolio management is critical for long-term growth.
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.
To view this article on the Medical Product Outsourcing Magazine website, click here.
