'Big' med tech M&A deals getting smaller

EP Vantage compared med tech M&A activity in the first half of 2013 with the same period in 2012 and found something sobering: Billion-dollar deals all but dropped away.

From January through June 2012, all of the top 5 deals landed well above the billion-dollar mark, led by Johnson & Johnson's ($JNJ) multi-billion-dollar buyout of orthopedic devicemaker Synthes. A year later, Bayer's $1.1 billion acquisition of birth control devicemaker Conceptus became the top med tech M&A deal in the first 6 months of 2013, and it was the only one of the 5 to cross the billion-dollar threshold.

There are a number of possible reasons for this.

As EP Vantage points out, med tech acquisitions tend to be on the smaller side anyway. The J&J/Synthes deal was unusually large, representing a strategic, once-in-a-lifetime type of transaction, and it skewed the numbers higher for the first half of 2012 as a result. But that's just one deal. It doesn't change the fact that the top 5 med tech deals from January to June 2013, other than Bayer/Conceptus, landed well below the billion-dollar range.

Also, consider that med tech companies are being far more careful with their money as they grow through strategic acquisitions, something EP Vantage attributes in part to external economic pressures. They're searching for promising new implant and gene sequencing technology, or other med tech advances that can give them an edge. In other cases, companies are snatching up rivals in emerging markets, creating an automatic foothold and customer base for a relative bargain.

So far in the second half of 2013, the dollar volume of M&A deals appears to be ticking higher. But there are caveats. Baxter ($BAX) announced a nearly $4 billion bid for dialysis competitor Gambro at the end of 2012, and it finally closed in early September after delays due to antitrust concerns. Further, Johnson & Johnson is reportedly sizing up buyers for its Ortho Clinical Diagnostics unit, which some speculate could pull in close to $5 billion. It is unclear when that sale might close or who the buyer will be. 

Other newer deals are hitting on the small side. C.R. Bard ($BCR) announced plans in September to grab Rochester Medical ($ROCM) for $262 million in cash. Deals of a similar size are likely in the months ahead.

Below, we have for your review and contemplation the top 5 med tech M&A deals for the first halves of 2013 and 2012. EP Vantage compiled the data as part of its broader half-year review of the med tech industry. Click here to access the full report. -- Mark Hollmer (email | Twitter)

For more:
Bard embraces urology home care with $262M Rochester Medical bid
J&J sizing up buyers for $2B Dx unit
Baxter finally closes $4B Gambro deal, eyes dialysis dominance

Top 5 M&A Transactions in H1 2013

1. Bayer acquires Conceptus

The price: $1.1 billion

This deal, closed in June, added Conceptus' Essure permanent birth control device to Bayer's own struggling contraceptive business. More

2. Stryker acquires Trauson

The price: $764 million

This is one of the biggest device-company moves into China in recent years. Stryker's ($SYK) March 2013 acquisition gives it a major foothold in China's orthopedics device industry, adding locally produced devices such as pelvic plates and artificial joints. More

3. Bausch + Lomb acquires Technolas Perfect Vision

The price: $645 million

Also in January, Bausch + Lomb snatched up this German ophthalmology laser company, giving the eye care giant new refractive and cataract tech. More

4. Illumina acquires Verinata Health

The price: $450 million

Illumina ($ILMN) snatched up Verinata Health in January, allowing it to add new diagnostics to its roster, including a noninvasive prenatal test that helps make early detection of fetal chromosome abnormalities. More

5. Wright Medical Group acquires Biomimetic Therapeutics

The price: $380 million

In March, Arlington, TN-based Wright ($WMGI) completed its bid to buy Nashville-based BioMimetic, giving the orthopedic medical device company access to some major new bone growth treatments under development. More

Top 5 M&A Transactions in H1 2012

1. Johnson & Johnson acquires Synthes

The price: $19.7 billion+

More than a year after it was first announced, J&J closed its massive bid to buy the Swiss orthopedic devicemaker in mid-2012. The sale, in part, helped J&J become the biggest competitor in the $5.5 billion trauma market. A year after the sale closed, both companies are still trudging through the merger of operations. More

2. Hologic acquires Gen-Probe

The price: $3.7 billion

Hologic ($HOLX) made a big move to boost its presence in the molecular diagnostics space with its August 2012 acquisition of rising-star Gen-Probe, which developed a slew of new tests for STDs like chlamydia, gonorrhea, and human papillomavirus. More

3. Valeant Pharmaceuticals acquires Medicis

The price: $2.6 billion

First announced in September 2012, the transaction adds a number of new drugs and device-related treatments to Valeant's ($VRX) slate, including Restylane, a wrinkle-filler gel. More

4. Asahi Kasei acquires Zoll Medical

The price: $2.21 billion

In March 2012, Japan's Asahi Kasei snatched up Chelmsford, MA-based Zoll, gaining a new engine for growth. Several months later, the deal enabled Zoll to launch a Japan division (Asahi Kasei Zoll Medical Corp.) focused on expanding sales of its external defibrillators, monitoring equipment and other medical devices. More

5. Agilent Technologies acquires Dako

The price: $2.2 billion

In June 2012, Agilent closed its bid to buy Dako, a cancer diagnostics firm, which the company immediately folded into its then-newly created diagnostics and genomics group. Until then, Agilent had been mainly known for bio-analytical measurement products. More