Boston Scientific acquires BTG
Deal value: $4.2 billion
Announced: November 20, 2018
Closed: August 19, 2019
Boston Scientific has been on a shopping spree for several years, delivering a steady drumbeat of multimillion-dollar acquisitions that expanded its portfolio considerably. But one of its most transformative—and the largest since its $26 billion purchase of Guidant more than a decade before—was the company’s $4.2 billion outlay for the British devicemaker BTG.
The cash-based deal brought in a new pipeline of cancer-focused offerings and added a $500 million interventional therapy business to Boston Scientific’s oncology portfolio, which previously consisted of mostly delivery and diagnostic tools.
The BTG offerings included investigational radiotherapies, such as the TheraSphere microbead treatment in development for lung and breast tumors, as well as bone metastases. It also brought along the Galil cryoablation system for liver, kidney and other cancers. Those two lines joined Boston Scientific’s prostate, colorectal, stomach and esophageal cancer products, as well as its coil, micro-catheter and guidewire offerings.
As a wholly-owned subsidiary, BTG also promised to add more than $400 million in revenue with its cardiovascular products in peripheral disease segments, as well as new venous interventions for pulmonary embolisms.
At the time the deal was announced, Boston Scientific described the products involved as the “perfect complement” to its own operations—and in more ways than one. BTG drew about 90% of its revenues from the U.S., even though the company was based in London.
Boston Scientific, as well as investors, saw this as a strong opportunity: The company planned to pull BTG’s products up through its established overseas marketing and global commercialization teams, which at the time brought in almost half of its sales. In part for this reason, Jefferies analysts described BTG's interventional and oncology portfolios as the deal’s "hidden gem."
For this and its appetite for other acquisitions, Boston Scientific is one of the few big medtechs expected to actually move up in the rankings of the largest devicemakers, overtaking peers that will likely maintain their respective positions in the coming years.
The boost from the BTG deal’s returns may come in time to help Boston Scientific weather some of the financial impacts of the global COVID-19 pandemic—as many hospitals, clinics and patients forgo less-urgent procedures—though expenses are also up.
Total sales were up 2% in the first quarter, but net profits shrank to just $11 million, a deep dive compared with the $424 million it had reaped the year before. Overall, operating costs rose by about $370 million at the same time.
But without the newly acquired products from BTG—as well as additions from a $465 million deal for the spine-spacer developer Vertiflex—sales would have dropped by 2.9%. BTG’s peripheral interventions especially helped, pitching in a 6.1% positive impact on Boston Scientific’s bottom line, and pushed the company’s cardiovascular sales to more than $1 billion.