Boston Scientific Acquires Axonics for $3.7 Billion to Strengthen Position in Neuromodulation Market

Nov 22, 2024 17:17 CST Updated 17:17

Axonics

Developer of Novel Implantable Neuromodulation Technologies

Boston Scientific

Medical Device Manufacturer

The competition in the neuromodulation market continues to escalate.

Recently, Boston Scientific announced the completion of the acquisition of medical technology companyAxonics, Inc.The Acquisition。This acquisition increasesAxonicsImplantable Sacral Neuromodulation (SNM) System，Expanded Boston Scientific's Urology Product Line，MarksIts Accelerated EnhancementNeuromodulation TrackCompetitiveness, further solidifying its leading position in the global medical technology market.

It is reported that the transaction is priced at $71 per share, with an equity value of $3.7 billion (approximately RMB 26.76 billion). Boston Scientific expects that the transaction will not have a significant impact on its adjusted earnings per share (EPS) for 2024 and 2025, but will see growth thereafter.

In recent years, neuromodulation technology has developed rapidly and has gradually been applied in more disease diagnosis and treatment fields. From the enterprise side, Medtronic, as one of the earliest device companies to expand into this field, currently has a presence in multiple细分 markets. Additionally, multinational giants such as Boston Scientific, Abbott, and LivaNova are also key competitors in the neuromodulation field.

Industry insiders pointed out that Boston Scientific's completion of the acquisition of Axonics is a strategically significant move, which will not only deepen its layout in the urology field but also lay a solid foundation for its development in the neuromodulation sector. It can be foreseen that as Boston Scientific aggressively expands its presence, the competition among medical technology giants will become increasingly intense.

Accounting for nearly 30% of the market share

Is the Acquisition of Axonics a Bargain?

In recent years, the incidence of urological diseases has been increasing annually, especially the prevalence of lower urinary tract dysfunction, which ranges from 13% to 67% in the general population. With the rising prevalence associated with aging, the market demand for implantable sacral nerve stimulation systems is growing rapidly. This system has demonstrated significant efficacy in the treatment of chronic fecal incontinence, urge urinary incontinence, urinary retention, frequent urination, and urgency, bringing good news to China's large elderly population.

As an advanced neuromodulation technology, Sacral Neuromodulation (SNM) or Sacral Nerve Stimulation (SNS) continuously applies short-pulse, mild stimulation currents to specific sacral nerves through interventional methods, effectively modulating the behavior of effector organs innervated by sacral nerves, such as the bladder, urethral sphincter, and pelvic floor. With the significant growth of the global sacral nerve stimulation market, this technology is increasingly gaining widespread attention in the industry.

According to Data Bridge Market Research, the compound annual growth rate (CAGR) of the SNS market is projected to be approximately 10% from 2021 to 2028. By 2030, the global SNS market size is expected to grow from USD 423 million in 2023 to USD 634 million. Among this, the North American market will account for the largest share, with an estimated market share of 35.7% in 2023, followed by the Asia-Pacific region, with an expected market share of 25.2%.

In this booming market, Axonics stands out with its innovative products and technology. As a company focused on developing and commercializing innovative medical devices for treating urinary and bowel dysfunction, Axonics' core products include sacral neuromodulation systems, urethral bulking hydrogels, and more, offering practical solutions for incontinence patients. Particularly, the world’s first rechargeable sacral neuromodulation device developed by Axonics has achieved significant innovations in battery life, charging methods, and device size, greatly enhancing the user experience for patients.

Since its establishment, Axonics has emerged as a standout in the industry with its exceptional innovation capabilities and market competitiveness. In the 2023 ranking of the fastest-growing companies in the Americas published by the Financial Times, Axonics secured the runner-up position. The latest financial report shows that Axonics maintained strong growth momentum in the third quarter of 2024, with net revenue reaching $116 million, a 25% increase from the same period last year.

Among them, Axonics' sacral neuromodulation revenue reached $92.3 million, a year-on-year increase of 25%; the revenue of injectable hydrogel Bulkamid for treating stress urinary incontinence also reached $23.8 million, achieving the same year-on-year growth of 25%. Meanwhile, Axonics' gross margin increased to 77.2%, fully demonstrating the company's strong profitability and market competitiveness.

However, Axonics' rise has not been smooth sailing. In the sacral neuromodulation market, Medtronic once held a monopolistic position. After Axonics' products received approval, the company gradually expanded its market presence and engaged in fierce competition with Medtronic. The two parties waged a years-long battle over patent issues, undergoing multiple reviews and lawsuits in courts and before the Patent Trial and Appeal Board from 2019 to 2021. Amid this prolonged competition, Axonics gained widespread recognition through its innovative products and continuous market expansion.

According to statistics, Axonics has captured 27% of the sacral neuromodulation market, with 14,000 people having received implants of the company’s products in 2022. This achievement not only fully demonstrates Axonics' market competitiveness but also adds more confidence and value to Boston Scientific Corporation's acquisition this time.

In January this year, Boston Scientific announced a definitive agreement to acquire Axonics for $71 per share, issuing $22 billion in senior bonds for the acquisition. However, the completion of the deal was delayed due to the Federal Trade Commission's request for more information about the acquisition. Now, Boston Scientific has finally succeeded in bringing Axonics under its wing and is expected to further expand its business footprint in the urology and neuromodulation fields through Axonics' rich product portfolio and technological advantages.

This acquisition will not only enhance Boston Scientific's competitiveness in the fields of urology and neuromodulation but also inject new vitality into its future business growth. With the intensification of global aging trends and the rising incidence of urinary and bowel dysfunction, the market demand for neuromodulation technology will continue to grow. By acquiring Axonics, Boston Scientific will undoubtedly secure a more advantageous position in this market competition.

Notably, Boston Scientific's Q3 2024 financial report also fully demonstrates the company’s strong operating performance and growth momentum. Specifically, Boston Scientific’s net sales reached $4.209 billion, representing a reported growth rate of 19.4% and an organic growth rate of 18.2% compared to the same period last year. Among these, urology revenue reached $532 million, with a reported growth of 10.3%, while neuromodulation revenue reached $268 million, with a reported growth of 17.0%. These figures not only further highlight Boston Scientific’s competitive edge in the market but also lay a solid foundation for its future business expansion.

Neuromodulation Booms

Giants at Home and Abroad Compete Fiercely

Neuromodulation Technology as a Cutting-Edge Medical Approach is Gradually Becoming Key to Improving Patients' Quality of Life and Enhancing Neurological Function.By precisely modulating neurons or neural signals in adjacent or distant regions of the central nervous system, peripheral nervous system, and autonomic nervous system, this technology is showing broad application prospects in an increasing number of disease diagnosis and treatment fields.In recent years, neuromodulation technology has made remarkable progress, and its market has also entered a period of rapid growth.

According to Mordor Intelligence data, the neuromodulation market size is projected to reach USD 6.12 billion in 2024 and is expected to climb to USD 9.26 billion by 2029, with a compound annual growth rate (CAGR) of 11.20% during this period. This booming market has not only attracted significant attention from numerous companies both within and outside China but also spurred intense competition and a wave of innovation within the industry.

In the field of neuromodulation, Medtronic, as a pioneer in the industry, began its in-depth work many years ago and currently has impressive performance in several细分 fields such as deep brain stimulation systems (DBS), vagus nerve stimulation systems (VNS), spinal cord stimulation systems (SCS), and sacral nerve stimulation systems (SNM).

Specifically, Medtronic is a pioneer in deep brain stimulation (DBS) therapy. Since its DBS system entered China in the late 1990s, it has undergone multiple iterations and upgrades. From the initial single-channel Soletra™ and dual-channel Kinetra™ DBS systems, to the world's first rechargeable brain pacemaker, the Activa™ series, and then to the latest Percept™ PC, a smart, sensing brain pacemaker compatible with full-body 3.0T MRI scans, Medtronic has continuously advanced DBS technology, providing patients with more precise and intelligent treatment options.

In the SCS field, Medtronic has also excelled. From the ltrel™ 3 Spinal Cord Stimulation System initiating the clinical application of this therapy in China, to the rechargeable RestoreSensor™, the non-rechargeable PrimeAdvanced™, and then to the world's smallest and 1.5T MRI-compatible rechargeable spinal cord stimulation system Intellis™, Medtronic has continuously evolved its SCS technology. In 2024, Medtronic further expanded the indications for SCS by launching Vanta™, the world’s only non-rechargeable spinal cord stimulation system featuring multi-position instant sensing adjustment AdaptiveStim™ and the high-performance patented stimulation technology DTM™-E.

As the pioneer of sacral neuromodulation therapy, Medtronic also has deep technical expertise in the SNM field. Its InterStim™ Sacral Neuromodulation System offers patients a visible, predictable, and adjustable treatment experience. In recent years, Medtronic has introduced the new SureScan™ lead and intelligent programmer, which are compatible with full-body 3.0T and 1.5T MRI scans, providing patients with more convenient and safer treatment options.

In addition, Medtronic has introduced advanced therapies such as Targeted Drug Delivery (TDD) and radiofrequency ablation focused on metastatic bone tumors, filling the gap in China's neuromodulation-related fields and demonstrating its continuous exploration in technological innovation.

Facing the huge potential of the neuromodulation market, multinational giants such as Boston Scientific, Abbott, and LivaNova have also stepped up their investments. In 2023, Boston Scientific acquired the U.S. medical technology company Relievant Medsystems for a high price of $850 million. The latter owns the only FDA-approved system for treating discogenic pain, which undoubtedly adds significant weight to Boston Scientific's competitiveness in the field of chronic pain treatment.

In the Chinese market, as neuroregulation technology continues to become more widespread and advanced, foreign companies are accelerating the introduction of innovative products into China. At the same time, domestic companies such as PINS Medical and SceneRay are catching up, actively promoting the research and development and commercialization of neuromodulation products.

This year, Boston Scientific's "Implantable Deep Brain Stimulation Electrode" successfully obtained NMPA innovative product registration approval, providing a new auxiliary treatment option for patients with mid-to-late stage levodopa-responsive Parkinson's disease symptoms. Not to be outdone, PINS Medical also gained NMPA approval for four innovative products, including its implantable deep brain stimulation electrode lead kit, marking the first directional deep brain stimulation product made in China. This signifies a new breakthrough in China's neuromodulation field.

Industry insiders indicate that the neuromodulation technology market will continue to maintain a rapid growth trend, and the competition between companies in and outside of China will become increasingly intense. In this market full of opportunities and challenges, those who can continuously innovate and optimize product performance and service quality will stand out in this war without gunfire, becoming leaders in the industry.

Editor: Wanwan