Johnson & Johnson's $13.1B Acquisition of Shockwave Medical Marks Year's Largest MedTech Deal as Intravascular Lithotripsy Becomes Fierce Competitive Arena

Nov 15, 2024 06:50 CST Updated 06:50

Johnson & Johnson

Medical Device R&D and Manufacturer

In April this year, Johnson & Johnson announced a cash acquisition of all outstanding shares of Shockwave at $335.00 per share, with the total transaction valued at approximately $13.1 billion, expected to become the largest medical device M&A deal of the year. The acquisition of Shockwave further expands Johnson & Johnson’s position in the cardiovascular intervention field and accelerates its transition into high-growth markets. On October 15, Johnson & Johnson Medical released its third-quarter financial report, showing global revenue of $22.5 billion (approximately 160.1 billion RMB), a year-on-year increase of 5.2%, reflecting strong performance in the third quarter. Global sales of Johnson & Johnson’s MedTech division reached $7.9 billion, growing by 5.8% year-on-year. The growth was primarily driven by products in the cardiovascular field, contact lenses in the vision care sector, and wound closure products in the general surgery field.

Alwide® Plus Valve Balloon Dilation Catheter (Official Website)

●Hotspots in the star track

Following the announcement by Mindray Medical, China's "leading medical device company," to acquire 21.12% of Huitai Medical's equity for 6.652 billion yuan, Johnson & Johnson's $13.1 billion deal has created the largest medical device merger and acquisition in history. The cardiovascular sector has undoubtedly become the hottest field this year. Both massive M&A deals target cardiovascular companies, both involved in the shockwave balloon catheter sector. Shockwave Medical, founded in June 2009 in California, USA, focuses on developing products for treating calcified cardiovascular diseases. It is the world’s first company to launch a "shockwave balloon catheter," aiming to establish a new standard for treating atherosclerotic cardiovascular diseases through its differentiated and proprietary localized delivery of acoustic pressure waves for treating calcified plaques. As early as 2023, rumors circulated that Boston Scientific, Medtronic, and Johnson & Johnson were competing to acquire Shockwave, which sufficiently demonstrates the enormous clinical value of intravascular shockwave technology. In 2023, Shockwave's total annual revenue reached $730.2 million, a 49% increase compared to the full year of 2022, with an annual gross profit of $634.8 million. Johnson & Johnson expects Shockwave’s future annual sales to reach at least $1 billion. Recently, Huitai Medical also stated on an investor interaction platform that its shockwave balloon is currently in the clinical preparation stage.

Shockwave Treatment Device (Source: Official Website)

● Significant clinical advantages, huge market potential

Coronary artery calcification has drawn significant attention due to the clinical treatment difficulties, surgical complexity, and poor prognosis, with the saying in the industry that "there’s nothing to fear except calcification." The intravascular lithotripsy (IVL) balloon technology mainly works by emitting non-focused, low-energy, pulsed shock waves during low-pressure balloon expansion to fragment vascular calcium, improve vascular compliance, and facilitate subsequent stent placement and deployment. It offers unique therapeutic effects for circumferential and eccentric calcifications. Compared with other surgical methods, it is characterized by minimal damage, fewer complications, and high efficacy, providing a new option for treating severe calcified lesions. The Shockwave IVL system consists of three parts: the IVL generator, IVL connector cable, and balloon catheter. Its treatment process can be divided into the following four steps:

(1) The IVL catheter is delivered to the calcified lesion via a 0.014-inch guidewire, and the integrated balloon is expanded to 4 atm (approximately 1.4 mm) to facilitate efficient energy transfer.

(2) The transmitter discharges to vaporize the fluid within the balloon, forming rapidly expanding and collapsing bubbles that generate acoustic pressure waves.

(3) The pressure wave generates a local field effect, penetrating vascular tissue and selectively crushing calcium on the inner side of the vessel wall and intima, while minimizing trauma to the vessel wall.

(4) After the modification of calcified material, the integrated balloon can then be used to dilate the lesion vessel at low pressure.

According to data from Shockwave, the potential global market for intravascular lithotripsy technology is nearly $10 billion, making it one of the most anticipated segments in the interventional vascular field in recent years. For example, the incidence of coronary artery calcification is positively correlated with age, occurring in about 50% of people aged 40-49 and approximately 80% of those aged 60-69, indicating significant room for market penetration. According to disclosed data from Shockwave, over 400,000 patients worldwide have received IVL treatment in the past five years, with 182,000 treated in 2023 alone, marking a year-over-year increase of approximately 49.2%, showcasing its vast market growth potential. Currently, Shockwave has entered hundreds of hospitals, including many grassroots-level hospitals.

● Technical Difficulties and Barriers

Key Points of Intravascular Shockwave Technology: First, the energy output parameters and whether they can achieve actual cracking of calcification; second, the difficulty in balloon design, which needs to consider wall thickness, semi-compliance, and how to reduce energy density so it functions effectively within the confined space of a blood vessel. Intravascular shockwave balloons also have limitations. They are unaffected by the degree of calcification, making them advantageous for opening calcified rings and restoring vascular compliance. Compared to plaque removal, they offer better safety but may struggle with eccentric thick calcifications and are significantly affected by elastic recoil. Simply increasing the number of pulses does not enhance lumen gain. Increasing both inflation pressure and pulse count has some effect, but excessive pressure increases the risk of vessel wall injury. Additionally, lesions that can be treated by rotational atherectomy may not be passable with a shockwave balloon.

●Many manufacturers are under research, and the competition is fierce.

According to statistics from OssDsign Medical Device Search, so far, six domestically produced shock wave balloon products from Chinese manufacturers such as Lepu Medical, Puchuang Medical, Zhonghui Medical, Saihe Medical, Jianwei Medical, and Blue Sail Boyuan have been approved for marketing in China. Most of these are primarily indicated for coronary use. Besides, many manufacturers targeting both coronary and peripheral indications are in the clinical registration phase. It is estimated that there are nearly 50 products under development, with more than ten expected to be launched in the coming two years, leading to inevitable intense commercial competition. In September this year, Johnson & Johnson announced FDA approval and the full-scale launch of its latest shock wave balloon product, Shockwave E8, in the United States. The Shockwave E8 is named after its balloon length (80mm), making it the longest shock wave balloon currently available, equipped with eight shock wave emitters inside the balloon.

Time to Market

Manufacturer

Product Model

Indications

2022.5

Gian Healthcare

Shockwave IVL

Coronary, Peripheral

2023.8

Zhonghui Medical

C-Wave®

Coronary, Peripheral

2023.10

Saihe Medical

LiqMagic C14

Coronary

2024.1

Lepu Medical

Vesscrack

Coronary, Peripheral

2024.3

Spectrum Medical

Sonico-CX®

Coronary

2024.8

Blue Sail Boyuan

Soni Cracker™-CL

Coronary

● How to Quickly Achieve R&D Certification

For innovative medical devices such as shock wave balloons, before the development of medical devices, the team needs to spend a lot of time and effort to understand market demands. Secondly, the latest technology and design must be adopted, making the technical requirements very high. The research and development team needs to possess deep professional knowledge and a technical background, and at the same time, they need to continuously innovate and explore in order to develop products that meet market demands. Additionally, the development of innovative medical devices requires strict clinical trials and approval procedures to ensure the safety and effectiveness of the products. Due to the high cost and long duration of clinical trials, coupled with strict and uncertain approval processes, the development and market launch of innovative medical devices face significant challenges.

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