Top 5 Medical Device M&A Deals of H1 2024: Johnson & Johnson, BD, Boston Scientific Lead Strategic Acquisitions

Source |SiYu MedTech

As of July 2024, there have been several mergers and acquisitions in the global medical technology field exceeding one billion dollars, with the largest being Johnson & Johnson's acquisition of Shockwave Medical for $13.1 billion.Review of the 5 Major Medtech M&A Deals Worth Watching in the First Half of 2024:

May 31, 2024Johnson & Johnson announced the completion of its acquisition of Shockwave Medical, a manufacturer of intravascular lithotripsy (IVL) technology, for $13.1 billion (approximately 94.864 billion RMB).

The latest report shows that the company's annual revenue reached 490 million US dollars in 2023, approximately 3.5 billion RMB, climbing 11 places to rank 88th in the annual Top 100 Medical Technology Companies list.

The addition of Shockwave Medical's commercially available intravascular lithotripsy platform will complement Johnson & Johnson's Abiomed heart recovery and Biosense Webster electrophysiology technologies.

The company completed the acquisition at the end of May, with $77 million in sales related to the acquisition in the second-quarter earnings report, but also incurred costs associated with the transaction.

The company raised its full-year sales guidance by $500 million to reflect the large acquisition in the second quarter but fell short of its medical technology revenue target.

Johnson & Johnson expects sales growth to accelerate in the second half of the year, supported by "favorable pricing." CFO Joe Wolk said that through initiatives such as the acquisition of Shockwave Medical, the company can secure sales globally.

In June 2024, BD Medical announced,Agree to acquire Edwards Lifesciences' Critical Care division for $4.2 billion (approximately 30.432 billion RMB) in cash., expand BD Medical's medical monitoring product line, further solidifying its position in the global medical device market.

To fund the acquisition, BD plans to use approximately $1 billion in cash and $3.2 billion in new debt.

BD executives expect the deal to drive immediate earnings growth and deliver significant returns, as critical care generated over $900 million (approximately 6.521 billion RMB) in revenue in 2023 and employs around 4,500 people.

The technologies included in this acquisition are: Swan Ganz pulmonary artery catheters, minimally invasive sensors, non-invasive blood pressure cuffs, tissue oximetry sensors and monitors.

For Edwards and BD Medical, this acquisition is a win-win.

Edwards Lifesciences will use after-tax cash proceeds to fund strategic growth investments, focusing on expanding opportunities in the cardiovascular and surgical fields, particularly in TAVR, TMTT, and surgical businesses, with plans to increase investment in interventional heart failure technologies.

Previously, on June 20, 2023, BD Medical announced that it had signed a definitive agreement to sell its surgical instruments platform to STERIS for $540 million (approximately RMB 3.87 billion).

According to the press release, divesting the surgical instrument platform helps advance BD's 2025 Strategy ("BD 2025 strategy"), marking a significant step in streamlining BD's product portfolio and manufacturing footprint.

BD 2025 Strategy Contains Three Key Words: "Growth," "Simplification," and "Empowerment."

January 8, 2024Boston Scientific Announces Agreement to Acquire Axonics, a Manufacturer of Devices for Treating Urinary and Bowel Dysfunction, for $3.7 Billion in Cash (Approximately 26.2 Billion RMB)

Axonics' products are highly complementary to Boston Scientific's urology business, which accounts for approximately 14% of its estimated sales in the fiscal year 2023.

After the acquisition is completed, Boston Scientific can ride the wave of Axonics to enter the high-growth sacral neuromodulation market, once again coming head-to-head with Medtronic.

However, the patent dispute between Axonics and Medtronic has a long history, with both parties having been in court and at the Patent Trial and Appeal Board (PTAB) for review and litigation on patent issues from 2019 to 2021.

• In November 2019, Medtronic filed a lawsuit against Axonics in the U.S. District Court for the Central District of California, alleging that Axonics infringed on four patents related to Medtronic's SNM technology for bowel and bladder disorders.

• In response, Axonics filed seven validity review petitions against Medtronic's "069" patent, which relates to charging implantable medical devices with batteries.

• In 2020, the U.S. Patent Trial and Appeal Board (PTAB) made a decision rejecting one of Axonics' claims seeking to invalidate a Medtronic patent.

• In 2021, the PTAB rejected Axonics' request to invalidate three Medtronic patents in an intellectual property infringement lawsuit related to the InterStim neuromodulation device.

In March 2024, Medtronic announced that it had filed a lawsuit with the U.S. International Trade Commission (ITC) to block the sale of certain Axonics devices.

In April this year, Boston postponed the expected completion of the deal to the second half of the year after receiving a second request from the Federal Trade Commission.

Axonics is one of the larger acquisitions by Boston Scientific in recent years, but Jonathan Monson, Senior Vice President of Investor Relations, stated that as the company continues to grow, the scale of future deals is expected to gradually increase to achieve strategic alignment.

In February 2024, Agiliti, the leader in the U.S. third-party medical equipment maintenance industry, announced that after three years of being listed on the New York Stock Exchange, the company had reached a merger agreement with its majority shareholder, Thomas H. Lee Partners (THL):

The latter's subsidiary will acquire Agiliti shares for a total consideration of $2.5 billion (approximately RMB 18 billion). After the transaction is completed, Agiliti will be delisted and become a privatized company.

Agiliti is a service provider in the healthcare industry, went public with an IPO of $368.4 million in April 2021, at the peak of the COVID-19 pandemic, when the pricing for medical equipment repairs surged and order volumes skyrocketed.

In 2021, the company's revenue exceeded $1 billion, a year-on-year increase of 34%. In 2022, revenue grew by 8% to reach $1.12 billion.

The company provides medical equipment management and service solutions to approximately 7,000 hospitals worldwide, as well as services such as maintenance and equipment leasing for surgical instruments, biomedical equipment, and imaging diagnostic systems.

Agiliti announced that the acquisition transaction was completed in May.

June 2024,Boston Scientific Announces Final Agreement to Acquire Silk Road Medical

Silk Road Medical is a medical device company that has developed an innovative platform product to provide stroke prevention for carotid artery patients through minimally invasive surgery — Transcarotid Artery Revascularization (TCAR). The acquisition price is $27.5 per share, with an equity value of approximately $1.16 billion.

Once the general closing conditions are met, Boston Scientific expects to complete the transaction in the second half of 2024. Silk Road Medical's net revenue for 2024 is estimated to reach approximately $194 million to $198 million, representing a 10%-12% increase from the previous fiscal year.

The transaction is expected to have no significant impact on Boston Scientific's adjusted earnings per share (EPS) for 2024 and 2025, with an increase thereafter.

JPMorgan Chase analyst Robbie Marcus said that this deal "is a good bargain for Boston, as the acquisition cost is not high, but it is significant enough to drive the growth of the peripheral intervention business."

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Mergers and acquisitions in the medical device industry have always been a double-edged sword, bringing both opportunities and risks.

Companies face the challenge of integrating products and operations but can quickly acquire advanced technologies and product lines through mergers and acquisitions to expand their markets.

Most of the deals by medical device giants have already been announced as completed. How the acquired technologies and product lines perform remains to be seen in the financial reports for the second half of the year.