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Johnson & Johnson Officially Announces Completion of Acquisition of ShockWave Medical, Which Now Becomes Part of Johnson & JohnsonAnd will operate as an independent business unit within Johnson & Johnson Medical Technologies.

On April 5, 2023, Johnson & Johnson and Shockwave Medical announced that they had entered into a definitive acquisition agreement.

Johnson & Johnson to Acquire All Outstanding Shares of Shockwave Medical for $335.00 Per Share in Cash, Valuing the Company at Approximately $13.1 Billion, a 4.7% premium over Shockwave's SWAV (closing price of $319.99 on Thursday). Johnson & Johnson intends to fund this transaction through a combination of cash and debt. The deal is expected to be completed by mid-2024.

Shockwave Medical, Inc. is the manufacturer of ultrasonic catheters. It was founded in California in 2009 and listed on NASDAQ in April 2019, focusing on treating calcified lesions in the cardiovascular system.

The highlight of this company is that it has pioneered the application of the concept of ultrasonic lithotripsy in urology to the treatment of vascular calcification. This technology is called "Intravascular Lithotripsy" (abbreviated as "Shockwave IVL").

And applied it to the development of its Shockwave C2 device. Relying on this core product, Shockwave's market value increased more than 10 times and ranked 99th in the 2022 Global Medical Device Companies Top 100 list with a revenue of $237 million.

Shockwave IVL

Previously, vascular calcification was a significant challenge and problem for surgeons during interventional procedures. The emergence of Shockwave IVL represents a groundbreaking and disruptive innovation in the field of interventional therapy.

This technology can be applied throughShockwave BalloonThe acoustic pressure waves generated by intravascular pulses loosen the calcification without affecting the integrity of the vascular intima, achieving the effect of modifying calcified plaques. The blood vessels can be safely dilated at low pressure, providing favorable conditions for subsequent stent placement and full expansion, while reducing the risks of perforation and distal embolism.

IVL not only works on superficial calcification but is also the only technology that has a therapeutic effect on deep calcification. It addresses some of the shortcomings of current pre-treatment techniques for severely calcified lesions, achieving true vascular dilation without injury.

Since its commercialization in 2018, this product and technology have received high clinical evaluations abroad, and doctors in China also widely approve and accept it. In the 2021 edition of the "Chinese Expert Consensus on Diagnosis and Treatment of Coronary Artery Calcification," it was referred to as the "terminator" of coronary artery calcification and is also the only intravascular lithotripsy product approved for marketing internationally.

Acquisitions in 2023

Notably, just in early April last year, Shockwave completed the acquisition of valve company Neovasc for $147 million (992 million RMB).

At that time, Shockwave planned to merge Neovasc's angina stent with the company’s cardiac device business to accelerate its entry into the refractory angina market.

Shockwave Medical had been rumored to be acquired many times before.There were also media reports in April and May last year.WeighMedtronic and Boston Scientific are potential acquirers.

Boston Scientific Acquisition Rumors

On April 22, 2023, according to Bloomberg, Boston Scientific Corporation may acquire ShockWave Medical, a cardiovascular medical device company, to expand its cardiac business portfolio. Following the news, the stock price of ShockWave Medical (SWAV.US) surged, rising over 14% at one point. By the end of the morning session that day, the increase stood at 10.22%, with a market value reaching $10.454 billion (approximately RMB 72.048 billion).

If the deal goes through, it will become the largest acquisition in Boston Scientific's recent history. Analysts at BTIG said that the acquisition could be Boston Scientific’s "response" to Abbott's previous acquisition of a cardiovascular company; and as the cost of taking action, Boston Scientific will face opposition from antitrust regulators.

Upon closer inspection, the perspective becomes clear. Boston Scientific and Abbott are both leading players in the global cardiovascular stent market, with a long-standing history of competition. In February 2023, Abbott announced plans to acquire Cardiovascular Systems, Inc. (CSI), a publicly listed cardiovascular device company, for $890 million (approximately RMB 6.037 billion), expanding its cardiovascular device portfolio.

ShockWave Medical's product is the only intravascular shock wave product approved for marketing internationally. Thus, Boston Scientific's acquisition of ShockWave Medical is seen in the industry as a "counterattack" to Abbott's purchase of Cardiovascular Systems Inc. (CSI).

In fact, as a global cardiovascular giant, Boston Scientific Corporation has a comprehensive product layout in the field of cardiac interventional treatment, covering the entire process of coronary artery intervention. The products of ShockWave Medical, Inc. are highly complementary to those of Boston Scientific, making this combination perfect for the medical market.

However, according to Bloomberg, the acquisition talks between Boston Scientific and Shockwave Medical have failed.The reason for the failed negotiation between Boston Scientific and Shockwave was the inability to reach an agreement on price. According to The Wall Street Journal, Shockwave had previously claimed to be seeking a quote of around $300, while the current market price is $289.

It is reported that Boston Scientific offered a price of $275 per share, half in cash and half in stock; the transaction was terminated due to the price discrepancy.

Johnson & Johnson, Medtronic

On May 10, 2023, Shockwave Medical's stock rose by 1.36%, leading to speculation that the company would face more acquisition options. According to an unnamed industry insider cited by The Wall Street Journal, Shockwave Medical is expected to face acquisition interest from Johnson & Johnson and Medtronic.

In the field of vascular calcification, multiple medical device companies are also involved in development. Among them, Medtronic, as the leader in the cardiac field, has mainly focused on this area through its EUPHORA SEMICOMPLIANT Balloon Dilatation Catheter and NC EUPHORA NONCOMPLIANT Balloon Dilatation Catheter. These two products are devices used to treat vascular stenosis and calcification and can help restore the natural patency of blood vessels. The acquisition of Shockwave Medical should provide significant support.

Johnson & Johnson stated in 2023 that it is seeking opportunities to merge with or acquire companies that can add value to its cardiovascular product portfolio, and added that many of the future deals may be small "complementary" acquisitions. In 2022, the company acquired the heart pump manufacturer for $16.6 billion.Abiomed。

Abiomed owns Impella®Heart PumpA series of products, including different models such as Impella RP and Impella CP, are used for patients with severe coronary artery disease requiring high-risk PCI (percutaneous coronary intervention), AMI (acute myocardial infarction) cardiogenic shock, or right heart failure, etc. This expands Johnson & Johnson's presence in the cardiovascular field.

Shockwave Medical Finally Acquired by Johnson & Johnson, Expected to Have a Profound Impact on the Industry and Market Landscape.

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