Johnson & Johnson in Advanced Talks to Acquire Shockwave Medical for Over $10 Billion, Potentially Reshaping Global MedTech Leadership

Mar 27, 2024 18:50 CST Updated 18:50

Shockwave Medical

Cardiovascular Disease Treatment Device Developer

Johnson & Johnson

Healthcare Product Manufacturers, Health Service Providers

March 26，The Wall Street Journal reported: Shockwave Medical, a cardiovascular device company listed on Nasdaq, may be acquired by Johnson & Johnson.

The Wall Street Journal cited sources familiar with the matter as saying:If the acquisition negotiations are successful, it may lead toIn the coming weeksFinalize the deal. Another bidder may also be seeking to merge with Shockwave. The specific name has not been disclosed.

This is not the first time Shockwave has been a potential acquisition target. Last year, media reports indicated that Johnson & Johnson, Medtronic, and Boston Scientific were all potential bidders. According to industry sources, another bidder is likely one of the aforementioned giants.

This news spread, directly pushingShockwave'sThe stock price rose more than 11% to $320.46 per share. This price is from when the company first went public in 2019.10x。

Currently,Shockwave's total market value reaches$11.82 billionIf Johnson & Johnson acquires, it will be a large-scale merger and acquisition worth over tens of billions of dollars. If Johnson & Johnson succeeds in the bidding, it will regain the lead over its competitors and rank first in the global medical device industry.

Of course, a spokesperson for Shockwave Medical stated: "The company's policy is not to comment on rumors or speculation."

Core Technology:Intravascular Lithotripsy

ShockwaveFounded in 2009, owningBloodIntratubal LithotripsyProcedure(abbreviated as IVL technology)The core is to use shockwave therapy to treat patients with arterial calcified plaques.

As heart disease patients age and their condition progresses, plaque in the arteries gradually calcifies. This bone-like structure can cause coronary artery stenosis, reduce coronary blood flow, and eventually lead to complete coronary occlusion and the appearance of calcified lesions. Improper management of calcified lesions may result in increased adverse events during the acute phase and poorer long-term clinical outcomes.

IVL can preferentially create cracks in plaques through arterial soft tissue.This method has been consistently used for treating kidney stones.

The acoustic pressure waves used in Shockwave's IVL technology are non-focused, low-energy, arranged in series, and cause no thermal damage. This unique design makes the Shockwave IVL technology extremely safe, as the shockwave energy only affects hard calcified lesions and does not harm the normal structure of the blood vessel wall.

In 2023, Shockwave's major news included the acquisition of Neovasc and the Reducer system for treating refractory angina, raising $650 million in a private placement, and launching the Shockwave C2+ Coronary IVL Catheter following FDA approval.

Earlier this year, the company's leader mentioned that launching two to three products annually has driven the company's growth.

In May 2022, Shockwave received NMPA approval to market the Shockwave IVL System, as well as the Shockwave C2 Coronary IVL Catheter and Shockwave M5 and S4 Peripheral IVL Catheters in China.

In March 2021, Genesis MedTech and Shockwave Medical formed a joint venture to partner in distributing Shockwave’s products in China; leveraging Genesis MedTech's R&D and manufacturing base in Wuxi to accelerate the production of Shockwave’s products for the local Chinese market.

If Johnson & Johnson acquires, it will become the No. 1 in the medical device industry.

In 2023,Shockwave Revenue$7.30 billion, an increase of nearly 50% year-over-year.

However, correspondingly, its R&D investment increased by 77% to US$146 million; overall operating expenses increased by 59% to US$476 million.

Thus, the net profit reached 147 million US dollars, a 32% decrease compared to 216 million US dollars in 2022.

▲Shockwave's Financial Report Data

Meanwhile, Johnson & Johnson Medical is the world's second-largest medical device company, with revenue reaching $30.4 billion in 2023.

If Johnson & Johnson's medical acquisition is successful, it will be compoundedShockwave 2023With $7.3 billion in revenue, Johnson & Johnson Medical’s annual revenue could reach $31.13 billion, with a gap of only about $1 billion compared to Medtronic, the global leader in medical devices. (Rough comparison for reference only.)

AndAt the 2024 JPM Conference, Medtronic stated that its current top priority is profitability driven by performance. In 2024, the company will continue to focus on optimizing its sales network and production capacity, reducing suppliers and manufacturing sites.

All this news, taken together, suggests that this potential acquisition could help Johnson & Johnson reclaim the top spot in the medical device industry.

In addition to causing a major shake-up across the medical device industry, this potential acquisition is also expected to propel Johnson & Johnson to new heights in the cardiovascular field.

In November 2022, Johnson & Johnson announced the acquisition of Abiomed, a leader in the artificial heart field, for $16.6 billion. With its exclusive product—the world's only FDA-approved interventional cardiac pump, Impella—it contributed $1.306 billion in revenue in 2023.

In 2023, the cardiovascular business revenue of Johnson & Johnson Medical reached 5.994 billion US dollars, compared with the revenue of Edwards Lifesciences (ranked fourth in the cardiovascular field) ($6.005 billion) are almost on par. ButThe addition of Shockwave will solidify Johnson & Johnson's position as the fourth-largest player in the global cardiovascular medical device market in 2024.

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