According to Evaluate data, the global medical device market was valued at $405 billion in 2017 and is projected to reach $594.5 billion by 2024, representing a compound annual growth rate (CAGR) of approximately 5.6%. By subsector, in vitro diagnostics (IVD) accounts for the largest share, followed by cardiovascular, imaging equipment, and orthopedics. Driven by an increasingly aging population and consumption upgrades, the medical device industry is embracing new development opportunities.So, what major events occurred in the medical device industry in 2018? Let’s take a look.

(The following is listed in chronological order of event occurrence, without distinction of priority.)

Amazon, JPMorgan Chase, and Berkshire Hathaway Establish Healthcare Company

On January 30, 2018, Amazon, JPMorgan Chase, and Berkshire Hathaway, Warren Buffett’s conglomerate, jointly announced plans to establish an independent healthcare company “free from profit incentives and constraints,” aimed at improving healthcare conditions for U.S. employees. In its initial phase, the new venture will focus primarily on technology-driven solutions. The entry of these internet giants is poised to disrupt the existing landscape of the healthcare industry.

Siemens Healthineers Successfully Listed on the Frankfurt Stock Exchange

On March 16, 2018, Siemens Healthineers successfully listed on the Frankfurt Stock Exchange. The initial public offering (IPO) of Siemens Healthineers was one of the largest in Germany and among the biggest in Europe. The IPO raised €4.2 billion ($5.2 billion), which will be used for future acquisitions and investments to enhance the independent value of Siemens Healthineers. According to the prospectus, the imaging business is currently the largest profit driver for Siemens Healthineers. In fiscal year 2018, Siemens Healthineers achieved revenues of €13.4 billion, with the imaging segment accounting for 60.7% of total revenue.

GE Healthcare Announces Independent Operation

On June 26, 2018, the President and CEO of GE Healthcare announced via an internal email a plan to spin off its healthcare business into an independent medical company. Following the separation, GE Healthcare will enjoy greater freedom and flexibility to strengthen GE’s leadership in the healthcare sector and invest in future technologies. Under the plan, 80% of GE Healthcare’s shares will be held by GE shareholders, while the remaining 20% will be used to generate cash flow. The spin-off of GE Healthcare is expected to be completed within the next 12 to 18 months. The streamlined GE will focus on aviation, power, and renewable energy as its core businesses.

Danaher Announces Spin-off and Independent Listing of Its Dental Business

On July 19, 2018, Danaher issued an announcement stating its intention to spin off its dental business into an independent publicly listed company (DentalCo), with the transaction expected to be completed in the second half of 2019. Upon completion of the spin-off, the existing Nobel Biocare, Ormco, and KaVo Kerr brands within the dental segment will constitute the newly formed DentalCo. As an independent entity, DentalCo will be better positioned to drive operational effectiveness and focus on investment opportunities. Danaher’s dental business reported revenues of $2.8 billion in 2017; as of the second quarter of 2018, net earnings amounted to $673 million, representing a year-over-year increase of 20.0%.

Mindray Medical (300760) Listed on the Shenzhen Stock Exchange

On October 16, 2018, Mindray Medical listed on the Shenzhen Stock Exchange. Its initial public offering (IPO) set a record for the largest IPO in the history of the ChiNext board. The total funds raised amounted to RMB 5.93 billion, which Mindray Medical plans to allocate to seven projects, including the expansion of its Guangming production base. Mindray Medical is primarily engaged in the research and development, manufacturing, marketing, and servicing of medical devices, with its product portfolio covering three core sectors: Patient Monitoring & Life Support, In-Vitro Diagnostics, and Medical Imaging. From January to September 2018, Mindray Medical reported revenues of RMB 10.28 billion, representing a year-on-year increase of 23.2%.

Siemens Healthineers Invests 3 Billion Yuan to Build New Laboratory Diagnostics Factory in Shanghai

On October 19, 2018, the groundbreaking ceremony for Siemens Healthineers’ new laboratory diagnostics manufacturing facility in Shanghai was successfully held. The new laboratory diagnostics plant will be Siemens Healthineers’ first in vitro diagnostic (IVD) reagent manufacturing site in the Asia-Pacific region, producing clinical chemistry and immunoassay reagents. Furthermore, the Shanghai campus will also become Siemens Healthineers’ first production base in the region to integrate both in vivo and in vitro diagnostic products.

Domestically Produced High-End Medical Imaging Diagnostic Equipment PET/MR Receives Certification and Is Launched to the Market

On October 28, 2018, Zhongshan Hospital Affiliated to Fudan University and Shanghai United Imaging Healthcare Co., Ltd. announced that the first domestically produced integrated positron emission tomography/magnetic resonance imaging (PET/MR) scanner had received certification from the National Medical Products Administration and was officially launched on the market, following clinical validation in more than 1,500 cases.

Johnson & Johnson Signs RMB 4 Billion Bulk Order with Jointown

On November 6, 2018, during the first China International Import Expo, Jointown Pharmaceutical Group signed an agreement with Johnson & Johnson, under which the former would purchase approximately RMB 4 billion worth of ultrasonic scalpels and staplers from the latter. Jointown and Johnson & Johnson have maintained a long-term partnership, and the value of this contract accounts for one-quarter of Jointown’s total annual import volume.

Smith Group Announces Divestiture of Healthcare Business

On November 14, 2018, the UK-based Smiths Group (SMIN.L) announced plans to divest its healthcare business to focus on industrial technologies. Smiths Medical is currently valued at approximately $3.7 billion. The unit has been hit by delayed product launches, loss of certification under new regulations, and the loss of two contracts in the United States. In fiscal year 2018, Smiths Medical generated revenue of $1.13 billion, a year-on-year decrease of 7%, accounting for 28% of the Smiths Group’s total revenue. Poor performance at Smiths Medical dragged down the group’s overall growth, becoming the catalyst for the decision to spin off the healthcare business.

Hubei to Build China’s First 5G Smart Hospital

On November 27, 2018, China Mobile Hubei Branch signed a co-construction cooperation agreement with Union Hospital, Tongji Medical College, Huazhong University of Science and Technology. The two parties will carry out cooperation and research in areas such as 5G technology and its healthcare applications, smart hospital campuses, intelligent operations and maintenance, and automated logistics, aiming to build Hubei’s first 5G-enabled smart hospital. Under the agreement, China Mobile Hubei and Wuhan Union Hospital will conduct extensive innovative research in fields including novel diagnosis and treatment, emergency care, and smart hospital campuses, with a focus on developing projects such as remote diagnosis, remote surgery, robotic ward rounds, and wearable medical devices.

Appendix: Review of M&A Transactions in the Medical Device Industry in 2018

● April 2, 2018, GE Healthcare announced that it would10.5sold its information technology business to private equity firm Veritas Capital for $1 billion, a business that includes three major assets: financial management, outpatient care, and employee management software.

● May 15, 2018, Illumina announced the acquisition of Edico Genome, with a spokesperson confirming that the acquisition amount was1hundred million U.S. dollars. Edico Genome provides accelerated solutions for next-generation sequencing (NGS) data analysis, reducing data storage footprint and time to results.

● June 5, 2018, Philips announced it would spend5.37acquired imaging manufacturer EPD Solutions for hundreds of millions of US dollars. EPD, a subsidiary of the Hobart Group companies, is dedicated to improving the efficacy and efficiency of minimally invasive catheter-based treatments for arrhythmias. This acquisition will provide Philips with a 3D cardiac imaging system applicable to interventional imaging technologies.

● June 6, 2018, Johnson & Johnson received a binding offer from Fortive Corporation to acquire the Advanced Sterilization Products (ASP) division of Ethicon, Inc., with a total transaction value of approximately28billion. Ethicon’s Advanced Sterilization Products (ASP) division is a leader in innovative infection prevention solutions, with net operating revenue of approximately $775 million in 2017.

● June 14, 2018, Platinum Equity at approximately21Acquisition of Johnson & Johnson’s Diabetes Care Business, LifeScan, for $1 Billion. Johnson & Johnson’s diabetes care business includes Animas Corporation, Calibra Medical Inc., and LifeScan. LifeScan, Inc. is a leading manufacturer of blood glucose monitoring systems in the United States. Since 2012, revenue from Johnson & Johnson’s diabetes care business has been continuously declining due to intensified competition. In 2017, Johnson & Johnson announced that it was evaluating all its diabetes care businesses and considering strategic options.

● July 3, 2018, Grand Pharma and its partner CDH Investments have14acquired Australian liver cancer treatment device manufacturer Sirtex Medical for hundreds of millions of US dollars. Sirtex Medical, an Australian company specializing in interventional oncology, offers SIR-Spheres Y-90 resin microspheres as its flagship product—a permanent, single-use implantable medical device indicated for the treatment of Stage I and Stage II liver tumors.

● July 12, 2018, Sinopharm Group announced that it would purchase a 60% equity stake in China Scientific Instruments Co., Ltd. from Sinopharm Holdings, with the consideration being51.08100 million yuan.

● August 30, 2018, orthopedic device manufacturer Stryker announced the $1.4 billion acquisition of K2M, a publicly listed company specializing in minimally invasive spine surgery. K2M is a publicly traded company headquartered in Leesburg, Virginia, with annual sales reaching3hundred million USD, is the leader in the complex spine market for 3D-printed implants.

● September 2018Johnson & Johnson acquires German 3D-printed spinal implant manufacturer Emerging Implant Technologies (EIT), with the acquisition amount undisclosed. EIT is a privately held manufacturer of 3D-printed titanium interbody implants for spinal fusion surgery.

● September 6, 2018, Boston Scientific announced that it would5$100 million in upfront cash, and payments of up to upon achievement of specified sales milestones1a payment agreement worth hundreds of millions of dollars to acquire Augmenix. Augmenix developed and commercialized the SpaceOAR Hydrogel System, designed to reduce the side effects of common radiation therapy for prostate cancer.

● September 20, 2018, Medtronic announced that it would16.4$100 million (approximately RMB 11.2 billion) to acquire the Israeli orthopedic robotics company Mazor Robotics. Mazor Robotics is an Israeli medical device company and a global leader in the manufacture of robotic guidance systems for spine surgery.

● September 27, 2018, Meinian Onehealth announced that its wholly-owned subsidiary, Mei'ai Investment, plans to invest2200million USD, subscribing for a 5% equity stake in ICDX and signing the Share Purchase Agreement.

● November 9, 2018, bioMérieux announced that it would2500acquired a 54% controlling stake in Suzhou Changguang Huayi Biomedical Engineering Co., Ltd. for €10 million. Suzhou Changguang Huayi specializes in automated immunoassay business.

● November 16, 2018, TIAA Bank with15$100 million acquisition of GE Healthcare's financed assets.

● November 22, 2018, Boston Scientific announced that it would42.4acquired British medical device manufacturer BTG for $X billion (approximately £3.3 billion) to strengthen its interventional medical product portfolio. BTG is an international medical device manufacturer and pharmaceutical company dedicated to developing commercialized medical products for critical care, oncology, neurology, and other diseases.

Source: New Materials Online