Friday Five - The medtech week in review

Rumour confirmed: Johnson & Johnson snaps up Auris Health in $5 billion-plus deal

Johnson & Johnson has scored the biggest medtech M&A deal this year to date by agreeing to pay up to $5.75 billion for robotic endoscopy specialist Auris Health. The news comes three weeks after unconfirmed reports that the healthcare giant was making a play for Auris.

Auris’ Monarch system is already cleared for use in bronchoscopy but it is expected that the platform will be developed for a wider range of indications. The company was founded by Fred Moll, the man behind surgical robotics leader Intuitive Surgical, as well as other notable movers in the robotics scene like Mako, which was acquired by Stryker and is now a key driver of its buyer’s knee implant sales. Moll will be joining Johnson & Johnson, post-acquisition.

The move signals Johnson & Johnson’s increased commitment to the surgical robotics space; the group already has an orthopaedic robotics platform from Orthotaxy and a digital surgery platform that is being developed by Verb Surgical, the joint venture Johnson & Johnson has with Verily. Auris will be a significant addition to Johnson & Johnson, raising the question as to how much longer Intuitive Surgical can hold onto its leadership position.

 

[See The Wider View: Will Johnson & Johnson’s robotics offensive put Intuitive on wobbly ground?]

 

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Rumour still flying: Smith & Nephew in talks to get into spine

Smith & Nephew was the subject of a more recent M&A rumour, with the alleged target being spine technology company NuVasive. Citing sources close to the matter, the Financial Times reported that Smith & Nephew is considering paying in excess of $3 billion for the company, which is the leader in minimally invasive spine surgery and pioneered the lateral access spine procedure.

Smith & Nephew had been very vocal during its latest Q4 2018 earnings call about doing more M&A this year to drive growth, a plan to which investors seemed very receptive.

However, the rumour that Smith & Nephew might be going for NuVasive, which would give the former first-time entry into an adjacent market that on the whole is not growing very fast, did not seem to be much welcomed news by the markets as reflected in sliding share price of Smith & Nephew following the Financial Times report.

 

[See The Wider View: Jury still out on whether a Smith & Nephew/NuVasive combo has legs]

 

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Lest we forget, Edwards Lifesciences still has a critical care business that it is expanding

Transcatheter heart valve therapies undoubtedly make up Edwards Lifesciences’ key business focus today but the company has not been neglecting its critical care unit, which posted 2018 sales of $674.5 million (up 12 percent year-over year) and accounted for 18 percent of total revenue.  Edwards Lifesciences announced this week that it was acquiring CAS Medical Systems, a developer of noninvasive systems for monitoring tissue oxygenation in the brain, in a deal valued at $100 million.

CASMed’s FORE-SIGHT cerebral oximetry technology will be integrated into Edwards Lifesciences’ Hemosphere critical care platform; sales of FORE-SIGHT is reported to grow at double-digit rates.

 

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Could a major merger be in the works to disrupt top 20 list?

This year’s top 20 medtech league table - based on the latest fiscal 2018 sales figures - shows very little movement in rankings, especially among numbers 11 (Boston Scientific) and 20 (Terumo). But looking ahead, what is the likelihood that the industry might see a merger of two mid- to heavyweight players this year, causing disruption to the status quo?

Boston Scientific had been very acquisitive in 2018 and it has already indicated that the pace of M&A in 2019 will not match that of the previous year; what of the other players in the top 20 like Zimmer Biomet, Baxter or even Terumo?

 

[See The Wider View: Medtech Top 20 - Little change in latter 10 but will there be a major merger to switch things up?]

 

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IBM Watson makes inroads into data analytics for predicting heart disease risk

Expanding on their existing partnership, IBM Watson Health and the Broad Institute of MIT and Harvard have embarked on a three-year project to develop algorithms that scour data from population- and hospital-based biobanks, as well as from electronic health records, make sense of it and from this build tools that physicians can use to predict patients’ genetic risk of developing cardiovascular disease.

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