Heading into 2022, many expected the rapid continuation of strong initial public offerings (IPOs) and merger + acquisition (M+A) activity. Wow, that was off. The underestimated implications of supply chain issues, geopolitical concerns, and Federal Trade Commission scrutiny led to decreases in both segments. However, there are still some M+As worth highlighting.
M+As and IPOs were down this year, which means we had to do a little extra digging to come up with our top list. Luckily, some interesting partnerships still took place. Did you see some of these acquisitions coming and did they make sense? Regardless, it makes for an interesting discussion heading into 2023. Before I get to my main list, here are a few points worth mentioning:
In the overall Life Science industry, IPO activity was down significantly. The first half of this year had only 16 IPOs, versus 68 IPOs in the first half of 2021.
Several big companies started the year by saying they planned on being aggressive with acquisitions in 2022. That didn’t materialize. In fact, MedTech acquisitions were down 85% in the first half of the year compared to 2021. Although, there seems to be some activity picking up in the second half of the year (see the list below).
Some experts predict that uncertain financial markets will make M+A a bumpy ride and may pause transactions into 2023. The good news is that innovation continues to thrive and investors are optimistic about what the future holds.
It’s always interesting to see how this niche space evolves and identify the strategies at play in its expansion. Technology continues to drive innovation, but money can be harder to come by, and exits are still a challenge for small players trying to justify relevance.
I’m keeping a close eye on valuations. So far, they seem to be doing okay, but the future is ambiguous. For now, let’s celebrate what happened this year. With that being said, here are my top five mergers + acquisitions for 2022 in chronological order.
My Top 5 Mergers and Acquisitions in the MedTech/Biotech Industry for 2022
1. Oracle Acquires Cerner ($28 Billion Value)
This action was announced in late 2021 but finally closed this year. In a blog on Cerner’s website, the company explains that this acquisition, which merges healthcare with new technologies, is the “future of healthcare.1” Given that there is a real need for coordinated care for patients across numerous platforms, this couldn’t be more obvious. Technology will continue to play a huge role in healthcare, and it’s neat to see a company like Oracle addressing this and taking initiative.
2. Stryker Acquires Vocera Communications ($3 Billion Value)
As mentioned in the previous acquisition, technology will help customers feel more connected. In this instance, a respected medical device company is trying to bridge that gap. In a press release on Vocera’s website, Stryker Chairman and CEO Kevin Lobo added:
“This acquisition underscores our commitment and focus on our customer. Vocera will help Stryker significantly accelerate our digital aspirations to improve the lives of caregivers and patients.2”
3. Thermo Fisher Buys The Binding Site ($2.6 Billion Value)
Thermo Fisher strengthens its specialty diagnostics portfolio by acquiring The Binding Site Group and their two tests for multiple myeloma from European private equity firm Nordic Capital in an all-cash transaction. Reuters reports that these tests are on track to deliver $220 million in revenue and will significantly contribute to the organization’s bottom line3. Thermo Fisher hopes this deal will close in the first half of 2023 as a major contributor to their specialty diagnostics platform, which accounts for about 10% of their business. This sounds like a nice acquisition to me.
4. Bain Capital Buys Olympus Science-Optics Unit ($3 Billion)
Olympus continues to restructure its business and has sold its microscope unit, Evident, to Bain Capital for $3 billion. This is their biggest diversification to date. They previously sold off their camera business which was losing money, but the microscope business proved profitable. Still, they want to focus on medical technology specifically geared toward respiratory, urology, and gastroenterology segments4.
5. Johnson & Johnson Buys Abiomed ($16.6 Billion)
This one is my favorite. I started my career at Johnson & Johnson (J&J) and went to Boston Scientific. The talk has always been about “not if, but when” J&J would buy Boston Scientific. They still haven’t, but they picked up a wonderful company in Abiomed. According to J&J’s press release, Abiomed will act as a standalone company, being one of the corporation’s 12 JJMT (Johnson & Johnson MedTech) priority platforms, which are valued by sales of at least $1 billion each. The “new” Johnson & Johnson strategy focuses on medical devices and pharmaceuticals according to Joaquin Duato, Chief Executive Officer of Johnson & Johnson. He added:
“We have committed to enhancing our position in MedTech by entering high-growth segments. The addition of Abiomed provides a strategic platform to advance breakthrough treatments in cardiovascular disease and helps more patients around the world while driving value for our shareholders.5”
The top companies in this industry are changing constantly. Even though IPOs and M+As were down for most of 2022, there appears to be an uptick in their occurrence. I can’t wait to see what happens in 2023.
Ken Dropiewski is a Partner with McDermott + Bull’s Life Science and Medical Device practice and has been in the search industry for nearly two decades. Ken and his team Shelby Varon, Director, and Allison Cox, Senior Executive Recruiter, serve the medical device, biotechnology, and healthcare industries. Ken is especially known for his work in the cardiac, vascular, and interventional oncology segments and has been in the MedTech field for over 20 years. Before his career in executive search, he worked for Johnson & Johnson and Boston Scientific.