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LEAD STORIES
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Medtech at Midyear: Bipolar Financials?
Wald |
It’s long been a generally accepted belief that the medtech industry—while not recession-proof—is at least recession-resistant. Regardless of prevailing economic conditions, after all, people continue to grow older, get sick, or have accidents that typically result in the need for medical care.
But this year, determining the health of the medtech industry at mid-year greatly depends upon the particular measurement used. While medtech revenues and earnings continue to show significant growth—particularly for large-cap companies—those gains seem to be occurring in a universe directly opposed to that of industry stock prices, which have lagged since the beginning of the year.
“This year, there really are no ports against storms,” says Jan Wald, managing director and senior medtech analyst in the Boston office of the Stanford Group Co. (Houston). “Some medtech stocks have held up better than others, but the economic woes are seeming to put a drag even on those that have been relatively stable.” [More]
U. S. Demand for Orthopedic Implants to Approach $22 Billion in 2012
Martineau |
According to a recent market report, demand for orthopedic implants in the United States is expected to increase 8.9% annually to nearly $22 billion in 2012. Each of the four major orthopedic product segments—reconstructive joint replacements, spinal implants, orthobiologics, and trauma implants—is expected to provide strong growth opportunities.
The ortho sector trends are described in Orthopedic Implants, a study from the Freedonia Group Inc. (Cleveland). According to report author Bill Martineau, the market for reconstructive joint replacements will gather momentum from an aging population and the widespread prevalence of physically active lifestyles. The value of joint replacement sales is forecast to reach $9 billion in 2012, according to the study. [More]
Experts Review Current Medtech M&A Trends
Cohen |
According to industry experts, the market for mergers and acquisitions (M&A) among medical device manufacturers remains strong, despite the ongoing credit crunch in the United States. However, the industry is not immune from the recent economic slowdown, which could have noteworthy implications for medtech M&A going forward.
Over the past year, say the experts, the number of medtech M&A deals has not declined significantly. “There is a lot of ongoing medtech M&A activity in the lower-middle and middle market areas—below the level of deals valued at $10 billion or more,” says Richard S. Cohen, president of the Walden Group Inc. (Tarrytown, NY), a strategic investment-banking firm. “The market is very, very active at lower levels, and intensely active in the middle level, so I wouldn’t say there has been a slowdown at all.”
McGlynn |
“In terms of acquisitions, I wouldn’t say we’re any less busy right now than we were a year ago,” says J. Casey McGlynn, a partner and chairman of life sciences group at Wilson Sonsini Goodrich and Rosati (Palo Alto, CA), “It certainly feels as though there is still quite a healthy medtech M&A market—even though the public markets seem to be more or less shut down.”
The experts participated in a four-member roundtable discussion for the July/August issue of MX magazine. The discussion was moderated by MX editor in chief Steve Halasey. Panel members provided their views about the current climate surrounding medtech M&A, as well as the sectors most likely to see conintued consolidation in the coming years. [More]
Regional Organizations Join Forces to Promote California Life Sciences
BayBio's Gardner (left), Biocom's Panetta (center), SoCalBio's Enany (right). |
In June, three of California’s largest regional associations representing life sciences firms and research organizations put their considerable weight behind a new alliance designed to promote the state’s life sciences industry.
Named the California Life Sciences Alliance, the new group was established through a memorandum of understanding among BayBio, Biocom, and the Southern California Biomedical Council (SoCalBio). Under the terms of the three-year agreement, the organizations will pool resources and work together to address a range of public policy issues.
The alliance chose the term life sciences in order to indicate its broad reach among FDA-regulated industries as well as other related fields. "It's tough to find terms that everyone agrees on," says Joe Panetta, president and CEO of Biocom. "Life sciences is the broadest description, and encompasses the entire community of companies that make therapeutic goods and services under FDA regulation, while also including the biofuels and biofoods companies throughout California. [More]
Medtech Manufacturers Invest to Meet Growing Diabetes Market
Driscoll |
Industry watchers admit that established medical device markets in the cardiovascular and orthopedic sectors are experiencing volatility, leading to some reduced interest from investors. Meanwhile, one medtech sector that continues to meet increasing expectations is the group of technologies and products centered on diabetes care.
According to Patrick Driscoll, publisher of MedMarkets newsletter and president of MedMarket Diligence LLC (Foothill Ranch, CA), a research firm focused on advanced medical technologies, the global market for diabetes monitoring and therapy is set to surpass $37 billion by 2010. “There are few markets in the device industry that have the combination of a large and growing patient population, well established products and technologies, and opportunity for continued product and market development as in the diabetes market,” says Driscoll. [More]
Stop Press: MassMedic Calls for Action to Stop Enactment
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Sommer
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In a dramatic turnaround from earlier expectations, late in the evening of July 31 both houses of the Massachusetts state legislature passed a compromise healthcare cost-containment bill that includes a state-mandated code of ethics, restricted spending on meal payments and the training of healthcare professionals, and a new reporting protocol for payments to healthcare practitioners.
News of the legislative turnaround was sent to members of the Massachusetts Medical Device Industry Council (MassMedic), by association president Tom Sommer, the morning after the compromise was passed. According to MassMedic, the newly approved conference committee report on the bill goes beyond the code of ethics provisions previously passed by the state’s House of Representatives. The association’s summary of the legislation indicates that enactment would have a number of harmful effects on life sciences companies in the state. [More]
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| JULY 2008 CONTENTS |
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Medtech at Midyear: Bipolar Financials?
U.S. Demand for Orthopedic Implants to Approach $22 Billion in 2012
Experts Review Current Medtech M&A Trends
Regional Organizations Join Forces to Promote California Life Sciences
Medtech Manufacturers Invest to Meet Growing Diabetes Market
Stop Press: MassMedic Calls for Action to Stop Enactment
INDUSTRY IN BRIEF
CALENDAR
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INDUSTRY IN BRIEF
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In mid-July, ArthroCare Corp. (Austin, TX) announced that it would restate its financial statements for periods running from 2006 through the first quarter of 2008. Three days later, the company announced that the Securities Exchange Commission is conducting an informal inquiry into accounting matters arising out of the company's restatement. The company stated that it will cooperate fully with the SEC.
At mid-month, iCAD Inc. (Nashua, NH), a provider of computer-aided detection (CAD) solutions for the mammography market, announced the completion of its previously announced agreement to purchase the principal assets of CAD Sciences (White Plains, NY). The purchase price was $5 million, comprised of $2 million in cash and 1,086,957 shares of iCAD common stock.
GE Healthcare (Chalfont St. Giles, UK) has entered into a definitive merger agreement to acquire Vital Signs (Totowa, NJ), a global provider of medical products applicable to a wide range of care areas such as anesthesia, respiratory, sleep therapy and emergency medicine. The transaction is subject to shareholder and regulatory approvals, and is expected to close in the fourth calendar quarter of 2008. Under the terms of the agreement, shareholders of Vital Signs will receive $74.50 per share in cash for each Vital Signs share they own.
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CALENDAR
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August 5–7: Opportunities for Next-Generation Implants, Cleveland.
August 11–12: Japan: Regulatory Filing Requirements and Compliance Processes for Life Sciences, Costa Mesa, CA.
September 7–10: North Carolina Healthcare Information and Communications Alliance Annual Conference and Exhibition, Greensboro, NC.
September 10-11: BIOMEDevice Forum, San Jose, CA.
September 14–17: Regulatory Affairs Professionals Society 2008 Annual Conference & Exhibition, Boston.
September 15–16: PharmaMed Marketing and Media, New Brunswick, NJ.
September 21–24: AdvaMed 2008, Washington, DC.
September 23: MedTech 08 Biosciences Summit, Skaneateles Falls, NY.
September 23–25: Medical Design & Manufacturing Midwest, Rosemont, IL.
October 1: Update on Hong Kong's New Medical Device Regulations, Webcast.
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MX: Issues Update is a monthly e-supplement prepared by the editors of MX: Business Strategies for Medical Technology Executives and sent to you as a benefit of your online registration with Canon Communications. To become a regular subscriber to this monthly medtech business update, click here.
The editors welcome your suggestions for future content in MX: Issues Update. Please feel free to contact us with your comments and ideas.—Steve Halasey, Editor in Chief, MX
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