Mergers & Acquisitions

Mergers & Acquisitions

September 28, 2011

Mergers and Acquisitons of Medical Technology Companies Spike

Healthcare can make you rich. According to Bloomberg (News - Alert) Businessweek, mergers and acquisitions by medical technology companies in the U.S. and Europe doubled in value to $30.6 billion last year from 2009.

The race was led by the industry's biggest firms, according to an Ernst & Young LLP report, as noted in the story. “More than $47.3 billion in transactions have been announced so far in 2011, led by Johnson & Johnson's $21.3 billion proposed purchase of Synthes Inc., the report said,” according to the story. On top of that, the number of acquisitions increased from 171 in 2009 to 201 last year, according to the Ernst & Young report, said.

“Health care spending relative to GDP has grown more rapidly than in any other country,” according to, which describes itself as “an economics and politics”

At a time when manufacturing has all but disappeared in the U.S., medical technology is a growing industry with R&D and medical equipment manufacturing facilities in small and large communities throughout the United States, reports, a blog on the economics of medical technology. It adds that America’s medical technology companies “play a pivotal role in diagnosing and providing treatment options for patients, improving outcomes, lowering healthcare costs and promoting economic growth.”

And it’s not going away. “The growth trend will continue as companies use acquisitions to bolster sales and diversify their operations internationally”, said John Babitt, head of Ernst & Young's medical technology practice, as reported at  “Traditional routes to growth through innovation have been curtailed as investment in early stage technology waned amid concerns that regulatory approvals and reimbursement by health insurers may be more difficult to obtain,” he said, as quoted in the story.

“There is right now an air pocket of innovation that is not making it to the market to fuel growth,” Babitt told writers in a telephone interview. “While the dollars in venture capital are stable and increasing in the first half of 2011, the amount of capital that is going to early stage companies has declined pretty dramatically.”

Companies such as Johnson & Johnson, General Electric Co.'s GE Healthcare and Medtronic Inc. are driving the consolidation “because they have strong balance sheets,” the Web site notes. Healthy cash flow and access to low interest rates have helped, Babitt said in the story.  The Web site reports that Babitt also said that smaller rivals are returning to the market after waiting out the turmoil of the past two years.

Deborah DiSesa Hirsch is an award-winning health and technology writer who has worked for newspapers, magazines and IBM (News - Alert) in her 20-year career. To read more of her articles, please visit her columnist page.

Edited by Rich Steeves

blog comments powered by Disqus

FREE eNewsletter

Financial Technology Industry News