The United States medical device industry ushered in "earthquakes." According to media reports, Stryker reached an acquisition merger agreement with competitor Boston Scientific, and a new giant of medical device manufacturing is about to come into being. Boston Scientific's market value is close to $50 billion, and if the deal is finally reached, it is expected to be the largest M&A deal in the sector in recent years.
At present, Boston Scientific’s attitude towards the acquisition transaction is ambiguous. In the report, Boston Scientific issued a statement saying that the report was known but declined to comment. However, in the case of Stryker, the company’s executives had indicated to the media that they had M&A interest, saying that “the company has the scale and cash flow needed to make greater investments”.
Boston Scientific's heart equipment product line is technologically advanced. Stryker, founded in 1941, is one of the top ten medical device manufacturers in the world, and is a global leader in orthopaedics, neurological technology, and spine surgery. According to reports, the deal will combine Stryker's technology in orthopedic, neurological, and spinal surgery with Boston Scientific's technology in cardiovascular and heart rate management.
On Monday, analysts at Wells Fargo Securities stated in a research report that the businesses of the two companies are complementary and that there is not a lot of product overlap, and antitrust agencies may not stop the transaction.
As a result of M&A news, Boston Scientific’s share price closed up 7.4% this week, with a market value of US$47.4 billion. According to the 2017 results, after the merger of the two companies, the new company's annual revenue will reach 21.5 billion U.S. dollars, and the market value will exceed 100 billion U.S. dollars, which is in line with the strength of the industry leader Medtronic.
In recent years, not only large-scale M&A transactions in the field of medical equipment, including pharmaceuticals, hospitals, health insurance and services, have forced entire industry companies to seek out partners to avoid lagging behind competitors. According to a report released by consulting firm Ernst & Young, in 2018, the scale of mergers and acquisitions in the healthcare industry will exceed the $200 billion in last year. About 60% of executives in pharmaceutical, biotechnology and medical device companies said they plan to seek mergers and acquisitions.
In response, Dan Hoyle, an analyst at Furui Financial Group in the United States, pointed out that the growth of the medical device industry has slowed down and it is more difficult to grow than before. Faced with changes in industry and regulation, demand for lower medical costs, and pressure from investors, large companies are seeking to expand their scale and diversify their products to reduce overlapping costs.
