Mergers and acquisitions continue in the Medical Industry
Medical device startups across the globe raised nearly $4B in equity financing in 2016, placing last year just behind the 5-year high of $4.1B in 2014. NEA stands out as the most active investor in device startups with Versant Ventures, OrbiMed Advisors, and High-Tech Gruenderfonds not far behind.
As medical device companies gain traction, large corporates such as Medtronic, Boston Scientific, and Teleflex are competing in the race to acquire private medical device startups targeting neurosurgery, orthopedics, and cardiology, among other areas.
Startups are working on connected devices, next-gen prosthetics, and robotics aimed at the medical field.
Industry data shows that average total funding raised funding raised the first acquisition was around $38 Million, and the median disclosed valuation at time of acquisition was around $140 Million.
Medtronic with 15 acquisitions has been the most active acquirer of medical device startups since 2012. Rate of acquisitions has increased substantially since 2012 where two thirds of acquisitions taking place in 2015. Average disclosed funding of a medical device startup prior to acquisition by Medtronic was $34 Million with a average valuation at time of acquisition of $150 Million, very much in line with the industry averages.
Boston Scientific with 8 acquisition was the second most active medical company. The acquisition of Cameron Health, developers in 2012 for $150 Million plus up to $1.05 Billion in revenue milestone payments was the most notable in 2012.
Stryker also has been active however most of their acquisitions were in the orthopedic devices, making up to 70 percent of all the acquisitions since 2012.
Apart from the top medtech giants venture capital-backed companies and private equities have also been very active. VC-backed companies accounted for 22% of all first-time medical device acquisitions since 2012.
Medical device manufacturing continues to be a high area of interest due to the total available market, degree of differentiation, growth projections and profit margins and experts agree that race to acquire medical device companies will accelerate through 2020.
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