Medical Devices is finishing the year on a high note. In fact, as of December 29, 2016, deal volume reached 113 transactions, equal to 2015’s total. Deal value topped off at $61.3 billion, a 111% increase from last year’s total of $29.1 billion.
However, one deal accounted for 50% of 2016’s total, and that is Abbott’s (NYSE: ABT) $30.7 billion purchase of St. Jude Medical, Inc. (NYSE: STJ), a developer, manufacturer and distributor of cardiovascular medical devices for cardiac rhythm management. When that mega deal is subtracted, we get a dollar value of $30.6 billion, still a 5% climb since last year.
A handful of acquirers made a name for themselves this year, such as Stryker Corporation (NYSE: SYK), with eight deals in this sector. Medtronic plc (NYSE: MDT) and Boston Scientific (NYSE: BSX) announced five acquisitions apiece, and Cantel Medical (NYSE: CMN) and Zimmer Biomet (NYSE: ZBH) announced three deals each. Not surprisingly, Medical Device buyers accounted for 65% of the 113 deals.
But as far as deal value is concerned, only one Medical Device buyer partook in a top five deal, and that was Thermo Fisher Scientific Inc.’s (NYSE: TMO) $4.2 billion purchase of FEI Company (NASDAQ: FEIC), a supplier of scientific instruments and related services for nanoscale applications and solutions. The deal earned fourth place for dollars spent in this sector, and is one of 11 deals with a price tag exceeding $1 billion.
Earlier in the year we saw a rather unexpected buyer, Canon Inc. (NYSE: CAJ), make the second largest purchase of the year when it bought Toshiba Medical Systems (OTC: TOSYY) for $5.9 billion. Toshiba Corp. sold its medical equipment unit as part of a program to shed non-core assets. The division makes diagnostic imaging systems such as MRI, X-ray and ultrasound equipment.
Pharmaceutical buyers made the remaining two top-five deals. Johnson & Johnson (NYSE: JNJ) paid $4.33 billion for Abbott Medical Optics, a wholly owned subsidiary of Abbott Laboratories (NYSE: ABT), and a global leader in ophthalmic surgery and intraocular lenses used in cataract surgery.
And at the end of December, Allergan plc (NYSE: AGN) paid $2.9 billion for privately-held Acelity L.P.’s LifeCell business unit, a regenerative medicine and reconstructive surgery company known for its applications in plastic and reconstructive surgeries and abdominal wall procedures.
As far as the legislative environment is concerned, in early December, President Barack Obama signed legislation that will streamline the FDA approval process for medical device companies. Previously, companies needed permission from several regional review boards based on the location of test subjects. Now, medical device companies can report to one centralized FDA review board, which removes a large, locational barrier for firms looking to consolidate. With this in mind as we exit 2016, the sky is the limit for medical device deals.
