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Strategies & Market Trends : Speculating in Takeover Targets -- Ignore unavailable to you. Want to Upgrade?

To: richardred who wrote (2459)10/19/2010 7:59:11 AM
From: richardred  Read Replies (3) | Respond to of 6449
Deal-Making in Medical Technology Sector Surpasses 2009 Level, Report Says
By David Olmos - Oct 19, 2010 12:01 AM ET

The value of mergers and acquisitions of medical technology companies in the first half of 2010 surpassed the total for all of 2009, driven by buyers’ taste for bigger deals of established companies, a report found.

Eighty-nine deals with a value of $16.9 billion were struck in the first half of this year in the U.S. and Europe, compared with 172 transactions worth $15.7 billion in 2009, according to an Ernst & Young LLP report released today. The 2010 totals exclude Swiss drugmaker Novartis AG’s proposed $28.3 billion offer to purchase Nestle SA’s majority stake in Alcon Inc., the eye-care company, Ernst & Young said.

Deals should remain brisk in 2010’s second half, as shown by St. Jude Medical Inc.’s proposed $1.08 billion acquisition of AGA Medical Holdings Inc., announced yesterday, said John Babbitt, head of Ernst & Young’s medical technology practice in the Americas, in a telephone interview. Activity in 2010 may approach $30 billion, about double the value of 2009 deals, which was the lowest since 2002, the report said.

“We’ll probably see more deals of $1.5 billion and below,” said Les Funtleyder, a health-care portfolio manager at Miller Tabak & Co. in New York. Mergers and acquisitions will likely increase in the fourth quarter of this year, as companies try to get transactions completed by year’s end, he said.

There have been 240 deals in the last five years in the medical-device sector, with an average deal value of $369.5 million and an average premium of 41.8 percent, according to Bloomberg data. The biggest deal was Boston Scientific’s 2005 acquisition of Guidant Corp. for $25.2 billion.

Merck KGaA Deal

Much of the gain in 2010’s deal volume came from one transaction, Darmstadt, Germany-based Merck KGaA’s $6.8-billion acquisition in July of Millipore Corp., the supplier of biotechnology equipment based in Billerica, Massachusetts.

“We’re seeing fewer but larger deals,” said Babbitt, of the accounting firm, noting that investment has shifted away from early-stage companies.

“The real interest has been in buying mid-tier medical technology companies that have attractive valuations,” Babbitt said. “They are folding them into leaner and more efficient structures that the larger medical technology companies now have.”

Besides Merck, some of the bigger deals in 2010 have been Dublin-based Covidien Plc’s $2.5 billion acquisition of heart- device maker ev3 Inc. in July, and Minneapolis-based Medtronic Inc.’s $350-million acquisition of Invatec, an Italian maker of heart devices, in April.

“I don’t think we’re going to see a Guidant-size deal,” Funtleyder said, referring to the rest of this year.

The report defines the medical technology sector as companies including those that make medical devices, imaging technology such as magnetic-resonance imaging scanners, non- imaging diagnostic gear and equipment used in scientific research.

To contact the reporter on this story: David Olmos in San Francisco at

To contact the editor responsible for this story: Reg Gale at

To: richardred who wrote (2459)12/7/2010 1:13:30 AM
From: richardred  Read Replies (2) | Respond to of 6449
Medical Devices Industry Outlook - Dec. 2010

Zacks Equity Research, On Monday December 6, 2010, 5:00 pm EST

Industry Dynamics

The global medical devices industry is fairly large, intensely competitive and highly innovative with 2009 worldwide sales in excess of $220 billion. The U.S. accounts for approximately 41% of this market. The industry is divided into different segments such as Cardiology, Oncology, Neuro, Orthopedic, Aesthetic Devices and Healthcare IT (“HCIT).

The U.S. medical devices industry continues to grow at a brisk rate, thanks to an aging Baby Boomer population, high unmet medical needs and increased incidence of lifestyle diseases (including cardiovascular diseases, diabetes, hypertension and obesity). Neuro, Orthopedic and Aesthetic represent the fastest growing categories.

The aging population represents a major catalyst for demand of medical devices. The elderly population (persons 65 years and above) base in the U.S. registered 39.6 million in 2009, representing roughly 13% of the nation’s population and accounting for one-third of health care consumption. Federal government estimates indicate that the elderly population will catapult to 72 million by 2030, ensuing a major boost to medical devices utilization.

The medical devices industry faces a host of issues, including pricing concerns, procedural volume pressure, impact of healthcare reform and increasing regulatory involvements, which have put investors in a dilemma in deciding whether to add these stocks to their kitty. While there exist several tailwinds for growth, these issues remain an overhang for MedTech companies.

With several growth constraints in the legacy markets, medical devices companies are aiming to expand into the lucrative incipient markets. Expansion in the emerging markets, especially those with double-digit annual growth rates, represents one of the best potential avenues for future growth. Our focus in this write-up, however, is primarily the U.S. market.

Regulatory Eco-system

Medical devices companies are susceptible to significant reimbursement risks as their products are reimbursed by the Center for Medicare and Medicaid (“CMS) and commercial payers. Third-party reimbursement programs in the U.S. and abroad, both government-funded and commercially insured, continue to develop different means of controlling healthcare costs, including prospective reimbursement cuts with careful review of medical bills.

The Government-mandated healthcare reform in the U.S. in March 2010, dubbed as the “Patient Protection & Affordable Care Act, has created a degree of uncertainty for medical devices companies. The reform has led to a less flexible pricing environment for these companies and may pressure pricing across the board. Moreover, the proposed tax on device companies may hit their bottom lines. Nevertheless, the Act places considerable emphasis on patient safety and aims to reduce the number of uninsured people.

“The 510 (k) Reform

The U.S. Food and Drug Administration (FDA) declared a set of proposals on August 3, 2010, aimed at the overhaul of its 510 (k) device approval protocols. The proposed changes are subject to public feedback and independent study (expected to be completed in mid-2011).

The 200-page report, consisting of more than 70 proposed changes which will serve as a blueprint for the reform, represents FDA’s vision to streamline the device review process and make it more predictable and transparent. As part of the listed proposals, the FDA intends to create a new “Center Science Council, which will oversee medical device science-based decision-making. Moreover, the regulator aims to seek additional information regarding the safety and efficacy of devices in the 510 (k) submissions.

Our Thesis

We continue to recommend companies providing life-sustaining products, given their strong recurring stream of revenues as patients are unable to forego these products. Furthermore, investors should look at companies with strong-earnings quality profiles.

Moreover, large companies with a wide portfolio of products are also better poised for improved returns. These companies have greater capability of withstanding the soft economic conditions.

We advise investors to stay away from companies that have grown historically through extensive acquisitions only. These companies may find it difficult to fund acquisitions considering the lingering impact of the recession. More importantly, they face increasing challenges in delivering operational synergies from these acquisitions, which are considered to be the prime reason for failures of mergers and acquisitions.


In our portfolio, we see growth potential in companies dealing with cardiovascular devices, Neuro and blood-related products. Names include Medtronic Inc. (NYSE: MDT - News), Boston Scientific Corporation (NYSE: BSX - News), St. Jude Medical Inc. (NYSE: STJ - News), ZOLL Medical (NasdaqGS: ZOLL - News), Abiomed Inc. (NasdaqGM: ABMD - News), Cyberonics Inc. (NasdaqGM: CYBX - News), Haemonetics Corporation (NYSE: HAE - News). Although these companies have Neutral ratings, they remain well placed in the current environment. We continue to closely monitor their performances for possible upgrades.

MedTech Giants Lead the Way

The above-listed companies produce life-sustaining products and are less affected by economic turbulence. As evident from their recent quarter results, some of these companies have been successful in weathering the storm (pricing, currency and procedure growth headwinds) in the cardiovascular space in the wake of recovery.

These companies are all leading players in their respective fields and are potential winners in the long run. In particular, with a slew of new products, the big three players (MDT, BSX and STJ) in the roughly $6.5 billion implantable cardioverter defibrillator (“ICD) market are well positioned to gain market share, despite the sluggish business environment. However, we do acknowledge the fact that a soft CRM market may prove to be a drag on these stocks.

Among the names above, Medtronic, the undisputed leader in MedTech space, has a diversified presence in Cardiovascular, Neuro, Spinal, Diabetes and ENT. The company boasts of an attractive pipeline including its new Protecta ICD and REVO pacemaker devices, which are currently awaiting final regulatory approval. Moreover, Medtronic is blessed with strong cash flows which it prudently uses for maximizing shareholder. The company is active on the acquisition front and is investing in emerging markets, which it reckons as an increasingly important growth driver.

Boston Scientific is the leader in the drug eluting stent (“DES) market and is better placed with the recent resolution of all issues cited in its 2006 FDA corporate warning letter regarding serious regulatory problems and corrective actions at three of its facilities. The company’s return to the ICD market (after one month absence due to product recall) represents another boost.

Moreover, Boston Scientic’s restructuring initiatives are expected to contribute to the bottom line moving forward. Importantly, the company’s pipeline DES product Promus Element is shaping up to be a major driver of its stent business. Moreover, we are also encouraged by Boston Scientic’s acquisition of asthma-treatment company Asthmatx, which will enable it to target the pulmonary devices area.

St. Jude is poised to grow its market share in the CRM segment (especially in ICDs) driven by its new Fortify and Unify lines of devices. Moreover, we are optimistic about the emerging opportunity in intravascular imaging market, enabled by the company’s LightLab acquisition in July 2010.

In a bid to boost its cardiovascular business St. Jude is acquiring Minnesota-based heart devices maker AGA Medical Holdings for $1.3 billion. The acquisition, which was completed recently, will eventually make the company a clear leader in the structural heart market.

The top-tier U.S. cardiovascular devices companies such as MDT, BSX and STJ are exploring new avenues of growth beyond the mature pacemaker and ICD markets. These companies are increasingly seeking opportunities to expand into fast-growing new therapy areas within or outside the cardiology space, including markets such as atrial fibrillation and neuromodulation.

Another interesting pick in our portfolio is resuscitation devices maker ZOLL Medical. ZOLL is a leading player in the global market for external defibrillators, which is worth more than $1 billion. The company is expanding its presence in the international markets, which should significantly push growth.

Notably, ZOLL’s LifeVest wearable defibrillator business continues to grow at a healthy quarterly run rate, benefiting from increased awareness of the product and associated sales force enhancements. We are impressed with ZOLL’s solid fundamentals, its broad product range, healthy revenue/margin mix and upbeat prospect for LifeVest.

We also believe that cardiac assist devices maker Abiomed represents another favorable opportunity for the investors. The company possesses a broad portfolio of products that are life-sustaining in nature and has been able to deliver sustainable growth in a challenging economy. Abiomed enjoys strong demand for its Impella cardiac pumps. Higher Impella sales continue to fuel double-digit revenue growth.

Improving Hospital Spending : A Potential Tailwind

A soft hospital capital spending backdrop has been challenging for the MedTech stocks in the first-half of 2010. The North American and European markets have been affected by shrinking budgets for equipment purchases at the height of the recession. However, recent quarterly results indicate signs of recovery in hospital spending across the U.S. and ex-U.S. markets. Spending levels are improving as hospitals appear to have started replacing their worn-out equipment. This may turn into a driver moving forward.

Federal “Stimulus: A Boon for HCITs

Another area which is interestingly poised for growth these days is Healthcare IT. The landscape has changed since the Obama Administration took initiatives to encourage hospitals and physicians to modernize their health record-keeping as part of the “Stimulus Package. The Stimulus is aimed at increasing the use of electronic health record (EHR) systems by medical practitioners.

Optimism about the growth prospects of HCIT service providers has improved since the Stimulus package. Moreover, the “meaningful use rule that enables hospitals to qualify for federal incentive program will boost business opportunities for the incumbents in the long-run.

Beneficiaries of the Stimulus include Allscripts-Misys Healthcare Solutions (MDRX) and Quality Systems (QSII). Allscripts-Misys Healthcare Solutions presently holds a Neutral rating, but is a potential candidate for an upgrade based on its healthy third quarter results.


Dark Side of 510 (k) Reform

As part of the 510 (k) reform, the FDA aims to create a subset of moderately risky devices under the “Class IIb moniker that would require submission of more clinical data and manufacturing information vis-à-vis the existing Class II devices. However, it remains to be seen which devices or group of devices should fall under this domain.

If implemented, this is expected to make the device approval process more complex, lengthy and burdensome. Moreover, with the expected rise in the regulatory bar for approvals, medical devices companies may require to shell out more for R&D. As such, critics and certain industry groups have started lobbying against such proposal.

Orthopedic Still a Concern

We continue to advise investors to shun companies in the orthopedic domain until we see a complete economic recovery. Companies in this space continue to struggle as patients defer their elective procedures given the lingering economic softness. Companies that fit this list include Stryker Corporation (NYSE: SYK - News), Zimmer Holdings (NYSE: ZMH - News), CONMED Corporation (NasdaqGS: CNMD - News), Wright Medical Group (NasdaqGS: WMGI - News) and Symmetry Medical (NYSE: SMA - News).

Pricing Woes Linger

Recent operating results manifest weak performances across the hip and knee replacement businesses, which underscore the macro-level concerns related to product pricing pressure. Pricing concerns on hips, knees and spine products have impaired the performances of most of the orthopedic companies.

The pricing issue remains a key concern. The effect of government health care cost containment efforts and continuing pressure from local hospitals and health systems as potential Medicare reimbursement cuts create additional reasons for hospitals to push back on pricing. This is expected to hurt selling prices on a global basis.

The advent of group purchasing organizations (GPOs) has also put pressure on pricing. The GPOs act as agents that negotiate vendor contracts on behalf of their members. The prevailing economic climate has bolstered the bargaining power of GPOs.

A “Broken Back

The U.S. spine market, which has grown at a double-digit rate in 2009, took a tumble recently. The spinal market has been worst hit by the pricing/volume headwinds as manifested by a decelerating quarterly growth trend. Leading companies in the orthopedic space such as Stryker and Zimmer continue to experience weak spine sales, which has somewhat shaken our confidence in these stocks.

Pricing pressure and reimbursement uncertainties coupled with austerity measures in Europe are expected continue to weigh on this market over the next few quarters. Private payors are delaying spine surgeries by requiring more documentation before approving such procedures, thereby contributing to the slowdown in this market.

Soft Replacement Hip and Knee Markets

The $12 billion replacement hips and knees markets still remain affected by the lingering economic softness, as reflected in sustained procedure volume pressure. Cash-strapped patients continue to defer surgeries given the weak economy. The knee market, especially, had a lackadaisical third-quarter 2010.

Procedural volumes in the U.S. have been negatively impacted as a result of a high unemployment rate, which has resulted in the expiry of health insurance as well as a decline in enrollment in private health plans.

Moreover, the Consolidated Omnibus Budget Reconciliation Act (“COBRA) subsidies expired effective June 1, 2010. This has led to a decline in the number of people covered under the COBRA, which allows employees who have lost their jobs to continue health insurance coverage and subsidized 65% of health care premiums for unemployed individuals for up to 15 months prior to its expiry.

As per the demographic analysis, these trends had a significant impact on the potential patient base for joint replacement procedures, those between 45 and 65 years of age and without any Medicare coverage. On the other hand, austerity measures are contributing to the reduction in procedure volumes in Europe .

A general sluggishness in the orthopedic industry is evident from the weak sales reported by most of the leading players in this market. The near-term outlook for procedure volume growth is bleak. Companies such as Stryker and Zimmer derive a chunk of their revenues from replacement hips and knees. As such, softness in these markets could potentially dent revenues and earnings of these companies at least through 2010 and early 2011.

As the economic indicators are pointing that the economy is still not out of the woods, we remain leery about the prospects of the companies listed above over the next few quarters and recommend investors to steer clear of these stocks at least for now until we see a material recovery.

Zacks Investment Research

To: richardred who wrote (2459)1/9/2011 11:38:18 AM
From: richardred  Respond to of 6449
Bloomberg report of same story. Sightly more detailed.

Smith & Nephew Rejected $10.9 Billion Takeover Approach From J&J, Sky Says
By Dick Schumacher - Jan 9, 2011 9:53 AM ET

Smith & Nephew Plc rejected a 7 billion-pound ($10.9 billion) takeover approach from Johnson & Johnson several weeks before Christmas because it “substantially undervalued” the U.K. medical devices maker, Sky News reported, citing unidentified people.

The indicative offer was at more than 750 pence a share, Sky News Business Editor Mark Kleinman wrote late yesterday on his blog. Smith & Nephew shares fell 1.9 percent to 650 pence a share in London on Jan. 7.

Smith & Nephew board members discussed the offer before rejecting it on the grounds it undervalued the company, Kleinman wrote.

Johnson & Johnson has been evaluating whether to return with a higher offer, he wrote. There’s no certainty it will, he said.

Smith & Nephew stock has climbed on “persistent” takeover speculation in recent months, Kleinman said. Rivals Stryker and Zimmer might be interested in making approaches for Smith & Nephew, he said.

Jon Coles, an external spokesman for Smith & Nephew at Brunswick Group, declined to comment on the report when contacted by Bloomberg News today.

Marc Monseau, a spokesman for New Brunswick, New Jersey- based Johnson & Johnson, declined to comment on the report also.

To contact the reporter on this story: Dick Schumacher in London at

To contact the editor responsible for this story: Dick Schumacher at

To: richardred who wrote (2459)1/24/2011 11:47:09 AM
From: richardred  Read Replies (1) | Respond to of 6449
Derma Sciences Launches Advanced Wound Care eLearning Portal for Clinicians

New Content-Rich Website Provides Educational Support and Resources to Meet the Ever-Changing Needs of Patients with Chronic Wounds

Press Release Source: Derma Sciences, Inc. On Tuesday January 4, 2011, 8:30 am EST

PRINCETON, N.J.--(BUSINESS WIRE)-- Derma Sciences, Inc. (Nasdaq:DSCI - News), a medical device and pharmaceutical company focused on advanced wound care, announces the launch of a new eLearning Portal to provide clinicians with valuable educational programs to ensure they are kept abreast of the latest information and product solutions in the Company’s advanced wound care line. Available at, the eLearning Portal is a highly visible example of the Derma Sciences commitment to advanced wound care, and contains both new and aggregated content.

The eLearning Portal includes archived webinars to support educational needs on such topics as wound debridement, the use of MEDIHONEY® on stalled wounds and those with atypical etiologies, and the benefits of super absorbent polymer technology in moist wound dressings. New webinars will be added approximately every six weeks. The Portal also aggregates the considerable number of abstracts, articles and peer-reviewed clinical posters on MEDIHONEY®, as well as broadcast media coverage about the Company’s products and extensive product literature available for download on MEDIHONEY®, XTRASORB®, ALGICELL® Ag and BIOGUARD®. Clinicians also can request product samples directly from the eLearning Portal.

According to Barry Wolfenson, Executive Vice President, Global Marketing and Business Development at Derma Sciences, “With the launch of our new eLearning Portal we are able to bring current and actionable information to clinicians who strive daily to deliver the highest quality care to patients with chronic wounds, burns and wounds at risk of infection. We will be adding content regularly, which will help our customers stay abreast of the many ways in which our innovative products are helping to advance the practice of wound care.”

About Derma Sciences, Inc.

Derma Sciences is a medical technology company focused on three segments of the wound care marketplace, including traditional dressings, advanced wound care dressings and pharmaceutical wound care products. Its MEDIHONEY® product is the leading brand of honey-based dressings for the management of wounds and burns. The product has been shown to be effective in a variety of indications, and was the focus of a positive large-scale, randomized controlled trial involving 108 patients with leg ulcers. Other novel products introduced into the $14 billion global wound care market include XTRASORB®, an advanced line of moist wound dressings, and BIOGUARD® for infection prevention. Derma Sciences expects to announce top-line efficacy results of its Phase 2 clinical study with DSC127, a novel pharmaceutical for accelerated wound healing and scar reduction, by the end of January 2011.

For more information please visit


Another interesting company I like in this field, but don't own currently. Many moons ago, I had it in a Leading edge portfolio at SI.
CRY-CryoLife Inc.-

Message 17291419

To: richardred who wrote (2459)5/8/2013 12:03:22 PM
From: richardred  Respond to of 6449
RE:ICIU Oh well, sold it earlier.

ICU Medical explores possible $1 billion sale: Bloomberg

NEW YORK | Wed May 8, 2013 10:31am EDT

(Reuters) - San Clemente, California-based medical device provider ICU Medical Inc ( ICUI.O) is considering a sale that could fetch more than $1 billion, according to a Bloomberg News report Wednesday morning.

The maker of intravenous medical equipment has tapped J.P. Morgan Chase & Co ( JPM.N), according to the report, which cited people familiar with the manner.

ICU's discussions about a possible sale are still early and the company is gauging interest, according to the report.

A JPMorgan spokeswoman declined to comment. An ICU spokesman did not immediately return requests for comment.