The winds of change in medtech are blowing in the Windy City.
As medtech’s best & brightest descended on Chicago for another annual confab at AdvaMed 2014, it was impossible to ignore that the industry has now entered the great age of consolidation with yet another multibillion-dollar healthcare deal.
Yesterday, Becton Dickinson & Co. (NYSE:BDX) announced that it agreed to buy CareFusion (NYSE:CFN), a maker of infusion pumps and other medical devices, in a cash-and-stock deal worth $12.2 billion (£7.63 billion).
Today the brass at AdvaMed reflected not only on what this deal means for medtech, but where it leaves the industry council. Since the spring, 6 of AdvaMed’s largest members have agreed to merge, notably Covidien (NYSE:COV), which agreed to a $43 billion merger with Medtronic (NYSE:MDT) in June – and whose CEO, Joe Almeida, is the chairman of AdvaMed.
"It’s generally bad for the association business [to have this much consolidation]," AdvaMed president & CEO Steve Ubl said to laughs at a press conference. "But it’s a fact of the environment and we’re working through it. We’re having discussions about a merger and acquisitions policy, not unlike other industry councils that have gone through consolidation. We’ll continue to work through those issues, but the membership continues to grow year over year and it’s comprised of many small and mid-sized companies and they still have a home in AdvaMed."
Almeida, who sat to the right of Ubl, added that he was determined to keep the industry council strong.
"It’s in the interest of all the CEOs," Almeida said. "We understand the impact of mergers and acquisitions on the association and we’re working through this and making sure that we can preserve the association’s abilities to represent all of its members across the globe."
"There’s a lot going on and this association needs to be stronger then ever. As chairman, this is 1 of the things that concerns me the most, is making sure the association is left as strong as possible."
Indeed, the string of consolidation has come at a critical time. AdvaMed is still pushing hard to ram a repeal of the medical device tax through Congress, at the same time seeking to hold the FDA’s feet to the fire on improving timelines to get devices to market faster.
Today the industry council touted a study from the Analysis Group it said showed that private insurers are adopting new payment provider models that focus on cost reduction, which they said will further tamp down adoption of innovative medical products.
Ubl called the results of the study "sobering" and noted that the industry was facing a double hit, in which insurers are requiring more evidence of efficacy and demanding more emphasis on cutting costs.