Analysts from Bank of America predict a favorable environment for mergers and acquisitions in the medtech space in 2025.
Travis Steed, Stephanie Piazzola, Craig Bijou and Enjia Cao say 2024 was “a typical year” in terms of M&A in medtech. They tracked 19 acquisitions of note with around $25 billion in disclosed deal price. Some notable ones include Johnson & Johnson’s $13 billion buy of Shockwave Medical, BD’s $4.2 billion acquisition of Edwards’ Critical Care business and Boston Scientific’s $3.7 billion purchase of Axonics.
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Even with such major deals in 2024, the analysts set their sights for an M&A boom in medtech in 2025.
“We see the potential for a pickup in medtech M&A in 2025 with a more favorable regulatory environment, lower financing cost, more normalized end market growth rates, and even more time since peak [small-to-midcap] valuations.”
BofA analysts said Boston Scientific and Edwards led the way in 2024 with four M&A deals apiece. Johnson & Johnson had two deals, with the Shockwave buy perhaps representing the industry’s most noteworthy acquisition. Despite such significant activity, the analysts specifically see continued M&A dealings from Boston Scientific and Johnson & Johnson in the next 12 months.
“In 2025 BSX and JNJ will likely still be active on M&A,” they wrote. “BSX has a lot of margin flexibility as Farapulse goes margin accretive in 2025. JNJ seems focused on building out its interventional cardiology portfolio.”
Additional big names that could join in the M&A fray are Stryker and Zimmer Biomet, they said. Meanwhile, they see little change from Medtronic as it focuses on small tuck-ins and divestitures. They called Abbott a wild card as well.
The analysts say that the past few years consisted of medtech M&A involving private companies. They attribute this to elevated public company valuations and frozen IPO markets. But, with companies like Shockwave, Silk Road Medical and Axonics getting acquired in 2024, they see M&A trending toward public companies.
“Some private companies may be less motivated to exit as IPO markets are starting to unfreeze,” they wrote. “And many public companies are still trading far below peak stock prices despite executing and putting up good growth.”
As far as markets to watch, the analysts highlighted the peripheral vascular market as large companies eye market entry there. Soft tissue robotic surgery remains a hot space as well as private companies need big company resources to survive. The analysts also note interventional cardiology, structural heart, sleep apnea, various stimulation markets, and foot and ankle. Those “all seem like markets where there‘s strategic interest.”
