Consolidation is increasingly shaping the medical device industry, but what about players on the other side of the fence? Medtech contract manufacturing partners to OEMs are seeing their own abundance of M&A as larger players look to expand their influence and keep up with increasing demand.Over the past four years, the medical device industry has looked to mergers and acquisitions to produce immediate growth and optimize competitiveness.
Major players are merging to consolidate their capabilities and looking to niche acquisitions to broaden their offerings and keep up with the shifting healthcare landscape.
Although moves like Medtronic’s $50 billion acquisition of Covidien hog the spotlight, behind the curtains medtech contract manufacturers are experiencing their own run of M&A activity, as manufacturers look to consolidate to keep up with their OEM partners.
In 2013, Phillips-Medisize snagged two Adval Tech Group manufacturing facilities. The next year, Tecomet snatched up both 3D Medical Manufacturing and Symmetry Medical’s OEM Solutions business. And then in 2015, Greatbatch merged with Lake Region Medical and went on to rebrand the new medical device contract manufacturing giant as Integer Holdings Co.
Last year Molex turned the tables on Phillips-Medisize, shortly after that company acquired Injectronics, and TE Connectivity expanded its interventional offerings by acquiring Creganna Medical Group.
This year we’ve seen private equity giant Kohlberg & Co. buy out specialty plastics manufacturer Pexco to merge it with PPC Industries to create Spectrum Plastics. These larger plays are joined by a wealth of smaller M&A deals, as all companies in the field try to ramp up to stay competitive in an increasingly demanding market.
And the trend isn’t showing any signs of stopping.
“I think that there will be continued consolidation. I’d say it’s hard to forecast the volume. We think that there is efficiency for companies that consolidate, we think that the OEMs prefer to work with the elite provider, so they’d rather deal with fewer contract manufacturers,” said Standard & Poor’s corporate ratings director David Kaplan.