Impending federal excise taxes, downward pricing pressure and declining volumes of big-ticket procedures constitute a triple threat that will drive the medical device industry to consolidate, according to a PricewaterhouseCoopers report.
The total value of health care deals over the past 12 months rose 40 percent, according to the consulting giant’s “U.S. Mid-Year M&A Outlook.” That trend is likely to continue, the report predicts.
“PwC expects healthcare M&A and joint venture activity will continue to accelerate, driven by the need to reduce costs, increase productivity and develop more integrated business models,” according to a press release.
For the medical device industry, according to the report, that means more M&A and joint venture activity as companies look to expand their footprints and create savings.
“The medical device industry will consolidate to achieve cost savings and diversify product portfolios, driven by the need to combat the impact of federal excise taxes, downward pressure on pricing and reimbursement and declining procedure volumes in certain high-cost treatment areas,” the authors wrote.
News of 1,276 deals broke during the first five months of 2011, worth $454 billion. That’s a 39 percent increase in value over the same period in 2010, although deal volume was off 4 percent (there were 1,336 deals worth $327 billion during the same period last year, according to the report). Average deal size rose 45 percent to $356 million, from $245 million.
One factor that’s driving the increased dealflow is a sell-side drive from firms looking to streamline portfolios and “exit those businesses in which they don’t have number 1 or 2 market positions,” according to the report.
“In the last twelve months ending May 2011, carveouts comprised 29 percent of deal activity,” the authors wrote.
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PerkinElmer picks up Dexela Ltd.
PerkinElmer Inc. (NYSE:PKI) acquired low-dose X-ray equipment maker Dexela Ltd. for an undisclosed amount.
London-based Dexela manufactures flat-panel complementary metal-oxide-semiconductor X-ray detection devices for surgery, dental CT, cardiology, and mammography and non-destructive testing.
“Dexela has been a pioneer in the development of CMOS X-ray detection solutions and has achieved award-winning recognition in the imaging market for its design strengths and ease of manufacturability — which are major advantages for OEM customers,” PerkinElmer medical imaging president Brian Giambattista said. “We look forward to expanding the reach of this promising technology into adjacent markets such as surgery, dental CT, cardiology, mammography and industrial NDT, to detect, monitor and remediate threats to human health or structural integrity.”
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Medisafe 1 looks to the dental implant space
Medisafe 1 Technologies Corp. (OTC:MFTH) says it’s in talks to buy a "breakthrough technology" in the dental implant space.
"The technology promotes healing, and enables real-time functional occlusion, improving the connection between bone and implant and thereby increasing dental implantation success rates," according to a press release.
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