“We did that under John’s leadership for a good 20, 25 years,” Andy Pierce, a 29-year Stryker veteran who’s now president of the MedSurg and Neurotechnology groups, said at DeviceTalks West yesterday.
In more recent years, Stryker’s been growing increasingly through mergers and acquisitions under the leadership of Kevin Lobo, who became CEO in 2012.
“John was a little more conservative on the M&A front, and Kevin has been a little more aggressive on the M&A front,” Pierce said. “It’s been a lot of fun.”
In a keynote interview with DeviceTalks Editorial Director Tom Salemi, Pierce said Stryker has acquired more than 60 companies in the past decade, and estimated the company’s year-0ver-year growth is now roughly split between organic innovation and acquisitions. He talked through some of Stryker’s biggest deals, including some that might not have made sense to investors when they were announced.
“We’re an equal opportunity innovator,” Pierce said. “When you have the growth aspirations that we do and that we’ve realized over time, you have to be open-minded to innovation that comes from organic, internal innovation — which we have robust investments, upwards of 7% of sales every year in internal innovation — and then external.”
And Stryker’s on the offense, not defense, when pursuing most of these deals, Pierce said.
“It is exceedingly rare — you can go across our company and look at these 60-plus deals over the past 10 years — where we have made a move from a defensive posture,” Pierce said. “We really don’t think that way. We are very diversified as a company. We can take some competitive encroachment or a slowing of the market in one space because of our diversification, because of our model, so it’s pretty rare that we fight off the back foot. It’s much more common that we’re fighting off the front foot in an offensive posture.”
The following excerpts from the interview have been lightly edited for clarity and space.
Mako Surgical (purchased by Stryker in 2013 for $1.7 billion)
“We had a program inside the company for hard-tissue, orthopedic robotics, that was about a decade old at that time,” Pierce said. “We were investing very substantially every year. We had 100, 120 engineers for a long period of time. Mako was de-risked, had traction in the marketplace, a great brand position, and was trading a little bit at a discount at that point. So we decided the right thing for us to do was to pursue Mako, and we actually shut down that program by and large, but there were some really neat innovations that we brought in future iterations of Mako from that team, a number of our engineers that were working on what we called Project Moonracer at that time who became engineers that still today work inside of our Mako business.”
Physio-Control International (purchased by Stryker in 2016 for $1.3 billion)
Pierce characterized Physio-Control as an “unusual” business for the company to buy.
“If you’re in an investor [you might have asked], ‘Why did you just go buy this defibrillator business that used to be run by Medtronic and didn’t grow at all?’ It’s now a double-digit grower for us consistently every year for AEDs and defibrillators along with a suite of products around EMS/EMT,” Pierce said.
Sage Products (purchased by Stryker in 2016 for $2.8 billion)
Another unusual business purchase for Stryker was Sage Products, Pierce said.
“Sage is for infection prevision primarily — there’s also injury prevention in that portfolio — and that’s now a $800 million to 900 million business for us,” Pierce said. “It was a heads-scratcher for a lot of people. It’s a great grower, strong double-digit grower for many years now.”
The Physio-Control and Sage deals “are offensive moves, and if you look across our portfolio we will bolster our existing offering,” Pierce said.
NOVADAQ (purchased by Stryker in 2017 for $700 million)
“We bought a company called NOVADAQ that made us stronger in surgical visualization with fluorescence imaging,” Pierce said. “They had what we thought — purely from a technology perspective, specifically in fluorescence — was a better offering. We acquired them, we learned a lot from them. But that was an offensive move. We were leading in the market already and we had an opportunity to buy them.”
Vocera Communications (purchased by Stryker in 2022 for $3.1 billion)
“Any reasonably good company works from the customer backwards: What are the customer needs, what are we seeing in terms of their challenges inside of the facility? One of the great businesses that we have inside the company is the beds and stretcher business that works in the medsurg floors. If you’re sick or post-surgery and in recovery for a day or two you might be laying in a Stryker bed, or maybe in the ICU or certainly when you come into the emergency department. We’re very close to the strains and challenges of the caregivers that work inside of those respective departments, and we had been watching over many years some of these newer technologies that help with patient care coordination. Over time, certainly post pandemic, the strain on nursing has only grown. Fewer nurses taking care of more patients, that’s a very stressful environment, including alarm fatigue where you’re in a patient room, they’re hooked up to multiple monitoring devices and there’s alarms going off all over the place and the nursing staff isn’t quite sure or tunes it out frankly on where to go and who to actually go to first from a prioritization perspective when they’re under a lot of stress. Vocera, which we had been watching over some period of time, is a patient care coordination platform which allows communication from caregiver to caregiver whether its via smartphone or smart badge. They actually have — which unfortunately is a reality in healthcare — a panic button when there’s an emergency, a caregiver’s safety is in jeopardy you can push a panic button. And the really neat thing about Vocera is you have all these technologies, those devices that are monitoring a patient or the bed that a patient’s laying in, different types of things electronically or digitally that are happening around that bed, and Vocera technology is connected to those devices. The neat thing, which goes back to panic button and safety, is we have a rules engine called Engage — invented by Vocera, not us — that allows for the establishment of the right message to the right person or team at the right time. So if you have a safety team, a threat team, inside the hospital and that panic button is pushed, it goes to the exact right people to notify them. We have roughly 150 partners that we work through that run their monitors, their various technologies, through the Vocera platform so we can unburden the staff from alarm fatigue, so they’re only getting the right alarm to the right person and where to go at the right time, and if they’re not available, it moves down that care team tree to make sure it gets to somebody who accepts the call and they go see that patient. That’s where with Vocera, we saw the need. It’s a continued need today. Nurses are under a lot of pressure and stress, and providing the really high level of patient caregiving that they want to, and a lower stress environment that they also want, is something that we are lucky to have the opportunity to do with Vocera.”
Care.ai (purchased by Stryker in 2024 for an undisclosed price)
“Think about Care.ai primarily as virtual nursing: input, discharge, activities that might be kind of lower on the value chain for a nurse that’s live to provide care for a patient. Again, they’re stretched, there are fewer of them. Nurses are burning out. And Care.ai has a technology where you have a monitor in the room and they can help virtually. We have a data bank where you have nurses that are offsite watching patients inside their room through cameras and communicating with patients on things like the examples I gave of discharge or when they’re actually being brought into the patient room. So it takes the burden off of the live nurse that’s there and allows them to do higher value added tasks, and it’s a really neat technology that plays in to the nursing shortage trend that we unfortunately are experiencing today.”
Vertos Medical (purchased by Stryker in 2024 for an undisclosed price)
Asked by Salemi about the Vertos deal and the opportunity to get into neuromodulation, Pierce said neuromodulation (along with soft-tissue robotics) is a space where Stryker is “not shy about looking into.”
“Neuromodulation, or using electric stim, there are a number of different clinical applications for that. One of those is back pain, but there are many others. This is a space where we’re interested. We’ve invested a lot of time over the years in building some expertise inside the company. We actually have had periods of time — we currently do not — but we’ve had our own development teams working on some of these things. We have a lot of that knowledge that sits inside the company, and we do get to know these companies fairly well. Many of these technologies are helping patients today in big ways, and you’ll even occasionally see a neuromodulation-related commercial or two on TV for a company that works in the sleep apnea space. We do investigate these technologies. We have an existing pain business today that works inside our Instruments division called Interventional Spine, which is where Vertos is moving inside the company. That is primarily around lower back pain, minimally invasive types of applications, nerve ablation, and in this case, you have spinal stenosis, which Vertos is addressing, where you have pressure on nerves or in the spinal column. Their technology is a very simple technology, minimally invasive, allows you to go in and shave away some of the ligament that has overgrown and put that pressure on the nerves and hopefully get that patient back to some degree of health quickly. We have a space that would be the area where neuromodulation would likely fall in the company should we ever decide to pursue one of these very promising technologies — so me are actually very mature — but some promising technologies in neuromodulation, that’s where that will reside.”
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