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Tuesday, January 12, 2016

2015 Medical Device M&A Year End Review

Some stats on medical device and diagnostics investment/M&A patterns from 2015: Ups and downs

(from MedCity News)

In general, venture capital went up quite a bit in 2015 reaching $59 billion, more than doubling in the last five years – but according to the latest Silicon Valley Bank report, only $2.4 billion went into medical devices.

Based on the report, interest in investment in the medical device and diagnostics sector does seem to be going up, though. Companies with just a CE mark or even no regulatory approval at all are still getting acquired more than what’s considered average – which should provide hope for those in early stage.

“The not-approved and CE mark deals outnumbered any commercial deals,” Silicon Valley Bank’s Healthcare Practice Managing Director Jonathan Norris told FierceMedicalDevices. “That hasn’t happened since 2009. That’s good news–and they got snapped up for good dollar amounts.”

“The Series A investment was off substantially, but look at the M&A happening in the sector,” Norris added. “The number of Series A rounds equals the number of M&A deals. That seems like a great time for venture investors–they can get pick of the litter and don’t have to have a lot of me-too companies. It seems like that would be a great time for Series A activity, so we’re hoping that it will pick up.”

Reportedly, NEA was the most active medical device investor in 2015 with 8 deals for a total of $136 million, followed closely by Life Sciences Partners. Boston Scientific was the most active corporate investor in medical devices last year with seven investments totaling $75 million, and Johnson & Johnson’s had four deals worth $60 million.

In terms of the most prominent focuses for investment in devices, cardiovascular was at the top, followed by orthopedics, vascular and surgical.

Six of the medical device acquisitions last year were by Medtronic, this is including it taking over Covidien, which would have likely taken the number two spot if it weren’t for this acquisition. And of course, Google jumped into the game full-force with the development of Verily and Verb Surgical with Johnson & Johnson.

Hopefully 2016 will be a productive year in this area of investment to increase the development of so many new and promising projects. Medtronic will probably stay strong in the acquisitions area, and Google will likely continue to gain momentum as it establishes its identity in the field.

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