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3. M&A Deals Get Smaller

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The past M&A frenzy in the medical device industry appears to be losing some steam, according to a recent report by EP Vantage.

The average monetary value of a medtech acquisition in the first half of 2016 was $401 million; it was more than $2 billion in the first half of 2015, according to EP Vantage. Even when Medtronic's huge $50 billion purchase of Covidien in early 2015 is taken out of the mix, the aggregate value of all the deals this year is on the way to being less than half what is was last year.

Says EP Vantage: "The disappearance of the megadeal from the 2016 menu could be because the industry has consolidated as much as possible for now: any more overlap would cause too many antitrust issues to be worthwhile."

Major deals closed this year include the creation of dental products giant Dentsply Sirona in a $14.5 billion deal and Stryker's $3 billion purchase of hospital products maker Sage Products. And coming up later this year is Abbott Labs's proposed $25 billion acquisition of St. Jude Medical.

The slowdown in huge deals is not entirely bad news. It could represent a return to the smaller deals that EP Vantage describes as the industry's lifeblood. Young companies with potentially innovative technologies, after all, are more likely to get venture capital if the investors know there is a high chance of an exit from an acquisition. 

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[Money image courtesy of Tracy O per Creative Commons license]

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