U.S. Medtech Is Gobbling Up Europe

The trend of American medical device companies buying their European counterparts may slow, but Europe is unlikely to hop into the driver's seat, a new report says.

Nancy Crotti

When U.S. medtech companies acquire European firms, the deals tend to be worth much more than those of European firms taking over American concerns.

That's according to a report by EP Vantage, which chalked the imbalance up to the fact that European medtech companies are generally smaller and less well-funded than their U.S. counterparts. Excluding Medtronic's $50 billion purchase of Ireland's Covidien, the biggest U.S. to Europe deals to date include:

In a technically in-Europe deal, Medtronic also agreed in May to buy Smith & Nephew's gynecology unit for $350 million.

The top five Europe-to-U.S. deals the service listed for 2010 to 2015 were:

Endo later sold off the urology device business it landed through the American Medical Systems acquisition to Boston Scientific.

European venture capitalists may have begun to lose their reluctance to invest heavily in medtech, particularly early-stage companies. European VC has raised several large medtech-focused funds this year. In March, Geneva-based Endeavour Vision raised a $275 million fund solely for medtech, the news service noted. Swiss/Dutch device maker G-Therapeutics (Switzerland/Netherlands) put together $40.2 million for a spinal cord neurostimulation product, according to Ecole Polytechnique Federale de Lausanne in April. And VC fund Forbion (Netherlands/Germany) earmarked about 30% of a $208 million healthcare round for medtech that same month.

But it may be awhile before European medtech companies can really compete at the level of U.S. companies in terms of having the financial heft for making acquisitions. European companies also carry the cachet of lower tax rates than those domiciled in the U.S., making them more attractive for takeover. U.S.-based companies looking to save on their taxes are more likely to seek out takeover targets in Switzerland and the U.K., which each have lower corporate tax rates than the United States, the site said.

U.S. companies keep trying to complete these so-called tax inversion deals, despite the U.S. Treasury Department's efforts to curb the practice. DOJ won one in April, when Pfizer and Allergan called off their proposed $160 billion deal.

Nancy Crotti is a contributor to Qmed.

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