The greatly expanded medical device business will allow Canon to "contribute to the world," according to the company.
|Toshiba's roughly $3.5-billion-a-year medical business has been a major manufacturer of diagnostic imaging equipment, such as the MRI machine shown above. (Image courtesy of Toshiba Medical Systems)|
Canon will greatly expand its presence in the medical device sector through its planned acquisition of Toshiba's medical device business, the 21st largest medtech business in the world by revenue.
The 665.5 billion yen ($6 billion) transaction between the two Japanese multinationals, announced Thursday, has Toshiba Medical Systems Corp. (TMSC) spun out into a holding company until Canon receives regulatory approval for the transaction. If the deal is completed as expected, it would give Canon control of a growing $3.5-billion-a-year diagnostic imaging equipment business covering everything from MRI to CT, ultrasound and x-rays. The products have enjoyed firm sales in the North American service sector and Chinese equipment sector, according to Toshiba's most recent quarterly report.
Toshiba sold the healthcare business because of its attractiveness: the overall company needs a cash infusion as it grapples with an accounting scandal involving nearly $2 billion in overstated profits over the past seven years. The company previously announced that 10,600 workers--about a fourth of the company's global workforce--are losing their jobs. On Thursday, Toshiba confirmed that the U.S. Justice Department and SEC have made inquiries about its accounting practices.
The deal is the latest chapter in the medtech merger frenzy that is shifting the landscape of the medical device industry, and would further alter the landscape when it comes to the world's largest medical device companies. (Here are the largest medtech M&A deals so far this year.)
Canon had already been rumored as a top bidder for Toshiba's medical device business. Both Bloomberg Business and Reuters report complaints about the process on the part of Fujifilm, which also desired the business.
"There is no reason to believe that the selection process wasn't fair and that Canon is paying an unfairly low price," Damian Thong, an analyst at Macquarie Group Ltd. in Tokyo, told Bloomberg.
Canon already has products in the digital radiography and fluoroscopy space, as well as retinal cameras and eyecare measurement instruments, and plans to leverage Toshiba Medical Systems Corps.'s imaging diagnostics and in-virtro diagnostics strengths.
"A collaborated effort between Canon, with its advanced production technologies, and TMSC, with its exceptional product development capabilities, is expected to lead to further enhancing TMSC's product strength through the provision of precision design and microfabrication technologies, an optimized production system, and cooperation aimed at improving quality," Canon said in a statement about the acquisition.
The new efficiencies will enable "investing in the development of next-generation medical equipment," according to Canon.
Canon also possesses proprietary high-speed dynamic X-ray imaging sensor technology, photoacoustic tomography technology, medical robotic system technologies, and minimally invasive technologies that could provide a boon for Toshiba Medical Systems Corp.'s R&D operations.
The expanded healthcare business will allow Canon to better "contribute to the world," the company said. "Within the field of medical x-ray computed tomography (CT) systems in particular, TMSC is the overwhelming market share leader in Japan and has been steadily increasing its global market share. Additionally, TMSC is the only company in the industry with a broad product portfolio that spans diagnostic x-ray systems, magnetic resonance imaging (MRI) systems, diagnostic ultrasound systems and diagnostic nuclear medicine systems. The company also offers cutting-edge medical imaging solutions and in-vitro diagnostics aimed at individualized care."
Learn more about cutting-edge medical devices at BIOMEDevice Boston, April 13-14, 2016.
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