Did Medtech M&A Come up Short in 2023?

A new report from EY shows that medtech spent about 28% less in deals in 2023.

Omar Ford

January 12, 2024

2 Min Read
Image courtesy of EY

A new report from EY shows that while M&A spend rose in pharma and Lifesciences there was a decline in the medical device industry. John Babbitt, Partner, Life Sciences, EY, spoke with MD+DI to discuss the findings of the EY M&A Firepower Report.  

Let’s talk about how medtech looked in 2023 from a deal’s perspective. I noticed in the report that the medical device industry fell 28% to $34 billion. What were some of the factors that led to this decline and has this been a consistent decline when looking at the medtech spend in deals over the past few years? How does this contrast with the biopharma space? 

Babbitt : 2023 was a weird year for Medtech in general with GLP1 fears impacting stock prices and valuations along with higher interest rates making dealmaking more expensive.  With the impact (or lack of impact) related to GLP1 in the rearview mirror and interest rates likely to decline 2024 is positioned to be better for medtech M&A.

If you could describe the landscape for M&A in medtech in one word, what would it be?

Babbitt: Attractive.

It feels like the number of “big deals” (M&A) were few and far between in 2023. The Globus/NuVasive merger was cited in the report and definitely was huge, but did we see any others? Also, is the market showing signs of huge deals in 2024? While it’s impossible to predict the future – what is the likelihood of megamergers in this environment?

 Babbitt: Unlikely.  Never say never, but the fact is that large scale M&A has not correlated to TSR outperformance. Tuck ins have worked, make sense and with the lack of an IPO market will be the attractive exit route in 2024.

 What is one of the hottest sectors in the medical device industry in terms of dealmaking activity? Do we see many deals swarming around AI, digital health, or cardiovascular for example?

 Babbitt: Recently it has been structural heart and cardiac ablation deals including pulsed field ablation and left atrial appendage deals coming to fruition.  Look for others to enter this space.   

 Finally, what are some predictions that you could offer for the medical device market in 2024?

Babbitt: The conditions are ripe for an increase in medtech M&A for 2024.  All the factors cited above along with significant cash balances on hand (see EY Firepower) and improving profitability from lower inflation and better product pricing should all contribute to a productive 2024 medtech M&A environment.

About the Author(s)

Omar Ford

Omar Ford is MD+DI's Editor-in-Chief. You can reach him at [email protected].


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