The medical device giant's latest deal involves $1.28 billion for external defibrillator manufacturer Physio-Control.
|Sudden cardiac death kills about 300,000 adults annually in the U.S. alone, and external defibrillators are the go-to devices to prevent such deaths. (Image courtesy of Physio-Control)|
Stryker on Tuesday said it will spend $1.28 billion to acquire Physio-Control International (Redmond, WA), a maker and manufacturer of monitors/defibrillators, automated external defibrillators (AEDs) and CPR-assist devices.
So far this year, Stryker has announced at least $4 billion-worth in M&A deals. Stryker announced early this month that it will spend $2.775 billion to buy Cary, IL-based Sage Products, which manufactures a host of products meant to prevent so-called "never events" in ICUs and hospitals, including hospital-acquired infections. Stryker is also spending an undisclosed amount on Synergetics USA's neuro portfolio.
In the case of the Physio-Control deal, Stryker is acquiring the company from Bain Capital Private Equity. Physio-Control saw sales of $503 million in 2015, up 6% from the year before. The company has a storied history, started in the late 1950s with what it touts as the first DC defibrillator, which became the prototype for devices used by emergency medical services and hospitals around the world.
Stryker executives view the Physio-Control acquisition as complementary to the company's emergency medical services business. Sudden cardiac death kills about 300,000 adults annually in the U.S. alone, and external defibrillators are the go-to devices to prevent such deaths, according to Cleveland Clinic.
"Physio-Control's focused strategy and their culture will fit well within the EMS business of our medical division, further leveraging our existing call pattern," Stryker CEO Kevin Lobo said in a news release.
The Physio-Control acquisition is expected to close at the start of Stryker's second quarter, pending U.S. antitrust regulations and other customer closing conditions.
The deal is but another sign that that the medtech mergers frenzy seen in 2015 is continuing into 2016.
Much of the merger activity is being driven by the way the U.S. government through Medicare is incentivizing health providers to be more concerned about how efficiently and effectively they manage patient populations--versus the former fee-for-service model's focus in which they counted how many devices, procedures, and services they are able to sell. Both health providers and private insurers are merging in response. That means the pressure remains for medical device makers to consolidate to offer better economies of scale, as well as create a whole cafeteria of products and services to offer up around each device.
Stryker has been rumored as a potential suitor for British medical device giant Smith & Nephew, but so far Stryker has not engaged in huge mega-deals such as Medtronic's roughly $50 billion acquisition of Covidien that closed in January 2015.
Still, Stryker executives appear excited to put the company's balance sheet to work on acquisitions. Lobo recently described Stryker's growth strategy as being based on a diversified sales footprint bolstered by "healthy R&D investment and a focus and disciplined M&A effort."
Learn more about cutting-edge medical devices at BIOMEDevice Boston, April 13-14, 2016.
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