Themiddle-sized and large companies are very professional and grow at a properspeed, which appeals greatly to the investors, and several companies satisfysuch requirements.  E Vantage provides alist of potential candidates and list the reasons why they are included.

Professionalism VS high increase

As forthe 6 medical technology companies purchased at the rate of over 1 billion USDthis year, except Covidien, the revenue of the other companies are from singletreatment fields. Only less than half of Covidien's sales amount is fromhospital device; therefore, it is very professional.

Whenthe performance of the purchased company is used as an index for assessment,high growth rate seems to be a dispensable feature. For example, for Tornier, aspecialized company in bone surgery purchased by Writght Medical and NobelBiocare, a specialized company in dental surgery purchased by Danaher, theirgrowth rate was expected to be 8% and 5%, respectively in merger.

Thegrowth rate of Biomet purchased by Zimmer and CareFusion purchased by BectonDickinson was even lower, 3.8% and 3.4%, respectively, in the acquisition.

Throughthe similar parameters in the application of evaluateMedtech database, severalcandidates who show great interest can be found (see the above table).Companies who had a sales amount of medical and technological products of over1 billion USD in 2013 and 45% of which were in single fields were analyzed andincluded. In addition, these companies have an annual growth rate of over 4%.Although it is not that important, it must be an advantage for them to beselected.

Bonesurgery leads to the trend of merger and acquisition this year, and many peoplewonder whether there will be bigger case of merger and acquisition. If WrightMedical is not one that finally purchases specialized bone surgery company,then Stryker will not be the next goal, but its market value will exceed 33billion USD and a very large company will buy it. Medtronic is currently busyenough with its own affairs, and the recent strategies of J&J's hasinvolved the asset stripping instead of acquisition.

Smith& Nephew is very likely to be the object of acquisition although America'snew tax law makes the company whose headquarters is located in UK not asappealing as before. However, this company has a proper scale and is easy to bemerged, and it is well integrated with a larger-sized bone surgery specializedcompany due to the product mix. In fact, the merger of two specialized bonesurgery companies listed in the company will not be very shocking.

Provide growth impetus to the buyer

Essilor,a French lens manufacturer, has the most rapid growth among top 10 companies inthe medical technology industry. As it is not a traditional medical technologygroup, the sales amount is from the spectacle lens, so it is not very likely bepurchased by a pure medical technology company.

However,companies such as Novartis may be the buyer of this company. The opthalmic lensmanufactured by Essilor can be mutually supplementary to the products developedby Novartis Alcon. The annual growth rate of 8% of Essilor can no doubtrejuvenate Alcon. Currently, the company's performance growth is predicted tobe at the speed of yearly 4% to 2020.

Thecardiovascular field is very representative in this analysis. However, it ispuzzling that the Edwards in the field of track valve has not been purchased.This company may be very suitable to Abbott Laboratories, Boston Scientific orSt. Jude, and it will become the growth impetus.

St.Jude is not as professional as Edwards, but it can be regarded as an optionalcardiovascular specialized company. It has cooperated with Abbott in sellingcardiovascular medical devices, and the cooperation effects reach the expectedlevels. In addition, St. Jude has advantages in electrophysiology and heartsurgery, and it can go well with the interventional heart class products ofAbbott. This company that is produced hereby will have sufficient scale and cancompete with Boston scientific although it is not as good as the associationbetween Covidien and Medtronic.

It isobvious that, in vitro diagnosis companies are not the participant in themerger and acquisition wave in 2014. The possible reason is that it is moredependent on the license cooperation than other sub-fields in the medicaltechnology industry, such as the cooperation with large-scale pharmaceuticalcompanies to carry out the assisted diagnosis. However, Sysmex has an enviabledouble-digit growth rate; for a large-sized but relatively-slow-growing company,such as Siemens or Thermo Fisher Scientific, it has a promising prospect.

Of course, predicting which company will go through the nextmerger and acquisition worth several billion USD is impossible, and thisanalysis is a thinking experiment at most. The key of the problem is that,almost every medical technology company with a market value worth one billionUSD must defensively expand its scale to main the competitiveness; otherwise,it will be merged by its competitions.

Issuance time:2014   Source: EP Vantage