The Race To Acquire Medical Device Startups In One Graphic

Medical device startups across the globe raised nearly $4B in equity financing in 2016, placing last year just behind the 5-year high of $4.1B in 2014. NEA stands out as the most active investor in device startups with Versant Ventures, OrbiMed Advisors, and High-Tech Gruenderfonds not far behind.

As medical device companies gain traction, large corporates such as Medtronic, Boston Scientific, and Teleflex are competing in the race to acquire private medical device startups targeting neurosurgery, orthopedics, and cardiology, among other areas.

Below we used CB Insights data to track first-exit M&A activity of top medical device acquirers that have made 5 or more acquisitions since 2012.

Key Takeaways:

• Out of the subset of medical device companies with both disclosed funding and valuation data, total funding raised prior to their first acquisition was $38M. Median disclosed valuation at time of acquisition was $140M.
• Medtronic is by far the most active acquirer of medical device startups since 2012 with 15 acquisitions. Much of that activity has been fairly recent. Sixty percent of acquisitions since 2012 occurred in 2015. Median disclosed funding of a medical device startup prior to acquisition by Medtronic was $34M. Median valuation at time of acquisition was $150M.
• Boston Scientific develops products across a wide range of specialties, which is demonstrated by the breadth of their acquisitions. With deals to companies working on heart valves, neurosurgical tools, gastrointestinal surgery, and gynecology, Boston Scientific is the second most active acquirer of medical device companies with 8 deals since 2012. Notably, the company acquired Cameron Health, developers of a subcutaneous implantable pacemaker, in 2012 for $150M plus up to $1.05B in revenue milestone payments.
• BC Technical has been laser focused on acquiring imaging companies, with these companies accounting for 100% of acquired startups since 2012. But the company has not made an acquisition since 2015. Recent deals include the 2015 acquisition of diagnostic imaging service provider Legacy Medical Imaging and MRI & CT service provider MagnaServ Enterprises.
• Stryker, known for its focus on orthopedic devices, tends to acquire companies in this space. Seventy percent of their medical device startup purchases since 2012 have been orthopedics companies with the exception of CHG Hospital Beds and Muka Metal, both manufacturers of hospital beds. Recent deals include the 2016 acquisitions of Intratek, focused on devices for hand and foot surgery, and Ivy Sports Medicine, working on knee repair devices.
• Venture capital-backed companies, including CVCs, account for only a relatively small share of acquisitions in the space. VC-backed companies accounted for 22% of all first-time medical device acquisitions since 2012. Most recently, Symetis, a developer of heart valve replacement technology, was acquired by Boston Scientific in a deal valued at $435M. Symetis was backed by BioMed Ventures, Novartis Venture Funds, Banexi Ventures, and NBGI Ventures.

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