In the strangest of years, as the COVID-19 crisis upended the best-laid plans of companies across the medtech landscape, some sizable M&A transactions were still accomplished throughout 2020. While some companies completed acquisitions in more traditional healthcare services, others capitalized on the boom in telehealth and remote patient monitoring to boost their own virtual care offerings.
A pickup in merger activity midsummer after a relatively quiet period over the preceding 12 months showed the appetite for M&A is there. Thermo Fisher Scientific's doomed acquisition of Qiagen, which fell apart in August, was a notable exception. Initially valued at $11.5 billion, the deal failed to secure the approval of Qiagen shareholders, who argued the molecular diagnostics company was worth more.
Despite a continued impact on the industry from the pandemic in 2021, there is reason to expect a fresh wave of deal-making could be on the way, driven by available capital and a potential pool of distressed assets.
EY, in its annual "Pulse of the industry" report in October, noted big players in the medtech sector have taken advantage of low interest rates to take on debt, which could support M&A ambitions. The industry saw a decline in the venture capital and IPOs that smaller companies often count on for funding between July 2019 and June 2020, according to EY. As the pandemic drags on, smaller companies under financial pressure could find themselves more willing to make a deal with an acquirer.
Here we take a look back at some of the top medtech deals of 2020:
1. Teladoc and Livongo
In early August, Teladoc announced an $18.5 billion cash and stock offer for digital disease management company Livongo, which helps people manage chronic conditions such as diabetes and high blood pressure through data-driven coaching. Founded in 2008, Livongo is used by 30% of Fortune 500 companies. The pandemic has buoyed Teladoc's business, with its revenue climbing 125% and virtual care visits tripling in the second quarter. The acquisition was finalized in late October, with Livongo becoming a subsidiary of Teladoc.
2. Siemens and Varian
Siemens Healthineers reawoke a hibernating deal market at the beginning of August with word of its $16.4 billion all-cash deal to buy Varian Medical, a maker of radiation oncology systems with which it had partnered for years. Varian had revealed a 16% decline in third-quarter revenue prior to announcing the deal with Siemens, as hospitals cut spending on capital equipment during the pandemic. Varian shareholders in October approved the transaction, which is expected to close in the first half of this year.
3. Illumina and Grail
September brought a major play in the liquid biopsy market, with Illumina's $8 billion agreement to re-acquire Grail, which it spun out in 2016. Just ahead of Grail's planned initial public offering, Illumina said it would pay $3.5 billion in cash and $4.5 billion in shares to acquire the cancer screening test developer. Illumina is a maker of genome sequencing machines. The transaction is expected to close in the second half of 2021.
4. Stryker and Wright Medical
In November, Stryker finally wrapped up its $4 billion acquisition of Wright Medical, a year after the deal was first unveiled. Stryker will divest its total ankle replacement and finger joint implant product lines to Colfax subsidiary DJO Global to satisfy U.S. and U.K. regulators' antitrust concerns. Stryker gains from Wright a complementary product portfolio and customer base in upper and lower extremities.
5. Philips and BioTelemetry
In another deal timed to take advantage of the acceleration in telehealth and virtual care, Philips in December said it agreed to pay $2.8 billion in cash to buy BioTelemetry, a specialist in remote cardiac diagnostics and monitoring. Philips said the move will expand its remote monitoring business beyond hospitals and into patient homes.
6. Exact Sciences and Thrive
Five weeks after Illumina struck its deal to buy Grail, two more liquid biopsy developers, Exact Sciences and Thrive Earlier Detection, announced plans to combine. Exact Sciences said it would buy Thrive in a cash-and-stock deal worth up to $2.15 billion. The deal is expected to close in the first quarter of 2021.
7. Medtronic and Digital Surgery
Just as the COVID-19 pandemic was beginning to grip hold of the U.S., Medtronic announced the acquisition of London-based Digital Surgery in a move expected to accelerate the medtech giant's plans to incorporate artificial intelligence and data in laparoscopic and robot assisted surgery. Digital Surgery will join Medtronic's Surgical Robotics business in the Minimally Invasive Therapies Group. Financial terms of the deal were not disclosed.