2 Mar
2016

Industry report - Medical M&A – more than meets the eye?

Co-published

The start of 2016 saw a number of high-profile acquisitions in the medical space, with Abbot buying Alere, Stryker buying Sage and Medtronic buying Bellco. These highlight that large corporates, especially in that fast-moving space, have a strategy to grow by acquiring companies. In the area of medical technology and devices there is also constant pressure to outperform in the markets as well as gain traction with hospitals and, of course, stay innovative, as summarised by Bloomberg research: “Facing pressure from hospitals and purchasing groups that are trying to control costs, medical device companies have been consolidating to offer a wider range of products. More than 590 deals worth about $82 billion were announced or completed in the sector over the past year, according to data compiled by Bloomberg.” Bloomberg further reports that Stryker strengthened a tangential part of its business, by adding “a complementary group of surgical items that help prevent infections acquired in hospitals”. The Abbott-Alere deal follows a similar pattern, boosting Abbott’s diagnostics department; and the Medtronic acquisition follows the same pattern of expanding and strengthening the business.

The trend appears to be a broad strategy of acquiring and strengthening innovative solutions. But these big organisations are often broadly researching many areas, leaving them with many legacy IP assets in non-core areas. Therefore, any acquisition should be evaluated in terms of what the technical overlap is as well as whether the acquisition brings in any added (IP) value drivers or risk factors.

However, uncovering these details can sometimes be less than obvious as there are often large numbers of IP rights and deals to consider. A high-level overview assessing many different factors shows that what appears to be the same is actually quite different.

This article looks at these deals, highlighting what the various acquisitions bring to the table.

Stryker acquiring Sage – increasing their fire power?
Figure 1 shows that Stryker and Sage actually appear to have a similar number of patents in the technical areas of Sage products, and have grown their presence in these areas over time at similar rates. Although only 2% of Stryker’s portfolio, it still has a sizeable portfolio in Sage’s space.

Their geographic profiles as seen in Figure 2 are also similar, so on face value one could imagine Stryker getting more of the same assets.

However, Table 1 tells another story: we can see that Sage has actively asserted its patents over the past five years and with positive results. So it would appear as if Stryker could indeed be acquiring a strong IP position in the space.

Table 1: Sage's patent assertions

Start date

Duration

Outcome

Defendant

April 30 2015

One month

Settled

Medline Industries, Inc/Industries Inc Medline

November 22 2013

Three months

Settled

Posey Company/Posey Company (aka JT Posey Company)

November 2 2013

Four months

Won

SwipeSense, Inc

August 7 2013

Three months

Settled

DeRoyal Industries Inc

November 3 2011

One month

Settled

Val Med, Inc

March 8 2011

Four months

Settled

Skil-Care Corporation

November 14 2003

Seven months

Other

American Nonwovens Corporation

 
Abbot acquiring Alere – filling up the pipeline?
Abbot and Alere have the most technical overlap of these three acquisitions at 21%. Again, the acquirer has a substantial portfolio in the space and Figure 3 shows that both have hundreds of granted families and similar growth rates. However, there is a slight difference in the filing profile, as Alere has filed much more than Abbott over the past couple of years, which means that Abbot has acquired some interesting pipeline.

Territorially they also have slightly different profiles: Alere has a substantially broader profile as seen in Figure 5.

Medtronic acquiring Bellco – looking outside the United States?
Medtronic’s acquisition of Bellco is the acquisition in which the acquirer adds the least amount of patents to their portfolios. Medtronic has a substantially larger portfolio than Bellco (even if the technical overlap only equates to less than 1% of its total portfolio). Figure 6 shows the vast difference in the size of portfolio and Figure 7 highlights the recent drop in pipeline for Medtronic, likely indicating that an acquisition has been on the cards for a while.

The one big difference is seen in Figure 8, where two completely different geographical profiles can be seen and Bellco could give Medtronic an angle in other geographies.

What looks the same is not always the same
On paper what might look similar are indeed very different transactions from an IP point of view. As these companies must compete fiercely, intellectual property and strong IP positions could be of great value. These strong IP positions could also come in different shapes and sizes (eg, litigation-ready patents or stronger geographical footprints). The point is to have "the right tool for the job” and to align your acquired intellectual property with the existing IP portfolio and strategy.

For further information please contact:

Marcus Malek
Aistemos
View website

This is a co-published article whose content has not been commissioned or written by the IAM editorial team, but which has been proofed and edited to run in accordance with the IAM style guide.