Keys To Creating Value for Early-Stage Medical Device Companies
Small cap firms that reach a successful exit via M&A tend to share a set of chacteristics that enable significant value creation. Start-ups can use them as a template to gauge their own potential for success. Indeed, those characteristics, which include the development of a novel, best-in-breed technology with significant clinical impact, having a set of products that deliver a competitive edge, and careful execution of their respective business plans (including managing capital and timelines), can serve as a template for early-stage medical device companies, and help define the parameters necessary for them to engineer their way towards an outcome that maximizes value.
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If you want some sense of the magnitude of Johnson & Johnson's recently announced acquisition of Guidant Corp., consider this: the $25.4 billion price tag was more than six times larger than any other deal done in the medical device space over the past six years; Still, if device industry executives were amazed by the deal, they weren't surprised. J&J's play for Guidant had been rumored for years-driven, it was argued, by a logical desire on the part of J&J to build on a valuable cardiovascular device business by accessing a major cardiac rhythm management (CRM) business. But it was the vascular business of both companies that seemed to propel the merger beyond the talking stages, beginning most notably, with the deal J&J and Guidant signed earlier this year to co-promote Cordis' Cypher drug-eluting stent. However, for all of the promise implicit in the merger of these two giants, there are enormous integration issues to be addressed, both before and after the deal closes. And for now, precisely how these challenges are resolved is likely to be fraught with uncertainty.
While the much-anticipated Innovative Medicines Fund is likely to benefit rare diseases in particular, other products must gain too.
Formycon has become the latest firm to announce a new CEO, after similar moves at Orion and Strides. Meanwhile, Gedeon Richter has made management changes and a new director has joined Coherus.