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A White Knight for Bausch & Lomb

Executive Summary

Bausch & Lomb was slogging forward after a difficult year-the company had been embroiled in a lengthy accounting investigation involving some of its foreign subsidiaries since the end of 2005 and in early 2006 it was compelled to recall its most profitable product-. In mid-May 2007 Bausch & Lomb was wrestling with a 3% decrease in annual sales, 344 product liability lawsuits, and an overhanging intellectual property case that could affect its fastest growing contact lens line, when up galloped white knight private equity firm Warburg Pincus, with a $4.5 billion offer to take the ophthalmic company private.

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Abbott buys AMO, Gets Double-Digit Growth Segment

The ophthalmic industry has traditionally stood alone, with its own device and pharmaceutical companies selling products marketed to specialists. So the announcement on January 12 that diversified giant Abbott Laboratories would acquire Advanced Medical Optics was initially astonishing, as was the hefty premium that Abbott offered. Perhaps Abbott was willing to pay more than it otherwise would have because of the recent divestiture of its Abbott Spine business. In AMO, Abbott is getting a business that almost can't fail to grow by double digits (despite recent economic stresses on the laser vision correction market) because of the demographics of the ophthalmology industry and improving margins on products like intraocular lenses, which serve the burgeoning elderly cataract patient population.

Trends for the New Year: Can Medtech Build on the Success of 2007?

Looking back at 2007, the performance of the medical industry seems strong, from blockbuster M&A to a better-than-expected result of a years-long DOJ investigation into the orthopedics industry. Even Boston Scientific seemed finally to be turning the corner. Drug-eluting stents (DES) got a second chance as data presented from several trials showed better mortality than with bare-metal stents. Venture capitalists poured even more money into device start-ups, both young and old. The confidence shown by venture investors was, not surprisingly, reflected in an IPO market that appeared to continue its recent rebound. But there are also some concerns: company consolidation, increased safety concerns and litigation revolving around physician-manufacturer relationships are causing some to wonder how long the foundation on which the industry's strong showing of recent years can sustain.

Trends for the New Year: Can Medtech Build on the Success of 2007?

Looking back at 2007, the performance of the medical industry seems strong, from blockbuster M&A to a better-than-expected result of a years-long DOJ investigation into the orthopedics industry. Even Boston Scientific seemed finally to be turning the corner. Drug-eluting stents (DES) got a second chance as data presented from several trials showed better mortality than with bare-metal stents. Venture capitalists poured even more money into device start-ups, both young and old. The confidence shown by venture investors was, not surprisingly, reflected in an IPO market that appeared to continue its recent rebound. But there are also some concerns: company consolidation, increased safety concerns and litigation revolving around physician-manufacturer relationships are causing some to wonder how long the foundation on which the industry's strong showing of recent years can sustain.

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