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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The first quarter of 2008 saw a dearth in financings for both the medical device and in vitro diagnostics segments. In the former, volume fell short of the billion dollar mark while the latter failed to reach the success the previous quarter had witnessed, despite completing an equal number of transactions. M&A in medical devices didn't look any more promising, bringing in $1.6 billion, a huge slide from the impressive $10 billion total of 2007's fourth quarter. However, there was one bright spot: acquisitions within in vitro diagnostics/research reagents substantially increased to $3.1 billion from the $370 million spent in the previous three months, led by Inverness Medical Innovations' $1.1 billion takeover of Matria Healthcare Inc. Also noteworthy: oncology diagnostics alliances grew slowly and steadily thanks to increasing attention from larger companies.