Medtronic Deal Drives Strong Q1 for Medical Device Sector

Medtronic’s $42.7 billion acquisition of Covidien led the medical device sector and helped drive a record-setting $166.3 billion in life science deals closed during the first quarter of 2015, a new report from Pricewaterhouse-
Coopers shows.

Overall, the device sector brought in seven deals totaling $56.1 billion, more than 10 times as much as the $4.9 billion total for 10 deals in the fourth quarter of 2014.

The sector is expected to remain strong throughout the year as eight potential deals valued at $5.6 billion were announced during the first three months of the year.

One diagnostics deal, Takeda Pharmaceuticals’ acquisition of Envoy Therapeutics, accounted for $140 million. This overshadowed the one of deal during the fourth quarter of 2014 — a $16 million transaction.

PwC lists four trends that are expected to continue throughout 2015 — divestures, consolidation, globalization and asset swaps. Consolidation played prominently in the medical device sector in the first quarter and is expected to continue this year as companies strive to maintain their bargaining power by expanding product offerings and adopting new business models, PwC says.

The sector was the second most lucrative behind pharmaceuticals, which closed 18 deals totaling $97.4 billion during the first quarter. In the biotechnology sector, six deals worth $6.4 billion closed, up from four valued at $3.3 billion in the previous quarter.

Contract research organizations also added to the strong quarter, based largely on Laboratory Corporation of America’s acquisition of Covance for $6.2 billion.

View the report, Pharmaceuticals and Life Sciences Deals Insights Quarterly, at www.fdanews.com/05-06-15-pharmalifesciences.pdf. — John Bechtel