As I highlighted in Dotmed’s Healthcare Business News, 2018 was an active year for mergers and acquisitions in the technology enabled medical device sector and 2019 is off to a good start.
There were 50 announced acquisitions of tech-enabled device companies in 2018. Notable areas included clinical trial management, device software optimization and IoT sensor technologies.
Private equity firms were active in the sector in 2018 and firms such as GTCR, Advent and Genstar acquired companies in the battery, RF Systems and asset management sectors.
Another interesting trend is the rise ofcarve-outs from the large strategic players. Private equity is stepping to the plate as large multinationals shed the excess weight that may not be core to their business.
2019 is off to a solid start on the technology-enabled medical device M&A front, as there were two transactions in January, Qualcomm shed their Qualcomm Life business in February, and already three transactions through the first half of March. Interestingly enough, Zoll Medical has already acquired two companies in 2019, acquiring Payor Logic in January and Golden Hour Data Systems in March. Zoll is continuing the march that we are seeing from medical device companies acquiring revenue cycle management and EHR companies.
In addition to Zoll, Resmed, Deloitte, Johnson & Johnson and Siemens also made device-related software acquisitions in the last few years. The trend of medical device companies acquiring software companies is expected to continue as medical devices are important data gathering points for patient information and caregiver workflow monitoring.
Securing medical devices will also be an area to watch. The Food and Drug Administration issued new guidance in 2018 to assist device manufacturers with their medical device design and regulatory framework for submitting premarket submissions. As any device could become a malware entry point, manufacturers, hospitals and other stakeholders will need to continue to integrate security platforms into their designs.
With the healthcare sector a common ransomware target, it is expected that healthcare-related cybersecurity M&A will increase in 2019 as leading security companies in the sector continue to move into healthcare with vertical solutions. Moreover, medical device and diagnostic companies need to consider their cybersecurity strategy and potentially acquire security companies themselves to gain an edge or even stay relevant. Relying on third parties to secure EHRs, medical devices or diagnostic equipment may no longer be sufficient.
One thing is for sure, whether it is cybersecurity, IoT or clinical trial management, the pace of M&A is expected to continue in the healthcare sector in 2019. For more information on these trends, visit Dotmed Healthcare Business News.