Abbott's Vascular Tech Is Big In Japan

| About: Abbott Laboratories (ABT)

A big deal often necessitates big divestments. To satisfy antitrust rules on their $25bn merger, Abbott (NYSE:ABT) and St. Jude Medical (NYSE:STJ) are to sell several of their vascular closure and electrophysiology devices to Terumo (OTCPK:TRUMY), Japan’s largest medtech company, for around $1.12bn in cash.

Terumo has been pursuing a fairly aggressive growth strategy, strengthening its endovascular and neurovascular portfolios, as well as its overseas footprint, through acquisitions. Most recently it bought Sequent Medical, a specialist in aneurysm embolization technology, for $380m. With today’s much larger deal it appears to be making a determined effort to become a major vascular player.

Pass the parcel

The deal will see Terumo pick up St. Jude’s Angio-Seal and Femoseal vascular plugs and Abbott’s Vado sheath, used to facilitate catheter placement through the skin into a vein or artery.

St. Jude’s vascular closure devices brought in $283m in 2015, according to data compiled by EvaluateMedTech, but sales are forecast to shrink by 4% annually out to 2022. Abbott is keeping its vascular closure products. Sale of these are not much larger – around $355m in 2015 – but are forecast to grow at an annual rate of 5% to reach $497m in 2022.

Perhaps Terumo can make more of St. Jude’s devices. Certainly this was never a major priority for the Saint Paul, Minnesota company, which has always been better known for its pacemakers and implanted defibrillators than its vascular technologies.

Terumo, by contrast, has been going big on vascular. The Sequent deal this July brought it the Web, a mesh implant inserted under general anaesthetic via a microcatheter through the femoral artery and into the brain. Its prior outright acquisition, of Onset Medical in 2012, allowed it to enter the global structural heart and aneurysmal repair markets, with technologies that could be used in complex, large-bore procedures including transcatheter aortic valve implantation and endovascular aneurysm repair.

10 years of Terumo's acquisitions

Date

Type

Target

Technology

Location

Value ($m)

Oct 18, 2016

Acquisition

Vascular devices of Abbott and St. Jude Medical

Vascular closure and electrophysiology devices

USA

1,120

Jul 14, 2016

Acquisition

Sequent Medical

Aneurysm embolisation technology

USA

380

Mar 27, 2014

Option

Arterial Remodeling Technologies

Bioresorbable polymer vascular scaffolds

France

-

Dec 21, 2012

Minority stake

Shanghai AngioCare Medical Technology

Renal denervation

China

-

Jan 16, 2012

Acquisition

Onset Medical

Structural heart and aneurysmal repair

USA

-

Apr 29, 2011

Acquisition

Harvest Technologies

Point-of-care cellular therapy devices

USA

70

Apr 14, 2011

Acquisition

CaridianBCT

Blood transfusion equipment

USA

2,625

Jun 30, 2008

Business unit

Clinical supply

Intervention products

Japan

-

Mar 6, 2007

Business unit

Bioprosthetic heart valve business of Köhler Chemie

Bioprosthetic heart valves

Germany

-

Jan 12, 2007

Acquisition

Salymed

Syringes, blood bags and cardiovascular systems

Chile

-

Click to enlarge
Click to enlarge

Terumo will have to do a good few more acquisitions like this before it gets anywhere close to the size of the company that will be created when the Abbott-St. Jude deal closes in the next couple of months.

The combined group could end up being the third-largest company by medical technology sales – Abbott currently holds seventh place in this ranking – and will compete in nearly every area of the cardiovascular market, from atrial fibrillation to cardiac rhythm management.

It is hard to gauge the effect this deal will have on Terumo’s standing in the overall rankings or in the area of vascular technologies, since the exact details of which technologies will be transferred, and how much exactly these sell, are not clear. But it could jump significantly; Terumo had sales of $3.9bn in 2015, and if it can sell these products more effectively than the less focused St. Jude and Abbott it could enter the top 20.

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