The first half of 2017 has been relatively strong for the medical technology space. In the public sector, MedTech stocks have been performing well. Many believe this stems from the potential permanent repeal of the Affordable Care Act and its associated medical device excise tax. Blue chip company names such as Medtronic and Boston Scientific, have been on the rise. On the M&A side, the focus has mostly been large deals such as the BD acquisition of Bard and Cardinal’s acquisition of a large Medtronic franchise. Companies such as as Johnson and Johnson have been active in M&A and investing. On the financing side, money has still been tight, and investors are interested in later stage companies, especially those with revenue. However, certain areas such as non-invasive monitoring have been hot. There is an IPO window as evidenced by the Valeritas IPO, but mostly for higher revenue companies (>$20M).
Starting in 2013, a 2.3% tax on the sale price of taxable medical devices, went into effect. At the time, this affected the share price of many publicly-traded medical device companies since the excise tax would cut into their profits. Many also believe this led to a loss of tens of thousands of jobs and increased prices on products to consumers. However, in the beginning of 2016, these companies were granted a reprieve when a two-year moratorium on this excise tax, was put into place for 2016 through the end of 2017. Currently, discussions are underway to permanently end the excise tax when the moratorium runs out at the end of the year.
Ending the excise tax would be just one contributor to why the MedTech sector is poised for growth. Also on that list are low valuations in private MedTech companies and assets that have moved to later stages. This should lead to more investments in the space and a more favorable environment for deal making and M&A. Locust Walk is uniquely positioned to help in both these areas. Our team specializes in running multi-track processes for MedTech companies focused on gaining an exit for their investors and shareholders or raising additional funds to bolster commercialization efforts. We would be delighted to speak with you and your company and assist you in achieving your company’s maximum potential. Please feel free to contact me at: stewart@locustwalk.com.
We recently published our Quarterly Report where we compiled and analyzed key statistics and trends on strategic transactions and financing in Life Sciences. We welcome you to download our FREE report to learn more about current trends in Biopharma public indices, Biopharma IPOs, Med Technology sector and how life science strategic deal activity has been performing in recent years.
