Possible Upsurge in Medical Technology Mergers and Acquisitions by 2025

Financial experts from Bank of America anticipate a promising scenario for mergers and acquisitions within the medical technology sector by 2025. According to Travis Steed, Stephanie Piazzola, Craig Bijou, and Enjia Cao, the year 2024 represented a “typical year” in terms of medtech mergers and acquisitions, with a total of 19 noteworthy deals amounting to approximately $25 billion. Significant transactions included Johnson & Johnson’s $13 billion acquisition of Shockwave Medical, BD’s $4.2 billion purchase of Edwards’ Critical Care division, and Boston Scientific’s takeover of Axonics for $3.7 billion.

(For comprehensive coverage of these M&A activities, click HERE to visit MassDevice.)

Despite these substantial transactions in 2024, the analysts foresee an even more robust wave of medtech M&A activity in 2025. “We anticipate a surge in medtech mergers and acquisitions in 2025 due to a more favorable regulatory framework, decreased financing costs, normalized growth rates in end markets, and the elapsed time since peak valuations in small-to-midcap companies,” they explained.

According to analysts from BofA, Boston Scientific and Edwards made significant strides in 2024 with four M&A deals each. Johnson & Johnson completed two key transactions, with the acquisition of Shockwave Medical being particularly noteworthy. Even amid this impressive level of activity, the experts expect further M&A activity from both Boston Scientific and Johnson & Johnson over the coming year.

“In 2025, BSX and JNJ will likely continue to be active in mergers and acquisitions,” noted the analysts. “BSX maintains significant margin flexibility as Farapulse starts contributing positively to margins in 2025. Meanwhile, JNJ seems intent on enhancing its interventional cardiology portfolio.”

Other major companies like Stryker and Zimmer Biomet may also enter the M&A scene, the analysts suggested. On the other hand, they predict minimal changes from Medtronic as it concentrates on smaller integrations and divestitures, while Abbott remains somewhat unpredictable in this regard.

The experts state that private companies have dominated medtech M&A over the past few years, a phenomenon ascribed to high valuations of public companies and stagnation in IPO markets. However, with 2024 witnessing public companies such as Shockwave, Silk Road Medical, and Axonics being acquired, the focus now appears to shift towards public company M&A.

“Some private entities might be less inclined to exit, given the gradual revival of IPO markets,” they wrote. “Meanwhile, many public companies continue to trade significantly below their peak stock prices, even with successful operations and commendable growth figures.”

As for the markets to be observed closely, the analysts emphasized the peripheral vascular market, driven by large corporations aiming to penetrate this segment. Additionally, soft tissue robotic surgery remains a popular area, with private entities requiring the resources of larger firms for sustainability. Other areas of strategic interest pinpointed by the analysts include interventional cardiology, structural heart, sleep apnea, various stimulation markets, and foot and ankle sectors.