News Feature | October 19, 2016

St. Jude, Abbott To Sell Portion Of Cardiovascular Business To Terumo For $1.1B

By Suzanne Hodsden

Terumo Medical Corporation

Abbott and St. Jude Medical have agreed to sell a portion of their vascular closure and electrophysiology businesses to Terumo for approximately $1.12 billion, contingent on Abbott’s successful purchase of St. Jude. Representatives from Abbott commented that the deal with Terumo is an “important” step toward completion of the St. Jude acquisition, which is expected to be complete later this year.

Under the terms of the all-cash transaction, Terumo will acquire St. Jude’s Angio-Seal and Femoseal vascular closure products, plus Abbott’s Vado steerable sheath. Abbott did not comment on any more specific products involved in the sale, but noted in a press release that the company will retain its portfolio of vascular closure products.

Abbott CEO Miles White commented that the company is focused on creating strong leadership positions in the cardiovascular and diagnostics markets, and has been “actively and strategically shaping” its portfolio to achieve this goal. Abbott recently announced the divestiture of its medical optics business to Johnson & Johnson for $4.3 billion. Abbott’s acquisition of Tendyne Holdings and investment in Cephea has boosted its market presence in the cardiovascular space.

Following the $1.12 billion deal with Terumo, Abbott and St. Jude Medical’s combined cardiovascular business will be highly competitive in the cardiovascular market, particularly in “high-growth segments,” such as atrial fibrillation, structural heart, and heart failure. Abbott’s $25 billion acquisition of St. Jude was announced in April, and representatives from the company projected combined annual revenues of $8.7 billion, as well as an “aggregate market opportunity of $30 billion.”

Rumors began circling earlier this month that Abbott may have received a $1.47M bid from Terumo to purchase a portion of its cardiovascular business. Sources told Nikkei Asian Review (NKA) that the rumored deal would greatly expand Terumo’s geographic presence. NKA did not specify which businesses were involved in the bid, or whether additional companies had made competitive offers.

St. Jude CEO Mike Rousseau told analysts in a July earnings call that St. Jude had achieved double-digit sales growth and that he was confident in future growth as the company moved toward acquisition by Abbott.  Miles told The Wall Street Journal that leadership from the combined device businesses likely would contain a mix of executives from both companies.

“We know the quality of their pipeline and the quality of their people,” said Miles. “You don’t just buy it, put it in the portfolio and leave it alone. You buy it and you put the best management you can in place, and you run it the best you can.”

St. Jude’s week also included announcing the launch of an investigational device exemption (IDE) clinical trial to evaluate the safety and efficacy of the Amplatzer duct occluder for pediatric patients with congenital heart defects. Patients eligible for the study would be severely premature newborns with patent ductus arteriosus (PDA), and the device could offer a minimally invasive alternative to surgery.