Stryker CEO Might "Pull The Trigger" On New Deals
By Jof Enriquez,
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Having just completed its acquisition of Becton Dickinson's (BD) CareFusion vertebral compression fracture (VCF) portfolio, the latest in a recent string of deals to augment a strong pipeline of internally-developed products, Stryker is on the lookout for more M&A opportunities.
CareFusion’s VCF portfolio comprises minimally-invasive systems used in vertebroplasty and vertebral augmentation procedures and is "highly complementary" to Stryker's Interventional Spine and Neurotechnology business, according to Timothy J. Scannell, Group President, MedSurg and Neurotechnology.
Stryker's latest purchase comes one week after it bought SafeWire's guidewire and needle portfolio for minimally-invasive spine (MIS) surgery, another boost to its Spine business. Those acquisitions follow larger deals the company closed in February, when it bought hospital supplies provider Sage Products for $2.78 billion, emergency medical services (EMS) equipment manufacturer Physio-Control for $1.3 billion, and Synergetics’ neurology portfolio for an undisclosed amount.
"Keep in mind that the vast majority of the deals we do are small tuck-in deals," Stryker CEO Kevin Lobo told analysts, according to a transcript of the company's first quarter earnings call. "That will continue to be the case for Stryker. That is where we drive the most value and we find great technologies that we can give to our fabulous sales forces to drive."
Additional deals may be forthcoming, according to Lobo.
"We still have significant capacity to do more M&A and I would say all of our businesses have embedded BD people. We have not told them to slow down at all, so they are continuing to scour the market to look for opportunities that will add value. And we won't hesitate to pull the trigger on new deals if we believe they will be value-creating for Stryker," he said during the call.
The company is not banking solely on acquisitions, though, as Lobo touted a strong product pipeline — resulting from robust R&D investment in the last couple of years — to sustain growth in not only the spine segment, but across all categories.
"We now have strength in our endoscopy with our new camera. We have strength within our neuro-powered instruments. We have the human stroke market taking off, we have a strong pipeline within spine. You are seeing the 3D-printed implants taking off. So really across our portfolio, we have very strong pipelines," Lobo said.
Product launches dating back to the middle of last year have started to impact positively, as reflected in the company's first quarter financial results, company officials pointed out.
During the period, Neurotechnology and Spine grew 12 percent, MedSurg rose 3.4 percent, and Orthopedics expanded 3.3 percent. Consolidated net sales of $2.5 billion increased 4.9 percent.
Beyond the first quarter, Lobo expressed confidence that Stryker will be able to sustain growth across a wide variety of products. He also touted steady demand for the MAKO robotic system for hips and knees, ahead of a Total Knee launch in 2017.
"So that isn't a one quarter thing. I think we will continue to see strong performance through the course of the year. And we continue to spend very robustly in R&D, so we have a cadence of new products that will continue," Lobo told analysts. "Consistent R&D investment has generated strong internal product pipelines across the Company and we continue to augment them with acquisitions."