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Year in Review

Merger and Acquisition Activity in 2012: Orthopaedics, Spine, Supplier

Merger and acquisition activity in 2012 was reduced in number of transactions vs. 2011. Year 2013 has already yielded four notable negotiations: the offer for Corin Group by 2IL Orthopaedics, the merger of BioMimetic Therapeutics with Wright Medical, DJO’s purchase of Exos and the acquisition of Geomagic by 3D Systems. M&A continues apace, across the space.

Exhibit 1 recaps transactions identified in 2012. Strategic highlights follow. Transactions are listed alphabetically by acquired entity within quarter of completion.

 

Completed in 1Q12

CASCADE MEDICAL’s orthopaedic assets purchased by MUSCULOSKELETAL TRANSPLANT FOUNDATION
• Platelet-rich plasma (PRP) and platelet-rich fibrin matrix technologies, to be distributed globally by ConMed Linvatec under a Sports Medicine Joint Development and Distribution Agreement
• ConMed receives services fees amounting to 100% of revenue from PRP products
 
REMMELE ENGINEERING acquired by RTI INTERNATIONAL METALS
• Remmele provides precision machining, engineering and other technologies and services to the medical device sector; RTI supplies titanium mill products and fabricated components
• At 9 months ended 9/30/12, Remmele contributed ~$83MM to RTI revenue
 
SANDVIK MEDICAL purchased by ALTOR/ORCHID ORTHOPAEDICS
• Sandvik Medical is a contract manufacturer of orthopaedic and dental implants and instruments
• Acquisition boosts Orchid to estimated 11% of 2012 global orthopaedic supplier market
 
SYNOVIS acquired by BAXTER
• Synovis’ portfolio includes orthopaedic and wound management products used in reconstructive, orthopaedic and sports medicine applications
• Transaction named among primary growth supporters for Baxter’s BioScience segment growth at 9 months ended 9/30/12
 
SYNVASIVE TECHNOLOGY acquired by ZIMMER
• Manufacturer of STABLECUT surgical saw blades and eLIBRA Dynamic Knee Balancing System for soft tissue balancing
• Named as “strong contributor” to revenue growth at 9 months ended 9/30/12
 

Completed in 2Q12
 
ADVANCED MEDICAL TECHNOLOGIES acquired by MEDTRONIC
• German manufacturer with wide portfolio of interbody systems in new shapes, geometries, materials
• In FY 2Q13 (ended 10/26/12), launched first of acquired products, including interbody implants
 
DEPUY’s Trauma business acquired by BIOMET
• Offer accepted in 5/12; initial close in 6/12 of operations in U.S., U.K., Australia, New Zealand and Japan, as well as manufacturing operations in Switzerland; 21 additional countries closed as of 8/12
• Boosts Biomet to estimated 7% of worldwide trauma segment (See ORTHOKNOW 7/12.)
 
EDEN SURGICAL acquired by SURGLINE
• Eden reportedly formed in 2010 for distribution of trauma products; recorded no revenue
• SurgLine formed with intent to source and distribute FDA-cleared medical and surgical products at discount prices
• SurgLine did not file 10-K for the period ended 7/31/12, citing difficulty in completing and obtaining required financial and other information without unreasonable effort and expense
 
KENSEY NASH acquired by ROYAL DSM
• Kensey provides resorbable biomaterials with application in orthopaedic, sports medicine, spine, trauma, craniomaxillofacial and general surgery
 
LIFEMODELER acquired by SMITH & NEPHEW
• Provider of biomechanical human body simulation tools 
• SNN has used LMI’s LifeMOD human simulation tool to develop several key products
 
ORTHOFIX BREG subsidiary purchased by WATER STREET HEALTHCARE
• Represented company’s exit from sports medicine business
 
SPINAL USA and PRECISION MEDICAL acquired by PRECISION SPINE
• In 2012, received FDA 510(k) clearance to market Mini-Max Minimally Invasive Access System, Slimplicity Solo Anterior Cervical Plate; entered into agreement to co-develop devices based on rare earth magnetic technology for decompression of spinal stenosis, etc.
 
SYNTHES acquired by JOHNSON & JOHNSON
• Boosts DePuy/Synthes to estimated 22% overall orthopaedic market share, 42% of trauma and 25% of spine (See ORTHOKNOW 7/12.)
 

Completed in 3Q12
 
AXIAL BIOTECH’s ScoliScore scoliosis test purchased by TRANSGENOMIC
• Saliva-based multi-gene test provides highly-accurate assessment of likelihood of spinal curve progression for patients diagnosed with adolescent idiopathic scoliosis
• Provides access to testing market estimated at >400,000 patients in U.S. alone
 
DRAGONBIO SURGICAL IMPLANT (controlling stake) acquired by MINDRAY MEDICAL
• Dragonbio provides joint replacement, trauma, biologic and spine products in China
 
TELEFLEX MEDICAL OEM orthopaedic business acquired by TECOMET
• Teleflex lines include custom surgical instruments and micro-machined products (plates, screws, rods, etc.); Tecomet has a special emphasis on orthopaedic, trauma and spine 
 

Completed in 4Q12
 
CHINA KANGHUI acquired by MEDTRONIC
• Total consideration ~$816MM; total value of transaction, net of Kanghui’s cash, ~$755MM
• One month after closure, Medtronic and Weigao Group signed separation agreement to terminate their joint venture established in 2007
 
ORTHOHELIX acquired by TORNIER
• Could more than double Tornier’s lower extremity revenue
• OrthoHelix expected to generate ~$30MM in 2012 sales
• Ex-U.S. sales of OrthoHelix products slated for 2013 launch
 
Certain assets of PHYGEN acquired by ALPHATEC SPINE
• Phygen could contribute ~$15MM in 2013 revenue
• Alphatec has stated that Phygen is “no longer a physician-owned distributor”
 
 
Sources: ORTHOWORLD estimates, company press releases, earnings calls, web sites, articles in the public domain, filings with the Securities and Exchange Commission, etc.