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US medical device Industry ushered in "earthquake", Industry Integration accelerates

US medical device Industry ushered in "earthquake". Stryker has entered into an acquisition and merger agreement with rival Boston Scientific, a move that will give birth to a new medical device manufacturing giant, according to reports. Boston Scientific has a market capitalization of nearly USD 50 billion. The deal is expected to become the largest merger deal in the industry in recent years. Boston Scientific boasts advanced techniques in heart devices families. Stryker, a medical device manufacturer found in 1941, is one of the top 10 leading player in terms of in orthopedics, neurotechnology and spinal surgery. It is reported that the deal will combine Stryker's technologies in orthopedics, nerves, and spinal surgeries with those of Boston Scientific in cardiovascular and heart rhythm management.

This is not a unique situation for the medical device sector in the recent years. A huge number of merger or acquisition deals of pharmaceutical companies, hospitals, health insurance and service enterprises have prompted companies across the industry to find partners so as not to fall behind. According to report released by Ernst & Young Global Limited, a consulting firm, the value of mergers & acquisitions in 2018 is expected to exceed USD 200 billion last year. About 60% of executives in pharmaceutical, biotechnology and medical device companies expressed their willingness to seek mergers and acquisitions. Raj Denhoy, an analyst from Jefferies LLC of the United States, pointed out that the medical device industry has been growing at a lower speed and seen greater difficulty for further growth. In the face of industry and regulatory changes, the demand for lower medical costs, and pressure from investors, large companies are seeking to expand their business and diversify their products in their efforts to reduce overlapping costs.

Last year, for example, Becton, Dickinson and Company acquired C. R. Bard, Inc. with USD 24 billion. The deal gave birth to a new company with annual revenue of USD 13.371 billion, making the new company the fifth largest medical device company in the world. In January last year, Abbott Laboratories spent USD 25 billion acquiring St. Jude Medical., a move that helped forge a strong alliance in the cardiovascular sector. Since then, its business portfolio has covered almost every important corner of the cardiovascular device market. Medtronic, Inc., a giant in the industry, is also unwilling to be outpaced by its counterparts. In 2015, Medtronic, Inc. managed to acquire Covidien, a company from Ireland, at a whopping price of USD 42.9 billion. Medtronic is focused on the treatment of heart rhythm disease and spinal disease and neurological surgeries which are almost different from what Covidien is engaged in. Seen as part of Medtronic’s effort to expand its business, the acquisition has brought about significant benefits for Medtronic, Inc.