For medtech, resilience over the long term includes expansion through M&A and the bravery to make bold moves to pursue unknown alliances that have a high probability to result in profitable growth.
M&A due diligence is one of our sweet spots here at Medi-Vantage. We help investors with M&A due diligence to be sure the claims that entrepreneurs are making are sound and complete and meet the needs of the acquirer and end user.
In previous economic downturns, we've noticed that medtech companies which maintained a focus on growth, and were proactive in exploring mergers and acquisitions, adjacencies, and new opportunities, tended to be more resilient. They emerged from difficult economic phases with a long-term competitive advantage over their competitors.
Difficult macroeconomic conditions can push all sizes of medtech M&A for strategic reasons or purely from financial necessity. There is interesting data from 2021 showing Total Shareholder Return (TSR) comparing our industry to others from the last three downturns.
While the life sciences sector has had variable results post market crash, as measured by total shareholder return (TSR), medtech has stayed the course (1), even compared to the S&P 500.
The present episode of economic unpredictability is an opportunity to chart a new course by seeking growth through M&A in adjacencies or startups as part of the overall growth plan for a medtech company.
According to McKinsey, companies that expand into adjacencies with good fit generate an average of 1.5% of annual shareholder returns above their industry competitors.
The question is, which adjacencies or start ups are the right ones for your medtech company?
CONTACT US
LOOKING FOR A PARTNER with KEY INSIGHTS FOR MEDICAL DEVICE TRENDS WITH CLINICIANS, HOSPITAL ADMINISTRATORS AND HOSPITAL CFOS?
OUR LAST THREE PROJECTS WERE:
M&A due diligence analysis: strategic fit for a new disruptive product
Go to market strategy for a medtech start up
Medtech price sensitivity analysis - hospital administrators and CFOs
Footnotes
Resilience in life sciences: Emerging stronger from the downturn, McKinsey & Company (December 14, 2022)