Medical Device and In Vitro Diagnostics/Research Deal Statistics Quarterly, Q2 2008
Highlights from the Q2 2008 review of device and diagnostics dealmaking: financing for medical device firms was down 9% from the first quarter to $838mm, which consisted mainly of late-stage venture rounds at 43% of the total. Big Pharma was surprisingly active in device acquisitions, with Novartis buying 25% of surgical instruments maker Alcon, and BMS selling off ConvaTec to private equity as part of its "string of pearls" strategy to focus on biotech. Two FOPOs dominated the $300mm financing the IVD/Research industry, while Invitrogen's $6.4bn stock swap for Applera's Applied Biosystems represented 90% of the M&A dollar volume.
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It looks like the biggest strategic gulf in the industry: focus or diversify? If the CEO thinks he can't rely on R&D to grow his way out of the industry's revenue hole, get ready to live alongside generics and OTC businesses--though he'll downplay to investors the risks of managing different businesses by stressing the commonalities with the core branded efforts and probably won't move into wholly non-pharma businesses. If he's still committed to R&D--get ready for diversification of other sorts, and some pretty clever financial tactics.