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Zimmer Buys Abbott: Difficult Times Ahead in Spine

If spine is such a promising market, why did Abbott sell its spine business to Zimmer? The sale is a reflection of the transition period underway in the spine market, a transition born of a combination of the glut of small companies, the disappearance of large buyers, and also, some disappointments in some of spine's most promising technologies, And with that transition has come a perceptible loss of momentum in spine. For now that means depressed valuations on private financings for venture-backed spine companies and less-than-clear exits-an amazing turn around for an industry segment that just a couple of years ago looked strikingly different, certainly not the kind of spine industry Abbott thought it was buying into six years ago.

With the news last month that Abbott is selling its spine business to Zimmer for around $360 million, it may be hard to recall that less than two years ago Abbott was one of the finalists in the pricey sweepstakes to buy St. Francis Medical Technologies, losing out to Kyphon Inc. (now part of Medtronic PLC) in a deal that would eventually fetch $725 million or that, just four years earlier than that, Abbott Laboratories’ acquisition of Spinal Concepts (now Abbott Spine), was part of an ambitious plan to target the hot and fast-growing segment of spine devices as its next major play in medtech, following an earlier effort to build a cardiovascular franchise. [See Deal][See Deal]. (See "Spinal Concepts: Leading Abbott into the Spine Market," IN VIVO, July 2004 Also see "Spinal Concepts: Leading Abbott into the Spine Market" - In Vivo, 1 July, 2004..)

Indeed, six years ago, when Abbott bought Spinal Concepts to get into spine, the deal seemed rich in promise, notwithstanding...

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