Nordic Medtech Preview
Cross-border dealflow set to continue
Overseas investors, most notably US-based companies, continue their spending spree in the strong Nordic medtech scene. Meanwhile, local executives see great upside either from establishing a presence in the US, or gaining access to the market via M&A.
Given the size of the US-market and its strong financial position – and the many attractive, innovative targets available in the Nordic region – this doesn’t look like slowing down in 2020. However, with many bigger corporations having been acquired, the remaining targets are mostly smaller, founder-owned companies, a sector banker said.
For example, Redsense Medical [REDS:Spotlight], a Swedish medtech, is interested in talking to US-based investors to get access the market, according to CEO Patrik Bhymer. Other companies, including AddBio and Acarix, also see the importance of gaining US approvals. The US market is well capitalized and it makes sense to look at approvals in the US as well as Europe, AddBio’s CEO Ulf Sewerin said.
US-led medtech deals this year have included US-based Varex Imaging Corporation’s acquisition of Direct Conversion, a Sweden-based manufacturer and marketer of linear array digital detectors, for EUR 75m, and US-based TouchPoint Medical, a provider of mobile and stationary workstations, making its move for Health Tech, a Norway-based supplier of distribution systems for medication and medical supplies for an undisclosed consideration.
Nordic companies seeking US targets have this year included Icelandic Ossur that strengthened its US footprint this year via its College Park Industries investment, a US-based provider of lower and upper limb prostheses and supporting services, and Swedish Arjo [STO:ARJO] that acquired US- based Atlas Lift Tech, a provider of safe patient handling and mobility services.
Consolidation in the sector could increase next year, as the EU’s Europe Medical Devices Regulation (MDR) is set to further tighten its criteria for companies to gain CE-mark from mid-2020. This could particularly impact smaller companies which may find it harder to stay independent.
The Nordic region has a strong tradition of creating and developing innovative medtech companies. It has been in the forefront of developing many life-enhancing products including the pacemaker, radiosurgery, dialysis machine, and titanium implants, making it attractive for international buyers, and foreign buyers have been interested in the Nordic sector for decades.
Sizeable Nordic companies that have come under foreign ownership this decade have included the 2013 acquisition of Swedish medical technology company Gambro by US healthcare company Baxter International, the 2014 acquisition of Denmark-based cancer diagnostic company Dako by Agilent Technologies Inc. [NYSE:A], and the 2016 sale of sell Atos Medical, a Swedish medical device company, to private equity firm PAI Partners.
Bigger companies still retaining a degree of Nordic-based ownership include Swedish companies Elekta [STO:EKTA], Getinge [STO:GETI] and Investor-owned Mölnlycke Healthcare. However, Elekta has been rumoured as take-over target, and former rumoured suitor Philips [AMS:PHIA] could look again, this news service recently reported, and this news service reported last year that Getinge's main owner, Carl Bennet, could consider a sale, partly as it trails behind its North American peers.
Companies to follow
Redsense Medical [REDS:Spotlight], a Swedish medtech, is interested in talking to US-based investors to discuss various growth strategies, CEO Patrik Bhymer said. While the company does not see an immediate need for cash, it would be receptive to discussing options with a strong financial player in the US, including a take-private or selling equity, he said.
QuickCool, a Swedish medtech, could consider a sale once it has received CE certification, CEO Fredrik Radencrantz said. The Lund-based company has developed a patented brain and body cooling system, primarily for sudden cardiac arrest patients. Potential future indications include stroke, traumatic brain injury (TBI) and sepsis. Quickcool made drastic changes to its operations earlier this month, and its primary focus has moved from cooling systems to the medicinal cannabis and alternative medicine sector. The change comes following a SEK 600m (EUR 60m) investment from Luxemburg-based European High Growth Opportunities Securitization, which will fund the company for three years.
Acarix, a Swedish commercial stage medical device company, could benefit from tying up with larger sector players either through a partnership or an investment to increase market share, CEO Per Persson said. Ideal companies could include Abbott Laboratories [NYSE:ABT], Medtronic [NYSE:MDT] and Koninklijke Philips [AMS:PHIA] owned Philips Healthcare, he said, noting these as general examples only.
AddBIO, a Swedish company that has developed Zolidd, a bioactive coating for dental implants that strengthens the bone, is in early stage M&A talks with larger sector players, CEO Ulf Sewerin said. Being acquired by a major player could give AddBIO’s product instant access to a substantial market, he said.
Elos Medtech [STO:ELOS], a Swedish medical devices developer and manufacturer, is reaching the point where M&A could play a bigger part of its overall strategy, CEO Jan Wahlstrom said. The company is showing solid organic growth and has increased its profit margins, and it will therefore start looking at acquisitions again, he said. Management has spent the last few years evaluating the group structure and has made clear what type of M&A would be most beneficial, the CEO said. The aim of M&A is to be able to offer more solutions to its existing customers, as well as new ones, he added.
Cellink [OTCMKTS:CLKKF], a Sweden-based 3D bioprinting company, will adopt an “aggressive” acquisition strategy in the next 12 months to add complimentary technology to its portfolio, CEO Erik Gatenholm said. Cellink is interested in targets which offer technologies including liquid handling and robotic automation technology so that it can produce products for its customers more efficiently, the CEO noted.
Ossur [CPH:OSSR/OTCMKTS:OSSFF], an Icelandic manufacturer of non-invasive orthopaedic devices, plans to continue its active M&A strategy and could increasingly look at smaller targets, CEO Jon Sigurdsson said. The potential increase in volume is largely down to the fact that most logical targets tend to be smaller, the CEO said. Typically, the company closes one to two, or sometimes more, acquisitions annually, he said.
Respinor, a Norwegian company that is developing a medical device for continuous diaphragm monitoring of critically ill patients, is looking to raise up to EUR 12m to commercialize its product, CEO Trude Tingvoll told Mergermarket in an interview at the LSX Nordic Congress in Stockholm.
Monidor, a Finnish company that is developing a medical device for remote intravenous therapy monitoring, is looking to raise EUR 7m by 2021 to fund its global expansion, CEO Mikko Savola told Mergermarket in an interview at the LSX Nordic Congress in Stockholm
MedBeat, a Swedish company that is developing a medical device to diagnose cardiac arrhythmias, is raising over EUR 4m by 2021 to commercialize its device, CEO Erik Rask told Mergermarket in an interview at the LSX Nordic Congress in Stockholm.
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