EY today released its 2017 M&A Firepower Report: Life sciences deals and data, which analyzes three life sciences subsectors: biopharma, biotechnology and medical devices. The report’s biggest overall prediction for 2018 involves a surge in mergers and acquisitions (M&A) by life sciences companies, with the total value of deals once again surpassing $200 billion.
Here’s are the three things that especially stuck out in the report when it comes to the medical device industry:
1. M&A isn’t going away
There have been so many huge medical device companies merging in recent years. That means there isn’t a lot of fodder left for big deals. But the incentives for medtech M&A are still there, because hospitals are merging, healthcare payment models are changing, and there’s pricing pressure on medical device products.
2. More investment in long-term R&D
The business-friendly environment – especially in the U.S. (e.g. the new tax laws, the Trump administration’s slashing of regulations and other business-friendly moves) – should give medical device companies more room financially to invest in research and boost innovation over the long-term. Innovation is going to continue, even accelerate, as companies have more confidence and a positive outlook.
3. Continued evolution toward new business models
The shift, especially in the U.S., toward value-based healthcare means that medical device companies are increasingly seeking out service-based models. That trend is expected to continue in 2018.