Welcome Avatar! This week’s post will be a follow-up to Part 1 of the MedTech market landscape. You can read it HERE (guest post made for BowTiedBiotech). Part 1 provided a basic overview of the MedTech sub-industries and profiled some of the big players in the space. Part 2 will profile three additional companies. One of the three is on the same level as those profiled in Part 1 but was excluded so as to not make the post too long. The two others are more "Second Tier" players. Labeled this way due to neither having the scale nor being present in as many MedTech sub-industries as the big players.
As a reminder… This substack is intended for a scientist/engineer/healthcare investor audience. Actionable information aims to be provided to this audience. MedTech in general is often ignored in favor of its “cousins” in the biotech & pharma industries. However, this industry is full of opportunities if you know how to position yourself. For more MedTech insights follow @BowTiedTogo on Twitter!
If you are enjoying these insights into the MedTech industry, please subscribe and hit the share button to help spread the word!
Medieval Medical Device - Arrow Remover
Let’s begin!
MEDTECH MARKET PLAYERS
Below, the biggest players in MedTech are ranked by revenue generated in 2021.
Part 1 of the MedTech landscape profiled what I consider to be the most important players in the industry (Medtronic, JnJ, Abbott, and Stryker). Here, we will take a look at Boston Scientific, Zimmer Biomet, and Becton Dickinson. Innovative and respectable companies in their own right. Yet, they lack the new-market disruption ability and scale of those considered best-in-class.
BOSTON SCIENTIFIC: ABBOTT LITE
Boston Scientific (BSC) is a formidable presence in some of MedTech’s most important sub-industries. Boasting significant market share in the Cardiology, Neurology, and Urology/Gynecology spaces. A company I considered including in Part 1, BSC seems to only be a few key moves away from finally making a jump to the next level. It has been on the cusp of joining the Top 10 of the revenue list for some years. Having placed #11 for 5 years straight, BSC is now getting aggressive. The MedTech has been on a shopping spree as of late. Acquiring 5 companies in 2021 and 2 so far this year. Recent M&A activity points to BSC focusing on enhancing its strengths rather than diversifying (much like Abbott). Five out of seven of its most recent acquisitions are involved in the Cardiology market while the remaining two are involved in Urology. It is clear the competition in the Cardiology space is fierce as BSC fights to retain its market share from top-tier peers Medtronic and Abbott. Like Medtronic, BSC also houses a corporate venture arm that has facilitated its aggressive M&A strategy. Interestingly, BSC’s recent bullish outlook has spurned rumors of a potential acquisition by JnJ. Having one of the most interesting MedTech sub-industries dominated by the Top 3 revenue generators would more than likely change the landscape of the entire industry.
ZIMMER BIOMET: STRYKER LITE
The current iteration of Zimmer Biomet (ZB) is a spin-off from the pharma giant Bristol-Myers Squibb. The company is a mid-tier when it comes to revenue as it has averaged the #15 spot on the revenue list for the past 5 years. ZB's specialty is in the competitive and high-revenue generating field of orthopedics. It is also relevant (although to a much lesser degree) in the Wound Care and Robotics spaces. In its quest to take market share from other orthopedics giants - Stryker and DePuy Synthes (JnJ), ZB has taken a different approach than that of M&A growth. The divestiture of its spine and dental portfolios exemplifies this. The new company, named ZimVie, finalized its formation in March of this year…
According to Zimmer Biomet management, this planned spin-off of its Spine and Dental business is part of the company’s third phase of ongoing transformation, which includes changing the complexion of the business through active portfolio management in order to accelerate growth and drive value creation. Per management, for Zimmer Biomet, the transaction is an important next step in the company’s transition into a more streamlined company with a focus on greater and more optimized resource allocation toward innovation in core businesses that are profitable and where it sees attractive markets with opportunities to become market leaders. LINK
Now less bloated, ZB's plan for growth in orthopedics aims to leverage another of its specialties - Robotics. Almost all orthopedic procedures are elective. The advent of COVID-19 and its impact on healthcare systems has resulted in a drop in revenue for players in the space. However, this same pandemic has provided a boon to Robotics. Joint replacement robotic surgeries have seen an increase in adoption and demand. The additional windfall has cushioned orthopedic manufacturers’ lost revenue. The top 3 orthopedic players all have joint replacement robotic systems. However, it is ZB that has grown the most seeing expanded applications get approval for use. It seems ZB’s divesture strategy and new focus on Robotics enable the company to at least stay in the mid-tier. Time will tell if it’ll eventually generate growth for ZB as a whole.
BECTON DICKINSON: “BORING” BIG PLAYER
Becton Dickinson (BD) is definitely in the higher tier of MedTech companies. Its exclusion from Part 1 is due to the sub-industries it is a major player in. Despite generating respectable revenues, the sub-industries of Minimally Invasive Surgery (MIS), Wound Care, Patient Monitoring, and Urology are not that interesting. Obviously, this is only a cartoon husky’s opinion. Nonetheless, I find these sub-industries lack the high-risk nature and/or potential for serious disruption other areas of MedTech possess. Nonetheless, BD’s perennial status at the top of the revenue list (average #6 revenue generator in the past 5 years) deserves recognition. Although BD does count on the support of a life sciences portfolio (~1/3 of the company’s business), it seems to be focusing on MedTech as of late. Like BSC, BD has recently leaned on an aggressive M&A strategy. It averaged 2-3 acquisitions from 2012-2019. Since 2020, it has acquired 14 companies (4 in 2020, 7 in 2021, and 3 so far in 2022). 9 out of the 14 acquisitions have been MedTech startups with most specializing in the MIS space. The rest are involved in Wound Care and Patient Monitoring. An interesting recent development is BD's affinity for HealthTech. Software companies have made up 4 out of the 14 total acquisitions with 3 of them coming this year. Like ZB, it remains to be seen if these strategic moves will be successful. So far Wall Street does not seem convinced.
CONCLUSION
This post diverged from the inaugural post’s topic of Sterility Assurance. In this week’s post, we looked at the general competitive landscape in MedTech. In Part 1 (guest post) we looked at the general market and the most important players. Nonetheless, savvy anons should mind considering not only the elite players in the space. If your goal is to work for, invest in, or be acquired by one of the major MedTechs, it is good practice to be aware of all the major players and their projected trajectories near-term. Boston Scientific appears like a company that will finally break through to the upper ranks. Zimmer Biomet & Beckton Dickinson, however, look like they are just barely holding onto what they’ve already gained. This substack's audience of scientists, engineers, and/or healthcare investors should no doubt keep track of developments at Boston Scientific.
See you in the jungle.
DISCLAIMER
None of this is deemed legal or financial advice of any kind. All information is obtained from publicly available sources. Insights are simply the opinions of an anonymous cartoon animal/engineer/investor.