The next big thing in medtech is bigger than just one thing

Livingstone spoke with a panel of CEOs, medical device manufacturers (OEMs), and private equity investors to discuss key drivers of the medtech M&A boom.

Panelists included:

• Kevin Cordero, Stryker Craniomaxillofacial, Director, Clinical Research & Market Intelligence
• Hunter Craig, GTCR, Vice President
• Steve Sundberg, MedTorque, President & CEO
• Chris Witham, Motion Dynamics, CEO

Karl Freimuth, partner and co-head of the US industrials practice at Livingstone moderated the discussion. Panelists discussed areas of growth (AI, robotics) for the sector and the steps they’re taking to access these growth opportunities. Read the responses below:

Karl Freimuth: Let’s talk through market growth opportunities which from a sell-side perspective is a material driver of premium valuations in the medtech sector.  What is the next big thing from a technology perspective in the medtech sector?

Kevin Cordero:  Every year the Cleveland Clinic releases their list about where the medical device industry needs to go.  Pain management with the opioid crisis right now is the top one on their list. Aneurysm repair and stroke treatment are large potential growth market categories. On the pharmaceutical side, immunotherapy. On drug delivery, nanotechnology.  On the device side, robotics and artificial intelligence, as well as patient-specific implants and virtual surgical planning, are hot topics for application and training purposes.

Karl Freimuth: How about growth opportunities outside of North America. Hunter, Resonetics recently completed an add-on acquisition in Israel, STI Laser.  Kevin, Stryker is a global medical device organization. Chris, Motion Dynamics is supplying components to global OEM customers. How do you view international market opportunities, be it in Europe with a different regulatory environment, or in China with a massive emerging middle-class population representing a significant future global growth opportunity?

Hunter Craig: Chip Hance, CEO of Regatta Medical, is involved in GTCR’s Resonetics investment. Chip was a 20+ year Abbott veteran and most recently built their vascular business. One of the first things he mentioned with Resonetics, which is based in North America, is what is the ex-U.S. strategy? Since our investment, Resonetics has completed two add-on acquisitions, one in Switzerland and one in Israel. OEMs like to work with suppliers who have a global footprint and can be physically located in close proximity to where they are. By having an international/global operating presence, it just opens up the TAM (total addressable market) for the next buyer.

Chris Witham: In the last year at Motion Dynamics, we have sold to customers in 19 different countries. So we are truly a global business. Our biggest issue is finding qualified sales representatives. How do we turn over the rocks and find those opportunities across the globe?  We have added a sales agency in China. We’ve added a sales agency in Europe and Israel, and then, of course, we’re selling to customers across the United States. But there’s a ton of opportunity on a global basis. It’s just the challenge of finding those opportunities.

Kevin Cordero: Outside of the U.S. market, we’ve been incorporating more dedicated sales representatives by division or surgical specialty and moving away from more broad distributor models. So we have more direct customer interaction, focus and case coverage, in addition to specific marketing and regulatory teams dedicated to individual markets because the businesses are drastically different in Europe versus the U.S., as one example.

Access the entire Medtech M&A report by clicking here.

For a pdf version of the report, please reach out to Olga Jewusiak at jewusiak@livingstonepartners.com.