Nov. 13 - thedeal.com - Boston Scientific Corp. CEO Jim Tobin, a guy who knows a thing or two about acquisitions, spoke at the Cleveland Clinic's Medical Innovation Summit Wednesday. Lazard Capital Markets LLC analyst Sean Lavin summarized Tobin's speech in a note to clients Thursday morning. First, Tobin reinforced what he and other execs have said recently: Boston Scientific is on the prowl with $2 billion in cash on hand. The downturn could present good deals for the diversified medical device maker, which is trying to dig out of the hole it created with its $27 billion takeover of Guidant Corp. in 2006.
Boston Scientific built its device empire through acquisition, but since the Guidant deal, the firm has shed several noncore product divisions and investments, often at a loss.
Tobin said Wednesday Boston would only buy "things that increase top-line growth. Small startups are generally out of luck." Boston will look for products that doctors want, he said, not interesting technology that might turn into products in the future.
He also said the dearth of IPOs -- no life sciences firm has gone public since March -- could be a death knell for venture-funded startups. "If you are a startup without the dollars to get to market, you are out of luck," he said. He also predicted unprofitable public biotechs would start running out of cash and disappearing. Read more.
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Good post, Mike. I found it curious and funny that Forbes yesterday came to the the less-than-insightful conclusion that due to the cash crunch, struggling med-tech firms may be bought out ((11/13/08: "Analyst: Med-tech firms may become buyout targets). I've always seen startup device companies and, more recently, biotech companies as well being the R&D arm of established medical product companies. Acquisition has consistently been a high possibility for these companies, struggling or not.
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