Class 4- Final Products: Medical Devices

By Rex Rumsey, MBA Candidate Class of ’25

Fall 2024 Kelley Life Sciences Industry from Research to Patient Course

November 19 Class 4: Final Products – Medical Devices: Measurement and Monitoring, Minimally and Less Invasive Therapies, Various Implants (cardio, orthopedic, other), Medical Tools and Supplies

Growth Through Strategic Acquisitions and Private Equity in Healthcare was the overall theme for this class. Thank you, Michael Vogel and Marguerite Urizarri (Galvez), for spending time at Kelley’s Center for the Business of Life Sciences and sharing insights on Boston Scientific’s venture capital-backed tuck-in acquisitions and Medline Industries, LP’s success following their leveraged buyout.

Boston Scientific’s acquisition of FARAPULSE highlights how early-stage VC investments can scale transformative technologies. FARAPULSE’s pulsed-field ablation technology has strengthened Boston Scientific’s position in the $4B global ablation market, projected to nearly triple in size over the next 10 years. This strategic partnership exemplifies how MedTech companies are increasingly acquiring several complementary innovations to expand portfolios, drive faster ROIs, and realize synergies rather than large-scale, risky acquisitions that are more challenging to integrate.

Michael emphasized Boston Scientific’s strategic focus on driving revenue growth that consistently outpaces the market, coupled with even faster bottom-line growth. This approach is evident in the company’s impressive performance from 2020 to 2024, with its stock price surging from $35 to $90, revenues growing from $10 billion to $15.9 billion, and operating margins expanding from 10% to 18%.

On the LBO front, Marguerite discussed Medline’s $30 billion buyout by Blackstone, Carlyle, and Hellman & Friedman. Since then, Medline’s vertically integrated model has fueled $23 billion in revenue with an 18% CAGR. By controlling its supply chain end-to-end, Medline has enhanced efficiencies and leveraged its dual role as distributor and manufacturer. This integration enables the company to gather market intelligence, identify demand trends, and develop targeted products, making it more versatile and profitable than competitors that exclusively distribute products and only generate revenue through distribution fees.

Key Takeaways:
💡Early-stage VC investments can turn into crucial acquisitions if milestones are met
💡Tuck-in acquisitions are less risky than transformational deals, as they’re easier to integrate, and typically involve smaller deal sizes which allow for multiple “shots on goal”
💡Medline’s vertical integration allows them to be agile, cut costs, and customize products based on healthcare needs

Thank you, Joshua Gildea, for teaching us about these types of deals in our Business Marketing class.