Co-Autor: Luis Matteo Ax
M&A as a Growth Driver
2025 started with a number of large-scale acquisitions in the MedTech sector. Among others, Stryker and Boston Scientific announced deals exceeding USD 1 billion. While the number of transactions is declining, overall deal volume is rising.
Healthcare and life sciences companies that complete more than one acquisition per year have generated an average total shareholder return (TSR) of 13.6% over the past decade, compared to just 0.3% for inactive players. Even a limited number of strategic acquisitions (>1 deal/year) has proven beneficial, with an average TSR of 11.5%. The key is not quantity, but the strategic quality of transactions.
Still, only just over half of companies in the sector pursue add-on acquisitions. Growth also comes at the cost of rising debt: companies completing three to five deals recorded 1.7 times higher net debt than non-acquirers. Venture capital activity reflects a similar trend: while Series E+ financing rounds show record deal activity (+25% in volume), pre-seed and early-stage investments are slowing.
Political Environment as a Catalyst
The change of government in the U.S. could provide new momentum. Leadership changes and staff cuts at the FDA and other agencies may benefit MedTech—particularly diagnostics, which faced tighter regulation under the Biden administration and could now benefit from some relief.
At the same time, the FTC continues to apply stricter merger control guidelines and has recently blocked Edwards’ planned acquisition of JenaValv (USD 945 million) as well as the PE-backed acquisition of Surmodics (USD 627 million). The M&A environment in MedTech therefore remains challenging.
Key Areas for M&A in 2025/26
GLP-1 drugs
The rapid rise of GLP-1 therapies has raised concerns that they could replace demand for certain MedTech devices. So far, however, demand for glucose monitors and insulin pumps remains stable, as nearly half of patients discontinue GLP-1 therapy due to side effects or costs. GLP-1 may in fact open new opportunities in orthopedics and obesity surgery, while driving proactive health management in diagnostics. According to a Strategy& survey (PwC), 76% of professionals in therapeutic instruments expect GLP-1 to have an impact, compared to only 33% in monitoring devices. Partnerships with biopharma companies, particularly around novel GLP-1 delivery methods, could become a decisive deal driver.
Artificial Intelligence
AI is emerging as a true platform technology in MedTech. Its applications go far beyond diagnostics, potentially supporting regulatory and compliance processes.
Diagnostics and life sciences
The pandemic has heightened demand for fast, reliable diagnostics. This trend is reinforced by demographic change and the growing importance of personalized medicine, often coupled with subscription models to secure long-term patient engagement.
Surgical instruments and devices
An aging population is driving demand for surgical procedures and high-quality equipment. Advances in brain-computer interfaces (BCIs), miniaturization, precision technologies, and digitalization create significant investment opportunities.
MDR Compliance and Post-Merger Integration
MDR compliance can determine the success or failure of an acquisition. Companies should address the following issues as part of due diligence and integration:
- Agreements with notified bodies: The success of a MedTech transaction can hinge on regulatory factors, most notably the involvement of the notified body (i.e., the neutral institution designated by an EU member state to conduct conformity assessments). Because cooperation agreements with notified bodies often contain differing terms and conditions, and for reasons of efficiency, it is generally advisable to establish a uniform agreement with a single body.
- Deal structure: Depending on whether the transaction is structured as a share deal or an asset deal, notification of the competent authority may be required, particularly if production processes, monitoring systems, or quality assurance measures are affected.
- CE marking: Verify whether certifications are valid, extensions have been applied for, and whether there are risks of restrictions, suspension, or revocation.
- Transition arrangements: In the event of a change of notified body, establish clear agreements with both the former and the new institution regarding the period during which products with the old identification number may continue to be marketed and the timing for the transition to the new number.
Integrating regulatory aspects into transaction planning at an early stage is essential to mitigate risks and secure synergies.
Conclusion
Despite a complex regulatory landscape and political uncertainty, M&A remains a key driver of growth in MedTech. Strategic acquisitions—in diagnostics, surgical devices, and AI-enabled platforms—offer significant opportunities, while GLP-1 therapies should be seen not as a threat but as a catalyst for innovation. Success will depend not only on the right deal strategy but also on managing MDR compliance and post-merger integration effectively.
