M&A in medtech show no signs of slowing in the fourth quarter of 2018, and companies looking to buy or sell have much to consider, according to patent attorney David Dykeman, a shareholder in the Boston office of the global law firm Greenberg Traurig.
The number of medtech M&A deals soared by 50% in 2017 and several major deals were announced in the last few months. Most recently, Boston Scientific (NYSE:BSX) offered $600 million for Bedford, Mass.-based Augmenix. In late August, Wright Medical (NSDQ:WMGI) agreed to pay $435 million in cash to acquire Cartiva (Alpharetta, Ga.). Stryker (NYSE:SYK) said it would acquire Leesburg, Va.-based K2M (NSDQ:KTWO) for approximately $1.4 billion. And in June, Altaris Capital Partners acquired Peabody, Mass.-based Analogic for $1 billion.
Having a strategic patent portfolio tied to business goals can be a key to attracting buyers and venture capital financing for early-stage companies with innovative technology and a solid management team, according to Dykeman. Patents are often the only way for investors to place value on an early-stage company’s technology and judge the potential success before sales, which often only begin after FDA regulatory approval. Strategic patents can also lead to joint ventures, collaborations and licenses with strategic partnerships.
Patents are not the only avenue to keeping a company’s ideas safe. Trade secret protection can provide a viable option to protecting intellectual property when used in conjunction with or as an alternative to patents. Companies must take measures to keep their ideas secret, possibly avoiding the effort and expense associated with filing patent applications. They lose that protection if there is any public disclosure of those ideas. The algorithms that drive digital health and mobile medical applications are often candidates for trade secret protection, according to Dykeman.