The Future of Innovation in Medtech: An Industry in Search of Growth While Facing Pressures to Consolidate in a Post-ACA World -

In the Affordable Care Act (ACA) era, the healthcare industry has witnessed significant consolidation among hospitals and commercial payers, which in turn has pressured big pharma and medical device manufacturers to consolidate in order to gain greater scale and improve their pricing and distribution leverage with providers. In recent years, some of the largest M&A transactions in healthcare—both in the pharmaceutical and medical device sectors—have been consolidation plays driven by the attractive financial synergies gained from increased operating leverage and, in many cases, non-domiciled tax advantages. This focus on operational scale and efficiency over innovation has been most pronounced in the medical device sector, which has faced a tough regulatory environment and increasing reimbursement pressures, as well as stagnant growth in mature end-markets.