- M&A, Investment or Partnering Checklist for Medtech Companies
- March 13, 2015 | Authors: David J. Dykeman; David C. Peck
- Law Firms: Greenberg Traurig, LLP - Boston Office ; Greenberg Traurig, LLP - Fort Lauderdale Office
- Emerging medical device companies should consider these points when weighing a potential merger, strategic partnership or investment:
1. Identify unmet medical needs
Medical device titans are actively looking to acquire new technologies to treat unmet medical needs and drive market adoption. Larger medtech companies often view early-stage companies as outsourced R&D labs, and will pay a premium price for products that can drive future revenue. The larger the potential market, the higher the value to medtech titans.
2. Know the market and competitors
Acquiring technologies that can transform or dominate a market drives many deals and collaborations. Disruptive technologies that improve patient outcomes are in high demand. Larger medtech companies are always on the lookout for new devices or improved treatments that have no or few competitors. Understanding the strategic investment goals and criteria of potential suitors will further refine and focus a growing medtech company’s efforts to gain visibility and generate productive relationships.
3. De-risk the technology and your company
Medtech companies need to be aware of the key legal issues that can arise in M&A or the partnering process. Problems discovered during due diligence can lead to price adjustments, changes in deal structure or, in extreme cases, termination of a transaction. Particular hot button issues include problems with the FDA, competitors, a patent portfolio, products liability litigation (pending or potential), how well a company has protected its intellectual property rights, or issues with the company’s capital and corporate structure. Medtech companies should address these risks early in the process before they are in the diligence process with a prospective suitor or partner to position themselves for a successful transaction.
4. Develop a strategic patent portfolio
A strategic patent portfolio is crucial to a company’s growth and survival, providing numerous business advantages including positioning themselves for M&A and gaining leverage for collaborations with other companies. A strategic patent portfolio can be used both offensively as a “sword” to strike competitors and defensively as a “shield” to avoid competitors’ attacks.
To obtain broad patent protection, a medtech company should consider both current and future business objectives and contemplate ways that competitors may attempt to design around the patents. Patent claims should be directed to the entire device, key components, disposables, methods of manufacturing, methods of treatment, therapeutic uses, combination therapies and any other aspects of the invention.
Creating value-driven patent portfolios and ensuring potential patent issues have been addressed is essential to maximizing opportunities for potential M&A, investment and partnering deals.