Article preview reprinted from IN VIVO - October 2008
If spine is such a promising market, why did Abbott sell its spine business to Zimmer?
Zimmer Buys Abbott: Difficult Times Ahead in Spine
Article preview reprinted from IN VIVO - October 2008
With the news last month that Abbott is selling its spine business to Zimmer for around $360 million, it may be hard to recall that less than two years ago Abbott was one of the finalists in the pricey sweepstakes to buy St. Francis Medical Technologies, losing out to Kyphon Inc. (now part of Medtronic Inc.) in a deal that would eventually fetch $725 million or that, just four years earlier than that, Abbott Laboratories' acquisition of Spinal Concepts (now Abbott Spine), was part of an ambitious plan to target the hot and fast-growing segment of spine devices as its next major play in medtech, following an earlier effort to build a cardiovascular franchise. (See "Spinal Concepts: Leading Abbott into the Spine Market," IN VIVO, July 2004.)
Indeed, six years ago, when Abbott bought Spinal Concepts to get into spine, the deal seemed rich in promise, notwithstanding its modest price tag ($170 million upfront, with milestones for earn-outs.) In the late 1990s, Abbott executives began a comprehensive rethinking and overhaul of the company's medical device businesses. Once dominated by a huge low-margin, high-volume hospital supply business and a market leading, but largely mature in vitro diagnostics franchise, Abbott wanted to begin to play in the kinds of high-margin, high-tech businesses that were, by their nature, the exact opposite of its hospital supply and diagnostics lines—businesses in which physicians drove product selection, and high volume, price-discounted contracting with national and regional hospital groups had made little headway. Cardiovascular devices were one target area for Abbott, spine devices were another.
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Companies mentioned in this article:
Abbott Laboratories Inc.
Abbott Spine Biomet Inc.
Boston Scientific Corp.
Johnson & Johnson DePuy Spine Inc.
Medtronic Inc.
Kyphon Inc.
Medtronic Sofamor
Danek SpineVision
SA SpineVision Inc.
Zimmer Holdings Inc.
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