Puzzle piece

Drivers and Implications of Multi-Billion Dollar Acquisitions in Medtech

By Laurie Halloran, Maria Shepherd
Puzzle piece

While billion-dollar deals are common in the medtech industry, multi-billion-dollar megadeal acquisitions were still notable in 2022. Often, these deals result in a ripple effect on the industry when two large companies merge. Here we look at some recent examples, the growth drivers behind them and what they mean for the medtech industry.

After a busy 2021, medical technology (medtech) mergers and acquisitions (M&As) dropped in 2022 largely due to the impacts of COVID-19, rising inflation and supply chain challenges. But some medtech companies were able to launch megadeals in 2022 despite macroeconomic conditions.[1]

While billion-dollar deals are common in the medtech industry, multi-billion-dollar megadeal acquisitions were still notable in 2022. Often, these deals result in a ripple effect on the industry when two large companies merge.

To discuss the current state of the industry, recent M&As and the impact of megadeals, MedExecWomen—an organization focused on empowering female executives to accelerate the positive impact of medical devices, diagnostics, drug delivery, and digital healthcare around the world—hosted a panel on “What Are the Implications of Multi-Billion Dollar Acquisitions in Medtech?” bringing together female health and medical technology executives to share practical insights and experiences with attendees during their 2023 annual conference.

The panel featured Heather Knight, Executive Vice President, Group President, Medical Products and Therapies at Baxter International; Jennifer Kozak, Vice President, Business Development at Johnson & Johnson Medtech; and Rebecca Schechter, Senior Vice President and General Manager, Dragon Ambient Experience at Nuance Healthcare.

Following are their insights (and more) from the panel discussion.

Growth Drivers of Multi-Billion Dollar Acquisitions

Before we get into the implications, let’s begin with the growth drivers behind these deals. Medtech’s multi-billion dollar acquisitions, particularly for 2022, centered around a few key themes:

  • Serving more patients, customers and stakeholders utilizing a large company’s global footprint to deliver smarter and more seamless digital and connected care solutions across care settings.
  • Seeking innovations in categories with a significant unmet clinical need, as with Johnson & Johnson’s (J&J) acquisitions of Auris and Abiomed. When combined with J&J’s global footprint and market access capabilities, these assets can drive even greater value.
  • Increasing AI scaling capabilities to bring value to customers by delivering industry-relevant solutions across healthcare and across industries, as seen with Microsoft’s acquisition of Nuance Healthcare.

Growth drivers, when aligned, are what compel companies to merge so they can maximize opportunities by combining resources and assets to make an impact on the industry. “Regardless of the size of a potential transaction, it always begins with strategy. Strategic considerations include whether the asset addresses a critical unmet need, changes the standard of care or takes cost out of the healthcare system, just to name a few,” said Kozak.

Once those questions have been addressed on both sides of the deal, it’s important to determine if there is a shared strategic mission between the two companies. Starting M&A discussions does not happen without a clear strategy on both sides. If both companies are “better together” and have the capability to transform an element of the healthcare ecosystem, that capability is often the beginning of the M&A process. Ideally when two large companies merge, they can leverage capabilities at both organizations to address an industry gap and provide opportunity for a long-term industry shift.

Let’s take a closer look at a recent example.

Microsoft’s Buyout of Nuance Healthcare

Microsoft bought Nuance Healthcare (Nuance) for $19.7B—Microsoft’s third-largest acquisition to date. The motivation behind Microsoft’s acquisition of Nuance was the opportunity to transform the clinician-patient experience with an innovative technology to deliver new cloud and AI capabilities across healthcare.

For example, one of Nuance’s core solutions works with healthcare systems, including electronic health records (EHRs), and offers conversational and ambient capabilities to capture the patient-physician conversation with patient consent. This solution alleviates the burden of clinical documentation and empowers clinicians to deliver better patient experiences by removing a physical barrier between the patient (i.e., the computer screen) to offer a more intimate conversation about a patient’s care. Other solutions include market-leading imaging, patient experience solutions and more.

For Nuance, the acquisition aligned with their strategic mission to make a positive impact in clinician-patient relationship dynamics and enabled a broader scale. For Microsoft, Nuance will help fill a critical role to deepen Microsoft’s reach into the healthcare sector.

“This M&A is a story of how vertical meets horizontal. Microsoft provides solutions at a horizontal level, while Nuance is a vertical focused in healthcare. When combined, the merger allows for speed, scaling and accelerated outcomes,” said Schechter.

Implications of Megadeal M&As

Implications for multi-billion dollar M&As have a ripple effect on the industry at large. Most recent M&As, including the deal noted above, are centered around connected care—a term used frequently by the industry.

For example, “Baxter International strategically acquired Hillrom in 2021 to accelerate the two companies’ expansion into digital and connected care solutions to enable patients to access hospital level care at home or in other care settings,” said Knight.

Integrating Baxter International and Hillrom introduces new opportunities for growth across a broad geographic footprint and creates new possibilities for connectivity with leading-edge digital health innovation focused on enhancing care, lowering costs and increasing workflow efficiency.

Like all major transactions and their impact on the healthcare ecosystem, integration comes with its share of issues and challenges, including prioritizing various synergy initiatives and maintaining business momentum while adding growth, all while addressing interdependencies between functions and geographies.

In another example shared during the panel, Stryker’s acquisition of Vocera for $3B is considered outside of the usual “medtech acquires medtech” model. Stryker management noted that the Vocera acquisition was a step to satisfy the digital aspirations of the organization.[2] Vocera, founded in 2000, is a prominent platform in the digital healthcare coordination and communications segment. The importance of this segment has expanded throughout the pandemic to reduce cognitive overload for caregivers and allow them to deliver the best patient care possible.[3]

So, what are the implications of Stryker’s deal? Time will certainly tell; however, for the hospitals and healthcare facilities that are Vocera’s customers, this deal enables a positive shift in the way care is communicated to patients, a reduction in caregiver burden and a new opportunity to engage with patients remotely to streamline efforts to meet the high demand for real-time, personal interactions.

Multi-billion dollar M&As, and M&As in general, often spur medtech companies to refine (or re-create) their strategic vision and propel acquiring companies to think strategically about their long-term impact on health care, their competitive advantage and how they too may fill a critical void with the right strategic partner.

Tech and medtech companies have used M&As as a key strategic lever to address industry change and propel greater financial performance. Larger portfolio offerings, improved therapeutic solutions, international expansion, and increased scale and leverage are some of the main motivations underlying recent tech and medtech M&A activity.

M&A deals continue to play a central role in the medtech ecosystem, and medtech companies will benefit by refining their strategic vision and future-proofing their business models amid current and future macroeconomic conditions. This means companies on both sides of the deal will need to optimize their deal-making approach, align their corporate strategies and de-risk to strengthen their financial positions where possible.

With strategics looking for new innovative technologies, smaller medtech companies are positioned to accelerate the development of new innovations, particularly with AI and digital health capabilities, to prime themselves for a potential acquisition in this “strengthen to survive” environment.


[1] Carey, T. (2023, March 3). ‘The Top Line’: The surprising multibillion-dollar medtech megadeals. Fierce Pharma. https://www.fiercepharma.com/fierce-biotech-homepage/top-line-surprising-multi-billion-dollar-medtech-mega-deals

[2] Hale, C. (2022, January 6). Stryker ponies up $3B to buy Vocera and amp up its digital communications. Fierce Biotech. https://www.fiercebiotech.com/medtech/stryker-lands-3b-deal-for-vocera-to-amp-up-its-digital-communications

[3] Stryker announces definitive agreement to acquire Vocera Communications. (2022, January 6). https://investors.stryker.com/press-releases/news-details/2022/Stryker-announces-definitive-agreement-to-acquire-Vocera-Communications/default.aspx

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About The Author

Laurie Halloran, Halloran Consulting Group

About The Author

Maria Shepherd