Dive Brief:
- Stryker said Monday it has agreed to buy Artelon for an undisclosed sum to add soft tissue repair technology to its portfolio.
- The deal will give Stryker ownership of soft tissue fixation products for foot and ankle and sports medicine procedures. BTIG analysts said in a research note the takeover could boost growth and serve as a “defensive mechanism against peers who have been growing rapidly in the space.”
- Orthopedic companies including Zimmer Biomet have acquired soft tissue technologies in recent years, but Artelon’s use of synthetic materials sets its products apart from collagen-based rivals.
Dive Insight:
Artelon has developed products to help people recover from injuries such as ankle sprains. Such injuries can resolve over time but some people have pain and instability that lead physicians to recommend surgery. Devices such as Artelon’s Flexband are designed to help restore the strength and elasticity of healing soft tissues.
While some soft tissue products are based on collagen, Artelon’s are made from the synthetic polymers commonly found in other medical devices. Artelon said it developed Flexband to integrate with healing tissue and then dissolve while being replaced with new tissue over a four- to six-year process.
BTIG analysts outlined why Stryker is acquiring the devices.
“On the surface, this would appear to be just another Stryker tuck-in acquisition from a well-worn playbook which has allowed Stryker to maintain its robust growth profile but the acquisition is worth noting because competitors have also targeted other soft tissue repair companies making the Artelon acquisition the third in recent series,” the analysts said.
The series includes Conmed’s takeover of Biorez in 2022 and Zimmer’s acquisition of Embody in 2023. Conmed and Zimmer were following the lead of Smith & Nephew, which bought Rotation Medical in 2017.
While Stryker did not release the terms of the acquisition, rivals structured deals with substantial milestone payments. For example, Conmed spent $85 million at the closing of its Biorez purchase, with $165 million in potential future payments, and Zimmer agreed to a $155 million deal, with an additional $120 million tied to regulatory and commercial markers over three years.
Zimmer has spoken positively about its deal without quantifying its impact, with CEO Ivan Tornos saying “we love what we’re seeing with our Embody soft tissue franchise” on an earnings call in May.
BTIG analysts wrote there are “tremendous growth opportunities ahead as companies expand utilization of these soft-tissue repair products further into foot and ankle markets beyond traditional sports medicine applications such as rotator cuff repair or anterior cruciate ligament reconstruction.”