Summary
By acquiring promising technology in the percutaneous valve arena, as well as enjoying an already established reputation among interventional cardiologists, Abbott will position itself as a major player in an emerging technology market, and become a comprehensive provider for interventional cardiology solutions.
Analysis
With a market for valve replacement that could exceed $1.5 billion within six years, the move to acquire a company which has, thus far, provided the most mature technology in the field, should be seen as one more step towards that goal. With two of its largest competitors (Medtronic and Edwards Lifesciences) having already acquired percutaneous technology for replacement of the aortic valve, Abbott had little choice if it wanted to stay in the game. Medtronic acquired Corevalve earlier this year, and Edwards already has a device system (the Edwards-Sapien valve) in phase III clinical trials in the US (PARTNER trial). Both of these companies have received CE Mark approval for their respective devices in Europe 18 months ago. For fiscal year 2008, European market share was almost evenly split between the two.
To be sure, despite earlier predictions, percutaneous mitral valve repair is not as close to “prime time” as percutaneous aortic valve replacement. However, Evalve’s product, the MitraClip, has been shown in the recently published EVEREST trial to be safe and very effective. Open-heart surgeries on the mitral valve (repair or replacement) account for 42,000 of the 95,000 heart valve surgeries performed yearly in the US (source: Cardiosource and Millennium Research Group, Inc). If the EVEREST results hold up long-term, the device will successfully compete with (and replace) a lot of these, eliminating the need for general anesthesia, heart-lung bypass and long postoperative recovery times. In addition, many patients who are now deemed “too sick” to undergo open-heart mitral repair may be candidates for the new procedure. Coincidentally, this will also lead to a major shift in the medical specialists performing these procedures: most (if not all) of the percutaneous valve technology will be implanted by interventional cardiologists, rather than cardiothoracic surgeons. This should stand to benefit Abbott, as the same specialists are already well acquainted (and use) its product portfolio, such as coronary devices (drug-eluting and bare-metal stents, PTCA balloons, wires) and peripheral vascular products (stents, PTA balloons).
Overall, a well-timed and executed move on Abbott’s part.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
