Private Bid For KCI Signals Growth In Wound Care

Article preview from IN VIVO - July 1, 2011

Historically, wound care has been a nice tuck-in business for both large medical device and pharmaceutical companies. But that dynamic appears to be changing as advanced technologies are developed that make this sector more attractive as a growth business, evidenced by the large number of recent deals and consolidation going on in this market. The latest example of this trend is the proposed $6.3 billion deal to make publicly traded Kinetic Concepts a privately held company.

Private Bid For KCI Signals Growth In Wound Care

Article preview from IN VIVO - July 1, 2011

Historically, wound care has been a nice tuck-in business for both large medical device and pharmaceutical companies. But that dynamic appears to be changing as advanced technologies are developed that make this sector more attractive as a growth business, evidenced by the large number of recent deals and consolidation going on in this market. The latest example of this trend is the proposed deal to make publicly traded Kinetic Concepts Inc. [KCI] a privately held company.

KCI's acceptance of the $6.3 billion private equity buyout deal from a consortium including Apax Partners and two large Canadian pension funds – the Canada Pension Plan Investment Board and the Public Sector Pension Investment Board – signals the continued prospects for growth in the advanced wound care industry, the sector that deals with chronic, hard-to-heal wounds like diabetic foot ulcers and venous and arterial leg ulcers. Advanced wound care is a complex and fragmented market, spanning both biopharmaceutical and device products and covering numerous clinical specialties including diabetes, podiatry, surgery, and internal medicine. Wound care businesses once sat in the shadows of either pharmaceutical companies – as in the case of ConvaTec Inc., formerly a division of Bristol-Myers Squibb Co. – or diversified device companies, such as Smith & Nephew PLC, which operates, as does KCI, in advanced wound dressings and negative pressure wound therapy devices. But now wound care has carved out its own identity, as evidenced not only by the large KCI deal, but also by a string of private equity deals creating consolidation plays in advanced wound care.

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