Navigant Analysis Steers Medtech Multinational's Decision on Acquisition Investment Worth Hundreds of Millions

Challenge

With high hopes, a multinational medical device company leadership team came to Navigant Consulting, Inc. to examine the value of a potential acquisition. The opportunity appeared to be the long-awaited key to unlock a sizable market for a minimally invasive therapy to prevent a common condition.

The product in question was an adjunctive device for a minimally invasive vascular procedure. Unlike other similar solutions that had come to market and stalled, this one seemed to address the major barriers that historically had prevented widespread adoption of this procedure.

Specifically, it showed the best clinical outcomes to date, had obtained incremental reimbursement, and targeted the surgeons who traditionally performed the current standard care practice.

But would the device unlock access to a large untapped market? Was it worth, say, $500 million? The multinational’s leadership team wanted data-driven, fact-based answers before making a decision.

Solution

Using a proprietary strategic market-assessment process to research and analyze the product’s market size, value proposition, and barriers to adoption, Navigant uncovered several critical insights that informed and prompted the final decision.

First, to gain broad adoption, the new solution must be proven to deliver better outcomes than the current standard of care. While this new technology showed the best outcomes to date, further scrutiny revealed the published studies were single-arm only, and thus were not conclusive or scientifically comparative to randomized studies.

This prompted Navigant to build a model to pressure-test whether the new product would be superior when randomized to the surgical standard of care, and, if so, whether it warranted an investment to carry out such trials. The short answers: no and no. Analysis revealed the enrollment size necessary for this new product to show clinical superiority in a randomized setting would be prohibitively large. That’s because the current surgical standard of care already achieved such positive outcomes that the incremental benefit provided by this new technology would be statistically invisible in a reasonably sized trial.

Impact

While at face value this new technology seemed like an attractive acquisition opportunity serving a large patient population, none of the solutions offered by this new product held up to the scrutiny of objective, rigorous market analysis. As such, Navigant concluded the acquisition’s true value was likely much less than the price being asked. In the end, the company chose to pass on the technology.

Undergoing this intense six-week assessment gave the multinational company leadership team critical new insight. In the end, they avoided making a several-hundred-million-dollar investment in a high-risk market, with a technology that was unlikely to achieve expectations, despite having early-stage revenue and significant venture capital funding.

 

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