Brian Chapman, principal, ZS Associates.
In a mid-December blog on the sales/ marketing consulting and technology firm's website, Chapman envisioned a rough road for pharmaceutical pricing and a "medtech purchase" from big pharma.
"In 2016, we will have set aside our preoccupation with complaining about the device tax and calculating its calamitous effects. Now that the political establishment has turned its collective sights on pharmaceutical pricing (thank you, Mr. Shkreli), there will be heat, smoke, and fire aimed at pharmacos," Chapman wrote in his blog. "An election year will bring scrutiny, criticism, and eventually even increasing intervention for pharma drug pricing. Medtech, on the other hand, will continue to invert to lower U.S. tax bills, acquire startups to launch compelling therapies, and innovate to address quality measures. In 2016, I believe that government interventions will focus on quality and outcomes, favoring what medtech offers, while punishing pharma. It'll be a good year to be a medtech CEO."
That certainly would be a welcome change. For CEOs anyway.
"M&A will continue but at a slightly slower pace. The more interesting speculation is what will happen next among the bigs: Medtronic has a ton of cash, Johnson & Johnson has sold a couple of businesses and hasn't really bought much since Synthes, and Baxter needs to consider what the split from Baxalta means for its portfolio strategy," Chapman continued. "Will Edwards remain stand-alone? So many interesting questions."
"I also predict at least one medtech purchase from big pharma--and a deal in which the acquiring company is strategically seeking entry into the medtech space, rather than Pfizer's "packaged deal" entry into medtech via its purchase of Hospira or Allergan ... I think that we'll see something happen here."