What is happening in medical device contract sterilization market?

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Generally consolidated industry or service line are static in terms of their activities, however one medical sub category begs to differ. Category in reference is contract sterilization services. Since 2014, when Sterigenics made an announcement to acquire Nordion, this industry, represented by 4 prominent players has been creating noises via one or the other news releases.

Some of the activity focus of the players include: Expansion, Acquisition, Funding and Regulatory Battles

The moment you think of sterilization services, two of the prominent names that surface up are, Sterigenics and Steris. While both the companies have expressed their love for M&A by participating in billion dollars (or almost billion dollars) transactions, their appetite for expansion does not seem to seize.

Sterigenics

Sterigenics has acquired close to 4 companies from 2014, one of which was Nordion , a buyout which involved cash transaction of USD 826 million. While the sterilization facilities of the company are spread across the globe, its growth focus has been global, a point well proven by its evenly spread M&A cash. That is, company not just shelled M&A cash in American market ( Latam) but also in European geography. In European region, the acquisition target was Gammarad, and in America it was CBE.

Analysing M&As, highlights a pattern which says that most of the acquisition targets were pure play focused at bolstering gamma sterilization capabilities. Be it Nordion, CBE or Gammarad , all acquisition had gamma sterilization moto flagged to it. Expansion on the other hand not just focused at gamma, but also touched base with ETO and other sterilization types. While Costa Rica expansion had ETO in mind, Memphis and Illinois focused on Gamma.

Steris

On one side Sterigenics was growing manifold through M&As and expansions, Steris was battling the only acquisition that it made in long-time. FTC was all over this mega merger amid two leading sterilization service provider. Steris breathed sigh of relief recently when US court denied FTC’s request to stop merger between the companies.

Conclusion:

While the consolidation of already consolidated market troubles the buyer <Medical, Pharma and other business segments>, distress is getting build within the industry too. Cobalt-60 supply and Environmental agency request of forbidding ETO sterilization continuity, remains two important challenges that are likely to keep contract sterilization service provider on their toes. Until this sub sector reaches any sort of stability it would be difficult to comment on its growth rate and size. However recent figures state the contract sterilization services market was valued USD 1.5 billion for the year 2014.

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