Surgical products company Ethicon Endo-Surgery, a division of Johnson & Johnson (NYSE:JNJ), is entering the medical device reprocessing and remanufacturing business with a planned acquisition of SterilMed.
The price of the deal isn’t being disclosed, according to a statement from Cincinnati-based Ethicon.
With the cost of healthcare in the U.S. continuing to skyrocket, medical device reprocessing could become a service in high demand and SterilMed appears well-positioned to capitalize on the stronger emphasis on cost containment by private firms and the federal government in the coming years.
The company received some recognition with a mention last year in a New York Times article on the growing problem of excessive medical waste generated by healthcare facilities — a problem that could be solved in part by more reprocessing of devices. Along with Ascent Healthcare Solutions, the two companies perform about 95 percent of device reprocessing in the U.S., The Times reported.
Maple Grove, Minnesota-based SterilMed reprocesses a vast array of single-use medical devices that includes guidewires, catheters, laser probes and chest retractors. The company says reprocessed devices typically cost about half the amount of new devices. SterilMed also repairs small healthcare equipment.
Karen Licitra, worldwide franchise chairman for Ethicon, said the acquisition will broaden Ethicon’s portfolio and allow the company to enter a “rapidly growing market segment,” according to the statement.
SterilMed will be managed as part of the Ethicon franchise, but will continue to operate as a stand-alone company and retain its name. SterilMed was acquired last year by two private equity firms, Boston-based Great Hill Partners and Cleveland-based Primus Capital Funds.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
SterilMed has some big-name customers, including Cleveland Clinic, Duke University and Massachusetts General Hospital.
Ethicon sells medical devices for use in general and bariatric surgery, as well as gastrointestinal health, gynecology and surgical oncology. A company official wasn’t immediately available for comment.
