Medtech M&A Activity Set to Rebound in Second Half of 2025

The medical device industry kicked off 2025 with a flurry of high-profile acquisitions, but dealmaking has since cooled amid economic uncertainty. However, industry analysts expect M&A activity to pick up in the latter half of the year as companies adapt to market conditions and pursue strategic growth opportunities.

Early Year Spending Spree

January and February saw several billion-dollar deals from industry giants. Stryker led the pack with its nearly $5 billion acquisition of Inari Medical, while Zimmer Biomet agreed to purchase Paragon 28 for $1.1 billion. Thermo Fisher Scientific followed suit in February, acquiring Solventum's purification and filtration business for $4.1 billion.

Boston Scientific also made moves early in the year, announcing deals worth up to $664 million for the remaining stake in Bolt Medical and up to $540 million for Sonvie.

Factors Behind the Slowdown

The sudden deceleration in M&A activity can be attributed to several factors, according to industry analysts:

1. Economic uncertainty and market volatility, largely due to the Trump administration's tariff policies.
2. Companies tightening budgets as they assess the impact of trade tensions on their businesses.
3. The time-intensive nature of large acquisitions, with many early-year deals likely initiated in late 2024 when market conditions were more favorable.

Shagun Singh, an analyst with RBC Capital Markets, noted that companies wanted to "see what the headwinds are, what they need to do, how they need to manage it" in response to the tariff announcements.

Outlook for the Second Half

Despite ongoing uncertainty, analysts are cautiously optimistic about a rebound in M&A activity for the remainder of 2025. John Babitt, a partner with EY, reported seeing increased activity in their business, indicating renewed interest in dealmaking.

Companies are expected to be opportunistic, with some pursuing a dual-process approach of simultaneously exploring both sales and IPOs to create competitive tension among investors.

Key areas of interest for potential acquisitions include surgical robotics, pulsed field ablation, structural heart, and diabetes technologies, according to Babitt.

Industry leaders like Boston Scientific and Stryker have signaled their readiness to continue pursuing acquisitions. Boston Scientific CEO Mike Mahoney emphasized the company's focus on "putting ourselves in faster-growth markets and expanding our category leadership," while Stryker CFO Preston Wells highlighted the company's strong liquidity position.

As the medtech industry continues to evolve, M&A remains a crucial strategy for growth and innovation. Despite the recent slowdown, analysts expect deal activity to diversify and potentially accelerate in the coming months, with companies seizing opportunities to enter multi-billion dollar markets regardless of ongoing economic challenges.