Healthcare giant Johnson & Johnson is reported to have interest in a potential acquisition of the robotic surgery oriented Auris Health. According to the report made by Bloomberg, J&J has plans to purchase Auris at a premium above their most recent evaluation of $2 billion. Being that the information regarding their plans of acquisition is private, the parties revealing the report asked to remain unidentified.
Led by Fred Moll, Auris has developed surgical robotic scopes that utilize a controller similar to that used to play video games. The device, Monarch, uses flexible tubes that are steered through the lungs during operation with this controller, ultimately putting the scope in position to identify cancerous entities.
This potential move by J&J follows the trend of medical device manufacturers seeking to grow innovation, with Medtronic acquiring Mazor Robotics last month for $1.7 billion. Mazor is an Israeli company that develops robotic surgery products aiding in spinal and neurological surgeries.
In May of last year, Auris reached an agreement NeuWave Medical, a branch under the J&J subsidiary Ethicon. This agreement allowed the two to work on developing systems for the Monarch system mentioned prior. J&J has also been working with Verily Life Sciences on Verb Surgical’s robot-assisted surgery system. Verily is a branch under Alphabet, Google’s parent company.
Auris has raised over $700 million from investors, raking in $220 million in equity financing in just November.
“An acquisition of Auris by J&J could be seen as a hedge by J&J on the JNJ/Google Verb partnership, which is also developing a surgical robotic system,” wrote Wells Fargo analyst Larry Biegelsen.
Despite news of this potential acquisition, J&J has warned analysts this week that the company expects growth to slow this year. The company is also dealing with the threat of liabilities coming from a great many lawsuits in which plaintiffs claim harm from J&J’s vaginal reconstructive mesh, artificial hips, and even cancer arising from baby powder containing talcum.
Ongoing debates regarding prescription drug prices in the U.S. are also imposing pressure on J&J, with generic competition emerging more and more as big products lose their patents.
A final deal between the two parties has not been reached, and it is uncertain whether or not the deliberations will result in the sale of Auris. When contacted about the matter, representatives from both J&J and Auris declined to comment, as per Bloomberg.
J&J eying surgical robotics firm Auris Health: Bloomberg Johnson & Johnson is pursuing an acquisition of surgical robotics firm Auris Health Inc, Bloomberg reported on Wednesday, citing people with knowledge of the matter. https://t.co/qfa1BgS1Dz #USRC #BusinessNews pic.twitter.com/EdAfWdokaR
— U.S. Reality Check🗽 (@USRealityCheck) January 23, 2019