Medical imaging is transforming right in front of our eyes and for investors this could be a large opportunity to capitalize. What was once as simple as discussing x-ray machines has now evolved and radiopharmaceuticals have taken the place of standard imaging devices.
In fact, according to a report from Research and Markets, the global radiopharmaceuticals market is set to grow by more than 9% on a compounded annual growth rate. Companies like Medical Imaging Corp (OTCMKTS:MEDD), Novadaq Technologies Inc. (NASDAQ:NVDQ), General Electric Company (NYSE:GE) and even Alibaba Group Holding Ltd (NYSE:BABA) are getting in on the action.
The latest trend that has built momentum in the market is partnerships for development of radiopharmaceuticals. In fact, some of the top nuclear medicines and nuclear imaging companies are creating partnerships to address long-standing radiopharmaceutical concerns in medical imaging. Additionally, they are also undertaking partnerships to increase their market share. These partnerships could quickly increase the output of low-cost radiopharmaceuticals, which may boost the growth of the market, entirely.
Medical Imaging Corp (OTCMKTS:MEDD) for example, has been building out its own footprint in the medical imaging center space. Earlier this year the company announced that its subsidiary, Custom Teleradiology Service signed a new client hospital. Since Medical Imaging is focused on acquiring medical imaging businesses that demonstrate a stable financial history with profitable operations, it comes as no surprise that the company continues to tread this path.
The New England Journal of Medicine, considered the world’s oldest and single most influential general medical periodical, calls medical imaging one of the top medical developments of the last millennium. One of the major drivers for this market is the growing burden of neurological disorders. These disorders are diseases that are related to the brain, spine, and the nerves and there are over 600 diseases of the nervous system.
Some of the more common diseases are epilepsy, Parkinson’s disease, brain tumors, and stroke. An aging populous and future demand for early identification of these diseases has put pressure on organizations to discover new and more efficient technology sooner.
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Medical Imaging Corp. has begun to upgrade various medical imaging equipment at its sites to meet new federal requirements. Various federal changes are being made to Medicare reimbursement rates in 2018 with regards to X-ray and CT studies. It will be the companies who remain ahead of the curve that could benefit most. This is what investors should take close note of.
These are reasons that large organization are looking for targeting companies like Medical Imaging Corp for acquisitions of serious size. Take, for instance, the recent approval of the Ontario Superior Court of Justice granting Stryker Corporation to acquire Novadaq Technologies Inc. (NASDAQ:NVDQ).
According to documents, Stryker Corporation agreed to acquire all of the issued and outstanding shares of NOVADAQ for $11.75 per share in cash. It may seem like a small cost per share but Stryker will essentially buyout NOVADAQ at a premium of more than 100% of the price just prior to announcing its engagement with the company!
The fact that some of the biggest names in technology are finding huge value and acquisitions in the multi-billion dollar range, for medical imaging companies could come as a well-timed opportunity for those looking for public companies still flying under the radar of main street traders (for now).
Other major acquisitions in the space include Nikon’s acquisition of Optos for a cool $400 million. International Business Machines Corp. (NYSE:IBM) acquired Merge Healthcare for $1 billion. If that wasn’t enough, Royal Philips NV paid $1.2 billion to by Volcano Corp, another medical imaging company.
And this is becoming a clear trend as many larger conglomerates are taking their chances in medical imaging. GE Healthcare, a division of General Electric Company (NYSE:GE) is one of the leaders in global diagnostic imaging. In fact, in 2007 the company acquired Dynamic Imaging. This was on the heels of the previous year’s buyout of IDX Systems for $1.2 billion.
This has helped open the market up for GE to get into the imaging and information systems of healthcare and diagnostic out patient markets. Though details of the Dynamic Imaging purchase were undisclosed, it would beg the argument that the previous $1.2 billion acquisition may have set the pace.
Echoing the same sentiment, the healthcare unit of Alibaba Group Holding Ltd (NYSE:BABA) invested $35 million in a medical imaging company. The company took a step toward building its health business by making an investment in Wanliyun Medical Information Technology. Alibaba’s business aspirations go far beyond e-commerce and into many aspects of daily life. China’s healthcare climate has offered companies in the space to act on rolling up a fragmented market.
According to China Money Network and a report from TechCrunch, Alibaba gains a 25 percent stake in Wanliyun as a result of the investment. In addition, Alibaba will be able to nominate two directors to join the company’s board.
Best Opportunity In The Space?
Right now, there’s a very hot climate for mergers and acquisitions. Obviously not every buyout will be worth billions of dollars but as anyone can clearly see, even the smallest investment in a company like NOVADAQ, mentioned above, could have easily been a double with proper timing. For investors, right now, the bet may be placed on other smaller cap companies working to build out their own footprint to build real value. At the rate of growth the medical imaging market is seeing, it wouldn’t come as a surprise to see other companies like that under the microscope for a similar outcome.
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