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News & Trends - MedTech & Diagnostics

Aussie medtech’s proposed acquisition knocked back again

Health Industry Hub | April 27, 2023 |

MedTech & Diagnostics News: Australian medtech’s proposed acquisition has been knocked back by the second competition watchdog.

The UK Competition and Markets Authority (CMA) has opposed Cochlear’s proposed acquisition of Oticon Medical’s hearing implants business for AUD$170 million. This news follows earlier opposition from the Australian Competition and Consumer Commission (ACCC).

Cochlear and Oticon Medical, a subsidiary of Demant, manufacture and supply non-surgical bone conduction devices, surgical bone anchored devices, and cochlear implant hearing devices. These devices are used to treat more advanced hearing loss that typically cannot be managed by hearing aids.

There are few suppliers of these devices globally. In Australia, Cochlear and Oticon Medical are two of only three suppliers of non-surgical bone conduction and bone anchored devices, and two of only four suppliers of cochlear implants.

Specifically, the CMA is concerned that the acquisition could reduce competition in the market, resulting in less choice, reduced quality, or higher prices for recipients of hearing implants. Cochlear disagreed with the CMA’s conclusions, noting that innovation is at the heart of its mission and that it has invested over $2.5 billion in research and development (R&D) since listing. The company also continues to invest around 12% of sales revenue in R&D to improve hearing outcomes and quality of life for recipients.

ACCC’s Chair, Gina Cass-Gottlieb, said “Although Oticon Medical has a much smaller presence in Australia, we have significant concerns that the proposed acquisition will remove one of Cochlear’s few competitors in the supply of these three types of hearing devices in Australia.

“These devices are critically important in providing choice to consumers with hearing loss about the way they manage their hearing needs. Market feedback has indicated that demand for these devices is likely to increase and so it is important to ensure acquisitions in this market do not lead to higher prices or reduced innovation over time.”

CEO and President of Cochlear, Dig Howitt, stated “Our interest in acquiring Oticon Medical is driven by our concern for the 75,000 Oticon Medical implant recipients who may miss out on the lifetime of support needed to maintain and improve their hearing. Demant has been clear about its intent to exit the hearing implants business and approached Cochlear to provide the support required by its recipients. We believe only Cochlear can provide Oticon Medical recipients with that lifetime care, supported by our financial strength, scale, innovation capability and global reach.”  

The CMA has invited comments on its provisional findings and potential remedies and the transaction is expected to close by June 30, 2023. Cochlear and Demant will continue to engage constructively with the CMA to address the concerns raised.

This acquisition is subject to approval from the CMA, ACCC and the European commission.

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