Dive Brief:
- TSO3, maker of sterilization products used in hospital settings, said Monday it has agreed to be acquired by Stryker for $51.7 million, including existing debt.
- The Quebec City-based company makes a low-temperature sterilizer and related supplies for heat-sensitive medical devices including colonoscopes, gastroscopes and duodenoscopes. Such devices can't withstand the heat used in regular steam sterilizers.
- Separately, Stryker announced expanded roles for two division heads, Spencer Stiles and J. Andrew Pierce, and the departure of Stuart Simpson, president of joint replacement, who left the Kalamazoo, Michigan-based company to pursue other career interests.
Dive Insight:
Stryker's decision to buy a maker of sterilizers for hospitals comes at a time of heightened regulatory scrutiny over the reprocessing of endoscopes, following a spike over the past year in bacterial contamination rates in duodenoscopes used for minimally invasive procedures involving the pancreas and bile duct.
FDA alerted healthcare providers in April that an agency analysis of medical device reports received between Oct. 15, 2018 and March 31, 2019 identified three deaths, 45 cases of patient infection and 159 reports of device contamination linked to inadequate reprocessing. FDA said manufacturers Olympus, Fujifilm and Pentax had failed to comply with agreed-upon timetables for completing post-market studies aimed at pinpointing the cause of the contamination problems.
At the same time, the industry has faced challenges affecting a wide range of devices stemming from the shutdown of a large sterilization plant in Willowbrook, Illinois. The closure in February of the Sterigenics plant by the state's Environmental Protection Agency because of elevated ethylene oxide emissions prompted device manufacturers including Boston Scientific, Medtronic and Smiths Medical to report subsequent product shortages and hits to revenue.
In July, FDA challenged industry to develop alternative medical device sterilization methods and methods to reduce ethylene oxide (EtO) emissions.
Stryker did not comment publicly Monday on the TSO3 acquisition and its plans for the business. In an email to MedTech Dive, the company said the transaction is subject to customary closing conditions. Until closing, Stryker and TSO3 remain two separate and independent companies, Stryker spokesperson Jennifer Lentner said.
During Stryker's second-quarter earnings call, CEO Kevin Lobo said the company's endoscopy business was among the drivers of a 17% organic sales growth rate in surgical instruments.
TSO3's sterilization system, the Sterizone VP4 Sterilizer, is designed to eliminate microbial contaminants that can cause patient infections in common surgical tools and complex medical devices including long, flexible endoscopes such as colonoscopes, gastroscopes and duodenoscopes, according to the company's website. The device is cleared in the U.S., Canada and Europe.
Also on Monday, TSO3 reported a second-quarter net loss of $4.2 million, compared to a loss of $4.0 million in the year-ago period. Revenue was $0.7 million, compared to $0.4 million a year ago.
Stryker announced Spencer Stiles will serve as group president of orthopaedics and spine, overseeing Stryker's joint replacement, trauma and extremities and spine divisions. J. Andrew Pierce, group president of MedSurg and neurotechnology, will oversee Stryker's instruments, medical, endoscopy, sustainability and neurotechnology businesses.
Both are Stryker veterans with more than 20 years of experience and will continue to report to Timothy Scannell, president and chief operating officer, in their expanded roles.
