Johnson & Johnson can acquire Shockwave Medical

The Bundeskartellamt has cleared the planned acquisition of all the shares in Shockwave Medical, a medical technology company based in Santa Clara, USA, by Johnson & Johnson, USA, one of the largest pharmaceutical and medical technology companies in the world.

Shockwave Medical develops technologies for the treatment of cardiovascular diseases and distributes products based on these technologies. The acquisition is set to cost around 13.1 billion US dollars.

Andreas Mundt, President of the Bundeskartellamt: “Where a multi-billion-dollar acquisition of an innovative medical technology company is to expand the portfolio of one of the largest companies in that segment, we need to examine that merger very closely. Shockwave Medical has so far generated only little turnover in Germany but is active in important growth markets. Having examined the acquisition, we have no serious concerns about the project. There will be no direct overlaps or other adverse effects on competition. When examining mergers that involve technology-driven companies, we particularly look at whether innovation-based competition, which also plays a crucial role in improving patient well-being, is maintained.”

The Bundeskartellamt could examine the project due to a provision in the German Competition Act (Gesetz gegen Wettbewerbsbeschränkungen – GWB) on the so-called transaction value threshold. The transaction value threshold allows the authority to examine under competition law mergers where companies or assets are acquired at a purchase price of more than 400 million euros, although they generate little or no turnover at the time of the transaction. This provision, which was incorporated into the GWB in 2017, allows the Bundeskartellamt to control acquisitions which, despite the target company generating little turnover, are of great economic significance (for example, very research-driven companies or companies with a high growth potential).

Shockwave develops and manufactures medical devices used in the minimally invasive treatment of calcified arterial lesions (arteriosclerosis). The treatment involves the use of intravascular lithotripsy (IVL), a novel technique based on sonic pressure waves (ultrasound). Shockwave also manufactures so-called coronary sinus reducers used in the treatment of (refractory) angina pectoris (tightness and pain in the chest) which cannot be controlled by conventional treatments.

Both technologies only compete to a limited extent with drug therapies and other medical technology methods used for preventing or removing plaque or calcification, in particular, in the coronary arteries. Being one of the largest medical technology and pharmaceutical companies in the world, Johnson & Johnson’s portfolio already includes cardiovascular medical technology (in particular, Impella heart pumps and electrophysiology devices used in the treatment of arrhythmias); however, it does not include products that could be used for a purpose comparable to that of Shockwave’s products. Therefore, it is to be expected that the merger will not significantly impede competition.