Corza Medical, a new venture forged by the financial firepower of private equity giant GTCR, is looking to build a surgical tool supplier that its executive chairman Greg Lucier says can compete with “almost monopolistic” leaders in the space.
To mount the challenge, Corza acquired Surgical Specialties Corp., a supplier of surgical sutures and ophthalmic knives. Corza will use this beachhead in Westwood, Mass., to build a pipeline of acquired assets including TachoSil, a surgical patch product line Corza acquired from Takeda Pharmaceuticals last year.
In an interview with the DeviceTalks Weekly podcast, Lucier, the former CEO of spinal company NuVasive (NSDQ:NUVA) and diagnostic company Life Technologies, said management believes “there is an opening for a pretty good-sized surgical tools and technologies company to compete against the Ethicons and the Medtronics of the world.”
Lucier said the two Goliaths have reached a size that makes them “almost monopolistic with their bundling. Customers are looking for a choice where they can get that exceptional value with remarkable service. That’s what we’re going to do with Corza Medical.”
The interview will run in the upcoming podcast episode this Friday, Feb. 5, 2021.
Corza brings more than a slingshot to the fight. In GTCR it brings a backer founded in 1980 that has invested over $18 billion in more than 200 companies. The Chicago-based firm closed on a $7.5 billion investment fund in November.
GTCR joined forces with Lucier in March 2019 to form Corza Health (now Corza Medical). Lucier boasts company-building expertise. He joined Invitrogen in 2003 as CEO and led the company through its transformative $6.7 billion acquisition of Applied Biosystems in 2008. The combined company, under the name Life Technologies, would eventually be acquired by Thermo Fisher Scientific in 2014 for $13.6 billion, making it the largest medtech acquisition at the time.
Prior to launching Corza last year with GTCR, Lucier had stepped in as CEO of spinal surgery giant Nuvasive after the abrupt departure of its founding CEO Alex Lukianov.
Surgical Specialties CEO Dan Croteau will stay on in that role with Lucier serving as executive chairman of the now 1,700-employee company. The company’s pipeline includes Quill barbed sutures, Sharpoint Plus and Look surgical sutures, Sharpoint ophthalmic knives, and the TachoSil fibrin sealant patch.
TachoSil will certainly ring a bell for Johnson & Johnson. The medical giant agreed to acquire the patch from Takeda Pharmaceuticals in May 2019. Takeda sought to shed the ophthalmology products it acquired through its $62 billion purchase of Shire in January 2019.
With a massive ophthalmology business, Johnson & Johnson’s Ethicon seemed like a natural home for TachoSil, which reportedly reached $155 million in sales during fiscal 2018. However, regulators were concerned that the company would have control over both leading fibrin sealant patches, Evarrest and TachoSil. Ethicon ultimately abandoned the $400 million deal in April 2020, citing regulatory concerns.
Corza stepped up in September, agreeing to pay €350 million ($423 million).
Croteau joined the company in 2017 after it was acquired by a private equity syndicate led by Vivo Capital and ZQ Capital management and it was known as Angiotech Pharmaceuticals. In 2019, reports suggested Vivo was looking to sell the company for approximately $500 million.
In a follow-up email to DeviceTalks Weekly, Lucier declined to say how much Corza paid but confirmed it was more than $500 million.
In the podcast interview, Lucier laid out the case for Corza competing against global leaders like Medtronic (NYSE:MDT) and Johnson & Johnson (NYSE:JNJ).
The combination of Surgical Specialties with TachoSil creates a “pretty good-sized company with about $350 million in sales per year to start” with an eye toward building through acquisition, according to Lucier.
“I do hope that we are the acquirer of choice,” he said. “The appeal I can make to an owner, somebody who wants to continue on in the journey, is that we can provide them the resources, some particular expertise to allow them with their current business, to become global, to become even more competitive by being in combination with what we’re building.”
Lucier said Corza already has a “roadmap” for future acquisitions. The company intends to follow the model it adopted in ophthalmology, creating a deep offering of products in one specialty. “You’ll see us do more of the vertical excellence, a deep dive,” he said.
He also pointed to the company’s global reach. Surgical Specialties operates in 13 countries throughout North America, Europe and Asia, with manufacturing facilities in the U.S., Mexico, England, Germany and China. “We already have a very fast-growing business in China, a very sizable business in Europe,” he said. “And then of course [the company is] here in North America.
Finally, he expects the customers will see Corza’s products equal to the bigger companies’ “without having all the restriction of a bundle anymore.” He also said Corza will work with customers to customize tools and supplies.
“It’s not going to be a one-size-fits-all on our technologies,” he said. “We’re going to be willing to modify that needle, create a special suture in a simple example, to allow that surgeon to really get what they want for the surgeries.”
“When we were in the business of acquiring Surgical Specialties, we did more analysis on what’s going on in the space. It became very clear that the professionals inside that operating room do not necessarily feel that they’re being catered to, that they’re getting the customized treatment that they require,” Lucier concluded.