FTC Plans Lawsuit to Prevent Acquisition of Medical Device Coating Firm

March 10, 2025 TruthUSA

According to the agency, the merged entities would possess more than 50 percent of the market share for outsourced hydrophilic coatings.

The U.S. Federal Trade Commission (FTC) is preparing to file a complaint to prevent an investment firm from acquiring a business that specializes in medical device coatings. The agency cautions that this acquisition could undermine competition and be detrimental to patients.

The FTC’s complaint aims to block Illinois-based private equity firm GTCR BC Holdings, LLC from obtaining Surmodics, Inc., as stated by the agency in a March 6 announcement. GTCR currently holds a majority interest in Biocoat, Inc., which is the second-largest supplier of hydrophilic coatings in the U.S., following Surmodics.

“Hydrophilic coatings enable doctors to navigate medical devices through narrow passages in the body—such as within a blood vessel in the brain—without harming delicate tissues or crucial structures,” the FTC noted. “Medical devices with these coatings are utilized in various interventional procedures in neurovascular, structural heart, coronary, and peripheral vascular specialties.”

If GTCR’s acquisition of Surmodics proceeds, the resulting company would command over 50 percent of the outsourced hydrophilic coatings market, according to the agency.

The existing competition between Biocoat and Surmodics has fostered “lower prices, enhanced quality coatings, and innovation in products,” the FTC emphasized.

“However, the merger would eliminate these competitive advantages,” which would negatively affect both medical device manufacturers and patients, the FTC contended.

The FTC stated that manufacturing hydrophilic coatings demands significant investment, an extensive research timeline, and specialized knowledge. Consequently, companies frequently choose to outsource this process to experienced third parties.

“Under these conditions, it is improbable that a new coating provider could emerge to effectively challenge GTCR and Surmodics after the merger,” the FTC indicated.

The agency intends to petition the U.S. District Court for the Northern District of Illinois to prevent the merger while an administrative review is conducted.

Surmodics expressed disagreement with the FTC’s move in a March 6 statement, asserting that the company plans to “vigorously defend” the acquisition in court.

The company “respectfully disagrees” with the FTC’s ruling and is determined to finalize the merger. Surmodics believes in the benefits of the merger for all parties involved, including shareholders, customers, and patients,” the statement continued.

“We have engaged productively with the FTC over the preceding months to achieve regulatory approval for the merger and are disheartened by its decision to initiate legal proceedings, as we believe the merger is pro-competitive.”

The proposed merger was disclosed by Surmodics in May 2024 and is estimated to be worth approximately $627 million. Shareholders have already endorsed the merger during a special meeting held in August.

The FTC commissioners voted unanimously, 4–0, in favor of proceeding with action against the acquisition.

In a joint statement, Commissioners Alvaro Bedoya and Rebecca Kelly Slaughter noted that the case challenges a transaction that exemplifies “a prevalent and troubling playbook in our economy”—a private equity firm first solidifying its foothold in a market, followed by acquiring additional businesses in that field to consolidate the industry.

“While this strategy can yield substantial profits for private equity entities, it may impose considerable costs on the market and consumers,” they remarked.

“This pattern of consolidation is widespread and raises significant alarm, particularly in healthcare markets where not only finances but lives are at stake.”

The Epoch Times contacted GTCR BC Holdings and Surmodics for their responses.

Source link