Competition for the company. Prospective buyers would want to get this at the best price... I'm certain there is more than one Company interested and the following article supports the direction...Note the bit about software...
http://www.hospitalbuyer.com/industry-market/mergers-acquisitions/guidant-bid-war-sure-sign-of-medical-device-sector-boom-29/ Guidant Bid War Sure Sign of Medical Device Sector Boom The New York Times explains how the bid war between J&J and Boston Scientific to buy troubled Guidant (Boston Scientific just upped its bid to $27B) illustrates the increasing attractiveness of the medical device sector, as compared to the economy as a whole and to other health-related activities such as drug manufacturing specifically. With the aging of baby boomers as a strong underlying secular trend, product segments such as heartbeat regulating devices are expected to grow by double digits every year for the years to come. Worldwide market size for things such as stents or balloon devices is in the $5-10 billion range every year each, with gross margins for some products as high as 70 to 90 percent.
Analysts project that the number of Americans over age 60 will grow by 30+ percent within less than ten years, to spend more on healthcare in the years between age 60 and 70 than during their whole life until then. Besides an older (and, though the NYT left that out, more ponderous) population, medical devices appear in a favorable light compared to drugs because device innovation has kept a brisk pace during the last decade. While drug manufacturers spun off their at-the-time less attractive device making divisions during the 90’s (Guidant itself was part of Eli Lilly until 1994), they have struggled to renew their portfolio of high-volume patented drugs. Device makers can leverage technological progress in computing power or software to keep improving their products by increments, thus sustaining or increasing demand and profit margins. Devices have sometimes stepped in where drugs have failed to have an impact, to keep blood flowing through vessels or correct an abnormal heartbeat.
However, doctors warn that some of the features touted by new, more costly products are not necessarily used in many cases and can lead to shorter product lifespans that require more frequent replacement operations (if only to change batteries) and still higher costs, though not always with the benefit of a better health outcome. The close collaboration between doctors and manufacturers to design and test devices can also lead to conflicts of interests.
We know small/med biotech's financials are precarious and survival depends upon merger's or buyouts...
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