Buying into cardiovascular: the 3M heart-lung deal (1999)

The shortcut into treatment — and the decade it costs

The point of this decision was to enter a treatment area Terumo could not have built in time. Oxygenators and the heart-lung business around them sit in high-difficulty, high-value cardiovascular care, where developing the technology, running the clinical trials and clearing the regulators in-house would have taken ten years and a great deal of money. When 3M pulled back from healthcare and put the business up for sale, Terumo bought its way in instead — acquiring Terumo Cardiovascular Systems whole rather than growing it. It was a clean break from the general-consumables company it had been, and it fixed the method Terumo would run on ever after: buy the treatment area, then connect it.

That method became the engine of Terumo’s growth and, in the same motion, its recurring cost. From 1999 the deals multiplied — MicroVention in neurovascular, CaridianBCT in blood, Bolton in aortic stents — and lifted the company into high-margin fields it had entered late; revenue and operating margin both climbed as the mix shifted toward cardiovascular devices. But each acquisition then demanded years of integration: the blood business bought in 2011 ran losses well into the decade, and products such as the Rika collection system took four years and more to pay. The strength and the liability are the same act — Terumo grows by buying what it cannot build fast enough, and then spends the better part of a decade making each purchase earn its price.