FTC challenges private equity firm’s acquisition of Surmodics

The U.S. Federal Trade Commission (FTC) has sued to block the planned acquisition of medical device company Surmodics by GTCR.

According to a news release, GTCR also owns a majority stake in Biocoat. The FTC says Biocoat is the second-largest provider of outsourced hydrophilic medical device coatings, behind only Surmodics. As a result, the FTC believes the deal is anticompetitive.

GTCR, a private equity firm with healthcare interests, agreed to acquire Surmodics for $627 million in May 2024. With that deal, it would acquire the Eden Prairie, Minnesota–based company’s range of technologies, including drug-coated balloons and thrombectomy systems.

Surmodics’ SurVeil DCB received a long-awaited FDA approval in June 2023. The company also reported successful early clinical use of its Pounce LP thrombectomy system at the start of 2024. In October 2024, the FDA cleared the Pounce XL thrombectomy system, and Surmodics reported the first uses of the system last month.

The FTC charges that the proposed acquisition would create a combined company controlling more than 50% of the coating market.

“Medical device makers rely on high-quality coatings in designing and bringing to market life-saving devices, such as neurovascular catheters,” said Daniel Guarnera, director of the FTC’s Bureau of Competition. “This merger threatens to disrupt competitive dynamics that have ultimately benefited patients. Today, the FTC is stepping in to protect patients from this unlawful acquisition.”

More on the FTC charges

The FTC’s complaint alleges the deal would lead to a highly concentrated market for outsourced coatings. The commission alleges that it would eliminate significant head-to-head competition between Biocoat and Surmodics.

According to the FTC, this market already “suffers from few competitors.” The resulting level of market concentration from the merger allegedly violates the FTC’s 2023 Merger Guidelines.

The FTC says internal documents from both companies, alongside competitor and customer testimony, recognize Surmodics and Biocoat as head-to-head competitors. In the complaint, the FTC alleges that the companies closely monitor each others’ business strategy. Often, the FTC says, they target the same large, small and startup medical device OEMs.

To seek a temporary restraining order and preliminary injunction, and authorize the staff to seek a temporary restraining order, the commission voted 4-0. It plans to file a complaint and request for preliminary relief in the U.S. District Court for the Northern District of Illinois to halt the transaction, pending an administrative proceeding.

Surmodics statement on the FTC challenge

Surmodics said in a news release that it intends to “vigorously defend this case in court in order to complete the merger.” It provided the following statement in response to the FTC’s planned challenge of the acquisition:

“Surmodics respectfully disagrees with the FTC’s decision and remains committed to completing the merger. Surmodics remains confident in both its rationale for the merger and the value it will bring to all stakeholders, including shareholders, customers and patients. We have worked constructively with the FTC over the last several months to secure regulatory approval for the merger and are disappointed by its decision to initiate litigation, as the merger is pro-competitive.”

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