Guidant Merger Signifies Technological Shift

In the future, when business school classes meet to discuss the things that can go wrong when two companies decide to merge, it's likely that Guidant's agreement to be acquired by Johnson & Johnson will be held up as a key case study. Things went wrong almost from the start for the Indianapolis-based device maker, which found its case for a merger seriously damaged by the publicity surrounding major recalls of key pacemaker and defibrillator lines. At the time of writing, barring a major internal shift at Johnson & Johnson, it looks very much as though a higher bid from Boston Scientific will emerge as the winner for Guidant, an outcome that could be felt for years to come.

Behind all the shouting, a very real trend is underway. FDA-regulated medical device companies are introducing wired and wireless communication technologies into their products. Meanwhile, implantable devices like stents, catheters and pumps are continuing to use more and more pharmaceuticals integral to their design. So, big medical device manufacturers like Medtronic and GE are finding the boundary between software, pharmaceutical and biotech companies increasingly blurred. The question of who regulates medical software is not too far behind.