Synthes is back in court, this time as the plaintiff in a lawsuit against Stryker Corp. (NYSE: SYK) accusing the Michigan-based medical device company of trying to obtain “an improper competitive advantage.”
The complaint, filed in federal court in Philadelphia, also singled out three former sales staff from Synthes’ San Francisco sales unit who resigned from the company between August and October and joined Stryker, and alleged they gave trade secrets to a competitor, and breached their contractual and fiduciary obligations to the company, according to press reports.
The medical device industry has undergone a significant amount of consolidation, including the companies at the center of the lawsuit, as increased costs from the excise tax and getting products to market spur companies to gather all available tools for their armories to boost their competitiveness and increase their market share.
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Johnson & Johnson (NYSE: JNJ) in New Brunswick, New Jersey agreed to acquire West Chester, Pennsylvania-based Synthes in April for $21.3 billion, making J&J the largest maker of medical devices for trauma.
It has also been a year for major growth for Stryker. It plowed through more than half of its cash reserves to boost its business through acquisitions like Boston Scientific’s (NYSE:BSX) neurovascular business, Malvern, Pennsylvania-based Orthovita and Bruz, France-based Memometal Technologies.
Earlier this year, three Synthes directors were sentenced to prison terms ranging from five to nine months under the responsible corporate officer doctrine over subsidiary Norian’s unauthorized use of bone cement in spinal surgery clinical trials. A fourth director was later sentenced to eight months.
