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Coloplast’s acquisition of Kerecis: Considerations and implications

Coloplast’s announcement is the latest large and significant advanced wound care (AWC) industry deal.

As the high level details have already been thoroughly disseminated by press releases and news aggregators, our analysis of the Danish multinational’s acquisition of Kerecis will focus on:

  • What makes this deal noteworthy in the context of the current advanced wound care (AWC) landscape and Coloplast’s positioning, especially in the US AWC market?
  • What are the potential tailwinds and headwinds that Coloplast will encounter as they integrate the Kerecis business org, portfolio, and platform?

Why is this deal noteworthy?

Aside from its 10-figure price tag and a high multiple on revenues relative to other recent AWC transactions, this deal is also a possible tipping point whereby now roughly half of the top wound care MNCs operating in the US now have biologics / skin substitute / allograft / CTPs (cellular and tissue-based products) to their portfolios. (Side note: There is a recent effort, including a consensus paper published in the Journal of Wound Care [JWC], to begin referring to this segment by the more accurate term, CAMPS [cellular, acellular and matrix-like products]).

Does this mean that the rest will follow suit? No–and some have intentionally avoided this segment–for very valid reasons as well.

On the other hand, it has become clear to most of the major global wound care brands that to simply innovate around the edges of their core dressings and bandages, if they do not have some other competitive advantage (ex: full service logistics, manufacturing, digital health, remote monitoring, etc.), will eventually render them obsolete.

However, beyond these relatively surface-level points, this deal is significant for the following reasons:

          1. Only a handful of players have successfully achieved commercial penetration at scale

There are around 100 advanced wound care CTPs available in the US, which makes up roughly half of the global AWC market overall, and the overwhelming majority of AWC CTPs. However, relatively few players have managed to successfully take this AWC category from concept to successful commercialization in the years since wound care has been on the map with specialized care settings and reimbursement. 

Indeed, various platforms based on everything from dehydrated porcine, bovine, ovine, and equine (pig, cattle, sheep, and horse) tissues, to autologous cells, cell culture banks, and human cadaver skin, to various amniotic and placental tissues, to collagen derived from bio-engineered plants, to bioactive glass and other synthetic materials have all been shown to contribute to healing in complex wounds and burns. 

However, of these ~100 products / platforms, only a handful of companies have achieved significant commercial traction to date (some of these companies have multiple AWC CTP products in their portfolios):

  • Organogenesis
  • Smith+Nephew (portfolios acquired from Healthpoint and Osiris Therapeutics)
  • MiMedx
  • Integra Life Sciences
  • Kerecis
  • A few others could be added, depending on the thresholds considered, such as:
    • Convatec (via its acquisition of Triad Life Sciences in 2022) 
    • Medline
    • Life Net Health (acquired the combined Bioventus-Misonix-Sol Systems wound portfolio earlier this year)
    • MTF Biologics
    • PolyNovo

So out of ~100 technologies, only about ~5-10 have significant commercial traction. Of these, Kerecis and its fish-derived Omega3 platform has been the fastest growing company in this segment for multiple years.

          2. International presence + viability

Of the CTP companies mentioned above, most of them have virtually no presence outside of the US (OUS), and/or their OUS focus is on a different part of their business (i.e. not AWC / burn care or CTPs). Again, almost the entirety of wound care CTP usage today is in the US.

When you attend US wound care conferences, the CTP companies’ booths are among the largest, busiest, and most elaborate in the exhibition hall (and a large proportion of their booth’s footprint if they have multiple product lines). 

Yet if you attend the increasing number of international wound care conferences (as we do), most of the same companies listed above are nowhere to be found–or perhaps just a small brochure or poster in the corner. Even large multinationals like Smith+Nephew may have a major presence or sponsorship, but they are unlikely to make their CTPs a major commercial focus, in many cases not even bothering to register the products overseas. I won’t go into details here of the many reasons for this, but suffice it to say that they include:

  • Reimbursement / willingness to pay out of pocket
  • Market and stakeholder awareness: of advanced wound care overall, and specifically of CTP use cases for wounds and burns
  • Regulatory, sourcing, logistical, and cultural challenges, for example: 
    • some markets require human tissue products to be sourced from local populations, or to undergo a level of material safety processing/testing (ex: heat) that offsets their clinical effectiveness
    • or proper and timely shipping + storage of such products becomes too complex or costly.
    • Sources of cells / tissues may not meet local cultural or religious guidelines

However, Kerecis in recent years has been increasingly present in the global wound care markets. Do they make up the majority of their revenues? Certainly not. However, the platform’s pricing elasticity, regulatory, and sourcing characteristics, combined with increased awareness overall, solve many of these issues. As such, in recent years (even pre-Covid), it was not uncommon to see Kerecis–or one of their third party distributors–with a presence at burn and wound care industry conferences across EMEA, APAC, and LATAM.

Kerecis also has some complementary, mostly consumer-focused, wound and skin products (that Coloplast can likely competently commercialize through their channels), as well as a pipeline of more complex surgical reconstruction and repair-focused products based on the Omega3 platform. However, the core of their business at the time of the deal is still their fish-derived lines of wound, surgery, and burn grafts.

In short, not only was Kerecis the fastest-growing CTP firm in the US prior to Coloplast’s acquisition, but they also were uniquely able to demonstrate at least some initial traction in less traditional and emerging markets where wound care biologics and CTPs have traditionally been avoided.

          3. Regulatory + reimbursement resilience

If points #1 (commercial penetration and scale) and #2 (international presence and viability) above speak to Kerecis’ past execution and performance, this third consideration deals with its future potential and capacity for resilience.

Certainly, the CTP segment of AWC has grown to over $2B in recent decades, fueled by focused wound care service lines, unique reimbursement codes (mostly in the US), and overall increased awareness and incidence of epidemic proportions.

However, whether this trend will continue is far from certain. Forces pushing back against the double digit growth rates include:

  • Regulatory: The FDA has been suggesting for quite some time that the 510k (predicate) device status of many CTPs is at risk, hence requiring them to perform more robust and costly clinical trials than they have been subject to until this point. This would 
  • Reimbursement:
    • CMS (whose lead most US private payers follow in part or in full) has been focusing on potential overuse of (especially relatively expensive) CTPs, and suggesting new frameworks that could see reimbursements for this category cut by ~25 to 95%, including a reclassification of CTP application code wording from “skin substitutes” to “wound care management products” and changing of the code categories to significantly reduce reimbursement. The Alliance of Wound Care Stakeholders has been pushing back on these changes at every comment window, but it is still on the table.
    • Products launched in recent years are waiting much longer (in some cases years) to receive reimbursement codes, and in many cases receiving less favorable reimbursement than their predecessors–seen by many as a tactic by CMS to buy time until they announce a totally reworked CTP payment scheme.
    • At the same time, there are overall incentives towards value based (not fee-for-service) payments, care in the home, and virtual care, which mostly have the effect of lowering CTP incentives.
    • Lastly, as the usage of advanced wound care procedures like HBOT and CTPs has grown, so have the administrative audits, which both directly and indirectly limit usage.

So few CTP companies are able to successfully reach commercial “escape velocity” even in the current regulatory and reimbursement environment. Now let’s imagine what would happen if even some of the above regulatory and reimbursement scenarios come to fruition, exerting further pressure on the space?

My prediction is that in such a scenario, dozens of the CTP companies who are barely hanging on today would go under relatively quickly. Likewise, those who do not have (or could not quickly create) a viable low-cost, moderate-to-high quality CTP that makes financial sense for customers in the new scheme will be in trouble. In fact, such scenarios could act as “equalizers” between the US and the international wound care markets: Increased US price elasticity, combined with simultaneously increased purchasing power and wound care awareness / infrastructure in the emerging and frontier markets.

Of course, in such a scenario, Kerecis’ Omega3 platform would take a hit as well. But given its low COGS (after all, it is derived from cod fish skin, a waste product in Iceland, and requires less processing than mammalian CTPs) and international footprint (boosted by Coloplast’s huge global presence), it could handle such a scenario, even as other firms’ CTP portfolios (the ones without flexibility of lower COGS options) may struggle to survive.

Stated differently, the Kerecis portfolio both benefits from the status quo, but is also positioned to survive some of the potentially disruptive industry events that may come to fruition.


Tailwinds and Headwinds for Coloplast

Most of the analysis above has focused on what made Kerecis stand out in a field of hundreds of CTPs, particularly in the US. But what about in the context of Coloplast as the acquirer? For the benefit of the audience, I’ll skip a lot of the cookie cutter talk, and focus on the key aspects of what could go right and what could go wrong from the perspective of an operator, investor, and advisor who spends an equal amount of time in the wound care treatment room as I do in the corporate boardroom:

Despite Coloplast’s huge international presence, their wound care business lags behind their ostomy and continence portfolios, especially in the US. From my experience, I can count on one hand the number of times that I have seen a Coloplast wound care sales rep calling on a hospital clinic or doctor’s office in the US (and never in the OR) in the past 10 years (I can say the same about 3M reps prior to the 2019 Acelity acquisition). Though they are often seen more in the acute settings, like with the inpatient wound ostomy and continence (WOCN) nurse(s). However, the growth momentum has been in the outpatient (clinic) settings (and now arguably shifting into the home).

This is in sharp contrast to some of Coloplast’s traditional AWC competitors such as Urgo, Molnlycke, Convatec, 3M, and others, who will often show up to these US care settings multiple times in a month. For biologics/CTP “native” players like Organogenesis, MiMedx, and of course Kerecis, the frequency may be multiple times in a week.

The above is in no way intended to disparage Coloplast–who by many metrics has outperformed most other AWC firms in recent years. Rather, it is just the natural cadence based on their geographic focus (they have very strong positions in markets like Western Europe and East Asia) and pre-Kerecis portfolio (mostly dressings and skin ointments). For those products and call points, the ROI of huge sales forces with aggressive field activity, is generally poor.

So now, with the Kerecis acquisition, Coloplast is gaining a strong, high performing US sales force, calling on sales points they have not traditionally focused on. This is an opportunity to not only move forward the Kerecis Omega3 platform, but also their other current and potential future products as well.

Unfortunately, as other leading AWC medtech organizations have seen, the approach, sales cycle, incentives / compensation, and other considerations for selling dressings and ointments is very different from selling biologics, CTPs, and more complex devices such as negative pressure wound therapy (NPWT). 

As we saw in the months and years following 3M’s acquisition of Acelity (the largest AWC deal ever, at $6.7B):

  • Most of Acelity’s top performing executives and sales reps left for other opportunities, especially after their retention bonuses kicked in (with 3M laying off thousands more in the years since, especially as they prepare for the planned spinoff of the healthcare segment).
  • The sales cycle and operational/logistical/reimbursement approach for the Acelity portfolio, despite also being “wound care,” was so different from that of 3M’s approach, that Smith+Nephew, Medline, and others were able to capture a large part of their market share during the transition.
  • This point, as well as significant cultural differences in terms of decision making and bureaucracy, led to further employee attrition (before planned layoffs, and before 3M could capture all of the organizational knowledge).

It’s not just the 3M-Acelity deal that Coloplast-Kerecis can learn from. I have shared this story before…Shortly after the Smith+Nephew-Osiris acquisition, I ran into some excellent sales and marketing executives at an industry conference, all wearing bright orange (S+N) neck ties. After congratulating them on the deal, I congratulated them on their new fashion accessories. After an uncomfortable pause, one replied, “Yeah…we don’t really wear ties…” and the another just nodded his head. Within about six months, that entire group had moved on to another company. I’m sure the new tie uniform idea had good intentions, but it may have been one of the proverbial straws that caused the proverbial camel’s pressure injury. To sell differentiated medtech that is handled and applied “case” settings, there is no substitute for a certain level of entrepreneurial and independent thinking. The fact that Kerecis’ Omega3 technology is scientifically different than an auto-instillation NPWT device or live mesenchymal stem cell graft does not change this fact. As such, care must taken to keep that dimension of the assets being acquired, while of course also ensuring a smooth transition and integration.

A good example of Kerecis displaying these traits was during the “Public Health Emergency” phase of Covid. Quickly after site of care restrictions were temporarily relaxed, many Kerecis reps made a push to bring their product to patients in SNFs (nursing homes). In the time that other larger or more bureaucratic companies may have developed elaborate plans and updated marketing materials, many members of the Kerecis team just saw an opportunity and went for it. Entrepreneurial and opportunistic yet lean approaches like these are what allowed the company to continue its growth trajectory even throughout the pandemic.

While both Coloplast (Denmark) and Kerecis (Iceland) share Nordic roots, most of the Kerecis commercial team is in the US. One of the most critical factors for the success of this M&A will revolve around Coloplast’s ability to successfully integrate and retain the top performers of the Kerecis team. Doing so will ensure that Coloplast has a commercial competency to potentially launch other complex wound care medtech in the US (biologics, NPWT, oxygen, diagnostics, digital health, etc.). On the other hand, should they repeat the mistakes from the 3M-Acelity integration (i.e. acquiring the portfolio but losing much of the talent), the deal will not create the potential shareholder value that was intended.

Fortunately, at the time of the acquisition, the announced plan is for Kerecis to continue to operate independently, under its own brand identity, as a standalone business unit. Surely Coloplast’s efficient operating structure and global footprint will deliver cost savings and other benefits, but it is a good sign that there is no rush to merge all  portfolio and business operations (if even at all).

Assuming that Coloplast is able to successfully preserve Kerecis’ value acquired in the US, and that they do not mistakenly rush to quickly integrate it to the rest of the organization, what might its approaches be across the various international markets?

United States:

  • Try to maintain the growth momentum and retain key talent, while also preparing for a potential Plan B scenario that could choke CTP growth (via changes in regulatory, reimbursement, or both).
  • Develop product(s) derived from the Omega3 platform, including possible non-reimbursable ones, that can be applied by clinicians in the home and other non-clinic/OR care settings.

Western Europe, Canada, Australia-New Zealand, Japan, South Korea, etc.:

  • Leverage the Omega3 platform as a natural, sustainable, efficacious, and cost effective AWC product for key markets that otherwise would not embrace CTPs for wounds besides large burns or trauma.
  • Focus on synergistic R&D and M&A efforts (several potential technologies exist in the Nordics alone) to fuel future generations of skin/wound care and related innovations.

Emerging markets:

  • Continue to gain early market share as these regions become exposed to CTPs and related AWC modalities.
  • Do not be too quick to take over distribution from local / third party distributors in these markets–they may already have competencies and relationships for this product type that will take some years to build internally.



Over the past decade plus, Kerecis has grown from a startup to the fastest growing CTP firm in wound care, including a multi-year track record. At the same time, Coloplast has been one of the top performing MNCs in this space, with a massive global presence, though lagging in US AWC.

On paper, this acquisition can open many doors for Coloplast, both in the US and its other markets. However, many of the potential pitfalls look very similar to those that have plagued other AWC players and their corporate strategies in recent years. At the same time, the drivers of US CTP growth in the past decade may not extend into the coming decade for a variety of regulatory and reimbursement reasons. Reflection on past case studies, diligent planning, and thoughtful execution will be needed to ensure Coloplast’s stakeholders realize the full benefits from this Icelandic success story.

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2 thoughts on “Coloplast’s acquisition of Kerecis: Considerations and implications”

  1. Excellent points. However the biggest obstacle yet to be overcome is the lack of product differentiation and guidelines for use of CTPs. Conference presentations rarely differentiate their products on levels of evidence, rather they focus on specific components and their contributions to tissue repair in vitro and in animal studies without major advantages over competitors in clinical applications. Product to product comparisons are rare as they may not show a financial or clinical advantage. Eventually, the medical reimbursement world and ultimate treatment outcome will have significant impact in what will truly dominate clinic use

    1. Great points, Gerit! Though most of these complex wounds are multifactorial, which makes designing a good wound care clinical trial difficult as well. In the end, many of the patients best resembling those in the real world are excluded from the studies: Poor circulation, uncontrolled diabetes, renal disease, obesity, wounds too large/deep, etc. On the other hand, if they are included in the wound care trials, they may not heal due to their other chronic conditions, and products that could have benefited other patients may not demonstrate an effect in the trial. This is one of the greatest dilemmas in the wound care clinical evidence realm.

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