Healthcare Sector Comment – April 2017 – Veterinary Services

People love their pets, that’s a given, but the extent to what they’re spending on keeping their animals happy and healthy is somewhat elusive. Pet companionship is on the rise as more people are using pets to counteract loneliness. Equally, rising GDPs and increasing disposable incomes can drive more people to invest in caring for an animal. Also a number of new entrants to the pet insurance market and a host of new products and plans create competition. In the dog-eat-dog world of insurance, customers are always hunting for the most competitive prices. Owners are also faced with a swarm of different treats for their beloved companions such as nutritional products, toys, grooming treatments and day care services. These strong drivers are making the veterinary market attractive to both financial investors and strategic buyers, who are set to consolidate this fragmented market. Veterinary corporate bodies are looking to offer a “one-stop solution” to pet owners, from first opinion practices to specialised hospital provision. The consolidation also gives suppliers stronger bargaining power when negotiating tariffs with insurers to help maintain margin.

Overall, animal care is big business and in the last few months we have seen a large amount of activity in the veterinary services sector, including:

  • Anicura’s acquisitions of Kliniek voor Gezelschapsdieren Eersel and Medisch Centrum voor Dieren BV, both Netherlands-based veterinary care providers as well as Varde Dyrehospital, the Denmark based animal hospital, a transaction advised by Clearwater International;
  • Mars Incoporated’s acquisition of VCA Inc., the listed US-based provider of pet health care services, clinical laboratory systems and animal hospitals, for €8.3bn;
  • VetPartners’ acquisition of VetWest Pty Ltd., the Australian vet group; and
  • EQT Partners announced the acquisition of UK-based veterinary healthcare chain Independent Vetcare Limited, for an estimated €500m.

At Clearwater International we have significant expertise in the sector having recently advised the owners of Varde Dyrehospital on their sale of the business to veterinary giant Anicura. For an eagle-eyed view on the market look out for our upcoming Animal Health Clearthought.


A taste of recent deals

Medical Equipment & Supplies

Otto Bock Healthcare LP, the Germany-based prosthetics, orthotics, mobility solutions, and medical care products manufacturer acquired the BeBionic, hi-tech upper limb prosthetic business of RSL Steeper Group Ltd, the UK-based provider of rehabilitation services and artificial limbs.

The management of RSL Steeper Group Limited, the UK-based provider of rehabilitation services and artificial limbs, acquired the company from its previous private equity owners Dunedin Capital Partners.

Minerva Laboratories, the UK-based provider of 3D scanning and design technology to manufacture ear moulds and Ultrawave, the UK-based manufacturer of ultrasonic cleaning products have both been acquired by management from UK-based healthcare company Hygea in a deal backed by Finance Wales.

Thermo Fisher Scientific Inc., the listed US-based manufacturer of analytical monitoring instruments acquired Finesse Solutions, LLC, the US-based manufacturer of measurement and control solutions for life sciences process applications.

National HME, Inc., the US-based durable medical equipment manufacturer acquired Genesis Healthcare Services, Inc., the US-based provider of mobility, hospice, bariatric and feeding equipment.


Health & Social Care

Fresenius Medical Care AG & Co. KGaA, the listed Germany-based provider of dialysis and chronic kidney failure products has acquired a 70% stake in Cura Day Hospitals Group Pty Ltd, the Australia-based provider of day hospital facilities, for €244m.

Eurosic SA, the France-based real estate investment trust acquired a portfolio of retirement homes comprising 16 care facilities from SARquavitae, for €116m.

OH Assist Ltd, the UK-based provider of occupational health services acquired Optima Health, the UK-based occupational health and wellbeing services provider.

National Health Investors Inc. the listed US-based real estate investment trust acquired Two Assisted Living/Memory Care Facilities in Hendersonville, North Carolina, for €15m.

Ravad Ltd and Golden House Ltd, both listed Israel-based property companies acquired 13 elderly care properties in London, for €83m.

Qualia Care Developments Ltd, the UK-based provider of buy-to-let care developments acquired Elder Homes Bradford Ltd, the UK-based care home services company.


Pharmaceuticals & Biotechnology

Asahi Glass Co., Ltd., the listed Japan-based conglomerate acquired CMC Biologics AS, the Denmark-based provider of fully integrated biopharmaceutical development and manufacturing services, for €491m.

Quotient Clinical Ltd., the UK-based drug development company acquired QS Pharma, the US-based provider of contract development and clinical manufacturing services, for €71m. In a related transaction they also acquired SeaView Research, the US-based clinical research organisation providing clinical pharmacology testing and laboratory services.

Quad-C Management, Inc., the US-based private equity firm acquired Pharm-Olam International, the US-based provider of clinical research services to the pharmaceutical, biotechnology and medical device industries.

Shangdong Jincheng Pharmaceutical Co., Ltd., the listed China-based manufacturer of intermediates and chemicals acquired Beijing Laneva Pharmaceutical Co., Ltd., the China-based manufacturer of chemical synthesis pharmaceutical medicines, for €267m.

Takeda Pharmaceutical Company Limited, the listed Japan-based developer of metabolic, cardiovascular disease, central nervous system disease and general medicines acquired ARIAD Pharmaceuticals, Inc., the listed US-based biotechnology company focusing on small-molecule drugs to treat cancers, for €4.6bn.