Healthcare sector comment – February 2011

Dato

February hit the half term blues with a low number of completed deals in the healthcare sector compared to last month. However, one deal that has not yet completed but stands out this month, is the recent announcement that The Carlyle Group in partnership with Palamon Capital Partners will acquire Integrated Dental Holdings (IDH) and will merge it with Associated Dental Holdings (ADH). Both IDH and ADH predominantly provide NHS dental services.

The dental market is a highly fragmented segment of healthcare and the dental body corporates control approximately 10% of all dental practices. Consolidation in the market will achieve greater efficiencies and reduce operating costs in an environment of challenging public expenditure. In time, it will also create an opportunity to develop new self pay and non pay services and to benefit from a battered and slow recovering private and public sector economy.

Another sub-segment of the dental market to keep an M&A watch on are outsourcing service companies who manage the administration part of the patient dental practice plans. With a consolidating customer base of dental body corporates and further consolidation predicted by the independent dental practices – driven by tight budgets, increased regulatory and compliance issue costs – it is envisioned that the knock on effect will be felt by other suppliers in the dental supply chain, like back office outsourcing services and laboratory service providers. Therefore, sparking off further consolidation throughout the dental supply chain.

This year we anticipate similar consolidation deals in the dental sub-segments with some vendors wanting to exit or build scale.

Watch this space!

Deals

Kyowa Hakko Kirin Co Ltd has acquired ProStrakan Group plc. Kyowa is a Japan based R&D based global speciality pharmaceutical company. ProStrakan Group plc is a listed UK based international speciality pharmaceutical company. The purchase price was for a total share capital value of £263m.

Wheaton Industries Inc has acquired Laboratory Sales Ltd. Wheaton Industries Inc is a US based marketer, manufacturer and re-packager of containers and laboratory ware and a portfolio company of PNC Equity Partners. Laboratory Sales Ltd is a UK based manufacturer and distributor of laboratory products. The transaction will further strengthen Wheaton’s position in speciality packaging and related instruments business.

NBGI Private Equity Limited has acquired Sante Group. Sante Group is a Turkey based company providing oncology therapy centres and related technical services, for an estimated value of £16.8m.

Meda AB has acquired Antula Healthcare AB. Meda is a listed Sweden based pharmaceutical company that develops, manufactures, markets, and sells pharmaceutical products. Antula Healthcare is a Sweden based pharmaceutical company that provides OTC pharmaceutical products to end users. Antula was a part of Healthcare Brands International Limited, the UK based OTC pharmaceutical company. The price paid was for a consideration of €207m, on a net cash/debt free basis.

Carewatch Care Services Ltd has acquired Graham Home Care. Carewatch Care Services is the leading provider of UK home-based care and support. Graham Home Care is one of Carewatch largest franchise operations.

Sun European Partners has acquired NextPharma Technologies Holding Ltd. NextPharma offers a range of services spanning the entire drug development, manufacturing and distribution supply.