Healthcare Sector Comment – November 2014

Dato

One area of the healthcare sector that is generating interest is the over-the-counter (OTC) pharmaceuticals space. It is expected that the demand for OTC products will increase over the next few years as the requirement for affordable medicines, particularly in emerging economies, continues to drive the market.

The switching from prescription-only medicines to OTC, which may be seen as a way for pharmaceutical companies to protect revenues from brands which are soon to lose their patent protection, is generating growth opportunities in the market.

OTC continues to be a desirable area for consumer goods companies who wish to develop or extend their range of consumer brands, recently demonstrated by Bayer AG’s €10.2bn acquisition of US pharmaceutical company Merck & Co’s consumer health business. It has also been announced recently that Irish drug maker Perrigo is set to acquire Omega Pharma, one of the largest providers of OTC healthcare products in Europe, for around €3.6bn.

At Clearwater International, we believe this market will continue to see increased M&A activity over the next 12 months as new sales channels open up, i.e.: online and through supermarkets, increasing the availability of and access to OTC medicines.

This is an area that Clearwater International knows well, having recently sold Peckforton Pharmaceuticals – a fast-growing company that manufactures, distributes and sells prescription and OTC products in the UK and Europe – to speciality pharmaceutical business Abbey Pharma.

Health & Social Care Deals

Fresenius Medical Care AG & Co. KGaA acquired National Cardiovascular Partners, a US-based operator of endovascular, vascular and cardiovascular services, for an undisclosed amount. Fresenius, based in Germany, is the world’s largest provider of dialysis products and services.

Dutch private equity firm Waterland acquired Median Kliniken, Germany’s largest private sector chain of health rehabilitation clinics, from US-based buyout firm Advent International and UK venture capital firm Marcol for an undisclosed amount.

PAI Partners, the France-based private equity firm, acquired a majority stake in Grupo Ambuiberica, the Spain-based company engaged in providing health and medical transportation services and ambulance services, from ProA Capital for an estimated consideration of €100m.

Altamont Capital Partners LLC and Kingfish Group Inc. acquired an undisclosed majority stake in Legacy ER & Urgent Care, a US-based standalone emergency and urgent care clinics operator, for an undisclosed amount.

AxelaCare Health Solutions LLC acquired Advanced Care Inc., a US-based home healthcare services company, for an undisclosed amount. AxelaCare is a leading provider of home infusion therapy services.

Finland dental chain operator Oral Hammaslaakarit acquired Hammaslaakarivastaanotto Dentia Oy‘s business and Dentinelli‘s business, both Finland-based dental care services providers, for undisclosed amounts.

Boston IVF LLP acquired Reproductive Science Center, a US-based fertility clinic operator, in a deal described as a merger, for an undisclosed amount.

Ealing Hospital NHS Trust merged with The North West London Hospitals NHS Trust in a restructuring deal. Both hospitals are operated by the National Health Service in the UK. The newly formed company has been named London North West Healthcare NHS Trust.

Pharma & Biotech Deals

US based Acorda Therapeutics acquired Civitas Therapeutics, a US biopharmaceutical company, for a consideration of €409m. Acorda is a biotechnology company focused on developing therapies that improve the lives of people with neurological disorders.

German chemical and pharmaceutical company Bayer AG acquired the consumer health business of US pharmaceuticals group Merck & Co. for a consideration of €10.2bn. The acquisition included Merck’s existing OTC business primarily comprised of products in the cough, cold, allergy, sinus & flu categories, as well as global trademark and prescription rights for Claritin and Afrin.

AMCo (Amdipharm Mercury group) acquired Focus Pharmaceuticals Ltd, a UK-based speciality pharmaceutical business, from Mobeus Equity Partners LLP, Focus Pharmaceuticals’ management and other shareholders for a consideration of €63m with an additional earn-out of €25m. Based in the UK, AMCo is an international pharmaceutical company.

Medical Equipment & Supplies Deals

Metalmark Capital Holdings LLC, a US private equity firm, acquired an undisclosed majority stake in Collagen Matrix Inc., a US-based provider of high-quality products and technology used in tissue repair and regeneration, for an undisclosed amount.

Becton Dickinson and Company (BD) acquired GenCell Biosystems Ltd, an Ireland-based biotechnological sample preparation sequencing, genotyping and cell screening equipment developer, from Enterprise Ireland and other shareholders for an undisclosed amount. BD is an American medical technology company that manufactures and sells medical devices, instrument systems and reagents.

Diploma plc acquired an 80% stake in Technopath Distribution Ltd, an Ireland-based pharmaceutical and medical equipment products supplier. Diploma is a UK business supplying specialised technical products and services.

UK specialist rapid diagnostics company Abingdon Health Ltd acquired Serascience Ltd for an undisclosed amount. Serascience is a UK-based medical diagnostics devices manufacturer.

US provider of mezzanine capital to mid-market businesses Yukon Partners Management LLC acquired an undisclosed minority stake in AccuMed Technologies Inc., a US orthopaedic and other medical products manufacturer, for an undisclosed amount.

German investment company Blue Cap AG acquired em-tec GmbH, a medical equipment manufacturer based in Germany, for an undisclosed amount.

Breg Inc. acquired United Orthopedic Group Inc., a US-based orthopaedic products manufacturer, for an undisclosed amount. Based in the US, Breg offers cold therapy, knee, shoulder, spine, elbow/wrist & foot/ankle bracing and orthopaedic practice solutions.

TG Eakin Ltd acquired Cliffe Medical Ltd, a UK-based stoma appliances and prescription distribution services provider. TG Eakin is a UK medical device manufacturer, dedicated to the production of high-quality skin protection products for use in stoma and wound care.

Canadian medical equipment manufacturer Laborie Medical Technologies Inc. acquired Unisensor AG, a Switzerland-based medical instruments manufacturer, for an undisclosed amount.

Oncologix Tech acquired Esteemcare Inc. and Affordable Medical Equipment Solutions Inc. – two home medical equipment wholesalers for respiratory and sleep therapy, based in the US. The deal consideration was undisclosed. Oncologix, through its subsidiaries, engages in the business of manufacturing medical devices and provides personal care services.

Owens & Minor Inc. acquired Medical Action Industries Inc., a US-based disposable medical and surgical product manufacturer, for a consideration of €162m. Owens & Minor is a US-based distributor of medical and surgical supplies to the acute care market.