Healthcare Sector Comment – November 2016

On 9th November 2016, Donald Trump became the 45th US President-Elect, so what does this mean for the healthcare M&A market?

First, during campaigning Trump promised to cut down on tax inversion M&A, which avoids US corporate taxes on foreign income. Instead, Trump has now suggested a tax holiday whereby corporate tax rates are cut from 35% to 10% for a short period of time.  This will encourage large US companies to bring cash back into the US, potentially providing a war chest to drive further acquisitions and investment in R&D, as Agilent has announced it plans to do so in the last few days.

Second, that he would cut ‘red tape’ at the FDA to get drugs approved more quickly, which prompted a rally in pharma & biotech stocks following the result but it still remains to be seen what material impact he can have.

Third, Trump’s macroeconomic plans revolve around deregulation, lower taxes and an expectation of continued low interest rates. These factors, combined with Trump’s penchant for dealmaking, should lead to a favourable M&A environment both in the US and further afield.

In this month alone we have seen the following deals involving the US:

  • Apax Partner’s acquisition of a 50.1% stake in Vyair Medical, the respiratory solutions business of Beckton, Dickinson & Co., for €228m;
  • EQT Partners acquisition of Press Ganey Associates Inc., the provider of health care solutions and advisory services to health care organisations, for €2.1bn;
  • Quintiles’ acquisition of IMS Health Holdings, the provider of information services for the international healthcare industry, for €11.2bn; and
  • Insmed Incorporated’s acquisition of the exclusive rights of compound AZD 7986, an inhibitor for treating pulmonary diseases such as non-cystic fibrosis bronchiectasis, for €172m.

The US has a significant impact on the global market for M&A and clearly future political developments are likely to be far-reaching.

 

A taste of deals in October

 

Medical Equipment & Supplies

Spirit Int Limited, the UK-based medical devices wholesaler acquired Aseptika Ltd, the UK-based self-monitoring medical devices manufacturer.

Oxford Immunotec Global Plc, the listed UK-based commercial-stage diagnostics company acquired Immunetics, Inc., the US-based diagnostics company focused on developing specialised tests for infectious diseases, for €5m.

Tecomet, Inc. the US-based contract manufacturing company acquired Mountainside Medical Colorado, LLC, the US-based supplier of complex, high precision medical device components and instruments used in minimally invasive surgical devices.

RJD Partners Limited, the UK-based private equity firm acquired Barber of Sheffield Limited, the UK-based manufacturer of stainless steel suture, drilled end, sternal, hypodermic, and other specialized surgical needles, for €18m.

Molex, LLC, the US-based manufacturer of electronic, electrical and fibre optic interconnection systems acquired Phillips-Medisize Corporation, the US-based outsourcer for the design of medical devices and diagnostics, drug delivery products and primary pharmaceutical packaging.

Duran Group GmbH, the Germany-based manufacturer of glass products acquired Kimble Chase Life Science and Research Products LLC, the US-based manufacturer of reusable, disposable, and specialty laboratory and scientific glassware, for €117m.

 

Health & Social Care

Fresenius Helios GmbH, the Germany-based owner and operator of hospitals and private medical health institutions acquired Quirónsalud, the Spain-based operator of various medical centres including general hospitals, multi-specialty medical centres, day hospitals, assisted reproduction centres, ophthalmology centres, and residential care facilities, for €5.8bn.

Welltower Inc., the listed US-based healthcare real estate investment trust acquired a portfolio of 19 senior residences from West Coast Seniors Housing, the US-based provider of housing for seniors, for €1.0bn.

MedicX Fund Limited, the listed UK-based investor in primary healthcare properties acquired a 173 Bed Care Home Portfolio from Apache Capital Partners LLP, UK-based private equity firm, for €33m.

China Resources (Holdings) Co Ltd, the China-based conglomerate and Macquarie Capital Group Pty Ltd, the listed Australia-based provider of banking, financial, advisory, investment, and funds management services acquired a 74% stake in Genesis Care Ltd, the Australia-based provider of radiation oncology, cardiology, and sleep treatment services, for €1.5bn.

 

Pharmaceuticals & Biotechnology

Probi AB., the Sweden-based developer of probiotics and pharmaceuticals acquired Nutraceutix Inc., the US-based probiotics supplements manufacturer, for €95m.

Accord Healthcare, the UK-based generic pharmaceutical company acquired Actavis UK Ltd. and Actavis Ireland Ltd., the respectively UK and Ireland-based generic pharmaceuticals manufacturers, for €685m.

Nitto Denko Avecia, Inc., the US-based developer of oligonucleotides acquired Irvine Pharmaceutical Services, Inc., the US-based provider of pharmaceutical development and manufacturing services, for €43m.

UDG Healthcare Plc, the listed Ireland-based provider of services to healthcare manufacturers and pharmaceutical retailers acquired STEM Marketing Limited, the UK-based provider of commercial, marketing and medical audits to pharmaceutical companies, for €67m.

Novogen Limited, the listed Australia-based pharmaceutical research and development company acquired Glioblast Pty Limited, the Australia-based developer of molecular inhibitor for treatment of brain cancer.