Healthcare Sector Comment – October 2015

Date

One area currently receiving a lot of attention is the digital health space – a global market worth close to €32bn, which is expected to nearly double to €59m over the next 3 years.

Technology conglomerate IBM has recently spent close to €1bn on the acquisition of US-based health tech company, Merge Healthcare, whose solutions facilitate the sharing of images to create an electronic healthcare experience for patients and physicians. Also, earlier this year, NYSE listed clothing and apparel company, Under Amour, spent €493m snapping up two health fitness tracking applications (“apps”) companies; US based MyFitness Pal and Denmark based Endomondo. It’s these mobile health (mHealth) apps that are the key drivers behind the high growth in the wider digital health space.

Mobile phones first became a household device in the early 1990’s but it wasn’t until the 2000’s, with the arrival of device sophistication and superior connectivity – mainly driven by the launch of the iPhone in 2007 – that their potential was fully explored, and it was then that apps really took off. The global mHealth app market is currently worth c. €3bn with predicted growth of 49% over the next 3 years – the fastest growing segment within the digital health space.

At present, mHealth apps are mostly used by consumers who use them to make decisions about wellness and / or to track fitness, however the real potential lies with clinically-led apps. These have the potential to improve: healthcare outcomes; population health management; clinical workflow; and electronic patient records. The future trend will be to use complex algorithms to screen big data and eventually use this information to diagnose with the potential to prognose. Companies like Google are investing heavily in artificial intelligence (AI) to try and achieve this. The technology giant acquired DeepMind last year for €300m. The AI start-up has the potential to completely change how people are diagnosed if it manages to achieve the task of recognising faces in video or words in human speech.

 

Health and social care

UK injury management and rehabilitation provider RehabWorks was acquired by European healthcare private equity firm Archimed, for an undisclosed amount. The deal marks Archimed’s first investment in a UK healthcare business and follows on from RehabWorks’ acquisition of employee assistance programme (EAP) and corporate wellbeing provider Right Corecare, which trades as Right Management Workplace Wellness, earlier in the month.

UK mid-market private equity firm Lyceum Capital acquired UK healthcare software firm TotalMobile from previous owners MMC Ventures, for an undisclosed amount.

NASDAQ-listed sleep solutions manufacturer Select Comfort Corporation completed the acquisition of BAM Labs (now known as SleepIQ Labs), a US-based company that provides touchless health monitoring solutions, for a consideration of €62.7m.

India-based healthcare IT solutions provider Practo Technologies acquired Qikwell Technologies, a company that operates a patient relationship platform that provides doctors’ appointments, and Insta Health Solutions, a company that provides cloud and local server based hospital management systems and electronic medical records software solutions, both of which are based in India. Practo’s solutions enable users to find doctors and book appointments online.

Anchor Trust expanded its footprint in the residential care home space with the acquisition of 24 homes from LNT Group, parent company of care home group Ideal Carehomes, for an undisclosed amount. Shortly after, Anchor, which is the largest not-for-profit provider of housing and care for older people in England, announced the purchase of Cavendish Healthcare Group, for an undisclosed amount. Cavendish operates five residential care homes in Suffolk and Essex. Following the two acquisitions, Anchor now has a total of 119 care homes in its portfolio.

Continually on its acquisition spree, Advanced Dermatology & Cosmetics Clinics (ADCS Clinics), the US’s largest dermatology practice with over 120 locations, acquired Dermatology & Laser Institute of Southwest Florida, a skin, hair and nails diseases dermatology treatment centre operator, and Dermatology of Northern Colorado, a dermatology practice operator.

NASDAQ-listed acute hospitalist and post-acute care services provider IPC Healthcare Inc. acquired Mid-Atlantic ElderCare, the US-based provider of medical care services to patients of long term care facilities and assisted living / retirement communities, for an undisclosed amount.

Singapore-listed dental giant Q&M Dental Group acquired three dental practices in Singapore: TP Dental Surgeons, for a consideration of €20.5m; and Tiong Bahru Dental Surgery and Bright Smile Dental Surgery, for a consideration of €2.5m.

 

Medical Equipment & Supplies

Spain-based private equity firm Magnum Capital Industrial Partners backed the management buyout of Orliman, the manufacturer of non-invasive orthopaedic devices, for a rumoured consideration of €80m. The company was previous owned by The Riverside Company.

NYSE-listed infection control and prevention company Cantel Medical Corporation acquired Medical Innovations Group, for a consideration of €70.8m. Based in the UK, Medical Innovations designs and manufactures endoscopic, surgical and mobile medical accessories.

US-based healthcare company Hill-Rom, most famously known for their range of hospital beds, completed their previously announced acquisition of Welch Allyn Inc. for a consideration of €1.8bn. Based in the US, Welch Allyn manufactures and markets medical diagnostic equipment.

Orchid Orthopedic Solutions (doing business as Orchid Lansing), US-based medical device contract design and manufacturing company and a portfolio of Altor Equity Partners, the Sweden based private equity firm, acquired Alhenia AG, a Switzerland based provider of coated implants to orthopaedic device manufacturers, for an undisclosed consideration.

Penlon, the UK-based manufacturer of anaesthesia systems and vaporisers, was acquired by Indian healthcare firm BPL Medical Technologies, a subsidiary of BPL, the Bombay Stock Exchange listed electronic group, for an undisclosed amount.

American pharmaceuticals and health care products company Abbott Laboratories acquired the remaining 90% stake it did not own in Tendyne Holdings, a US-based developer of medical devices for transcatheter mitral valve replacement, repair, and targeting mitral regurgitation, for a consideration of €251.7m.

Leading medical technology firm Stryker Corporation closed their previously announced acquisition of Turkey-based hospital bed manufacturer Muka Metal, for an undisclosed amount.

 

Pharma & Biotech

Shenzhen Stock Exchange listed Hangzhou Tigermed Consulting acquired DreamCIS, a South Korea-based contract research organisation, for a consideration of €26.2m. Based in China, Hangzhou Tigermed Consulting operates as a contract research organisation offering clinical trial services in various therapeutic areas.

MDxHealth, the listed Belgium-based molecular diagnostics company, acquired Netherlands-based NovioGendix for a consideration of €7.8m. NovioGendix is a molecular diagnostic research and service company providing an expert-based, integrated approach in developing advanced and clinically useful molecular diagnostic assays for the uro-oncological practice.

Netherlands private equity firm Mentha Capital acquired an undisclosed majority stake in Belgium pharmaceutical drug development firm PharmaVize, for an undisclosed amount.

ERBA Diagnostics Mannheim, a Germany-based in-vitro diagnostic company, acquired Lumorad, a UK-based molecular diagnostics company offering clinical diagnostic solutions, for an undisclosed amount.

US pharmaceutical giant Pfizer completed the purchase of pharmaceutical plc Hospira, for a consideration of €14.3bn.  Based in the US, Hospira is the world’s leading provider of injectable drugs and infusion technologies.

Research and development company Karo Bio, based in Sweden, acquired Apropharm AS, a Norway-based pharmaceutical preparations manufacturer, and Apopharm Distribution AB, a Sweden-based pharmaceuticals merchant wholesaler, for a consideration of €10.5m.

Indian pharmaceutical conglomerate Sun Pharmaceutical Industries completed the acquisition of the Australian Opiates business of GlaxoSmithKline plc (GSK), the British multinational pharmaceutical company, for an undisclosed amount. The opiates business is involved in analgesics manufacturing.