Healthcare Sector Comment – March 2015

Date

With increased emphasis on clinical trials and the need for cost effective design, the contract research organisation (CRO) market is seeing increased consolidation – a trend set to continue as trials become more global. Over 60% of worldwide clinical trials are currently conducted by players in Western Europe, North America and Australia – however, major growth is occurring in emerging markets. China, for example, is set to become one of the world’s largest markets for pharmaceutical clinical trials in the next 5 years.

The market has seen several deals in recent years. Large CRO players have sought to expand their global presence in order to deal with a number of challenges, including higher customer expectations, increased demand for clinical trials and attempts to combat the ballooning costs which are impacting margins. These deals include:

  • Charles River’s €134m acquisition of the CRO services division of Netherlands-based Galapagos;
  • ICON’s €104m acquisition of US-based Aptiv Solutions;
  • Parexel’s acquisition of Turkey-based Atlas Medical Services; and most recently
  • LabCorp’s €4.5bn acquisition of Covance.

LabCorp’s entrance into the CRO and drug development arena provides the company with an enormous opportunity to utilise its database of patients in order to recruit and enrol clinical trials more quickly. This combined group will offset any squeeze in reimbursement cuts that its testing business has endured in recent years.

At Clearwater International, we strongly believe that the consolidation trend will continue. The CRO market offers entrants multiple reasons to enter: whether to maximise their patient database, to try and sell additional services to pharmaceutical sponsors or to attempt to be a preferred partner of choice to its blue chip customer base.

 

Health & Social Care Deals

US-listed Health Care REIT, along with several other institutions, backed the management buyout of UK-based care home provider Signature Senior Lifestyle for an undisclosed amount. The deal marked an exit for Cabot Square Capital.

NMC Health, the UAE-based operator of hospitals, day surgery centres, medical centres and pharmacies, acquired a majority stake in Spanish fertility clinic Clinica Eugin for a consideration of €143m. Clinica Eugin is one of the largest fertility clinics in Europe and services patients in Europe and the MENA region.

Canford Healthcare, a UK-based company which owns and operates healthcare homes and provides nursing and care services, was acquired in a management buyout. Concurrently, Canford Healthcare signed a sale and lease back agreement with Ventas Inc, a US-listed real estate investment trust (REIT), to sell five care homes in Sussex and Kent.

Nexus AG, the listed Germany-based provider of IT applications for medical documentation and administration, acquired quCare Solutions BV for a consideration of €20m. quCare Solutions is a Netherlands-based provider of software solutions for hospitals and mental healthcare institutions.

UK-based healthcare company HC-One, with backing from US investor Formation Capital, acquired UK-based care home group Meridian Healthcare for a reported consideration of €140m. Meridian Healthcare operates 30 care homes in the North West and Yorkshire.

France-based Vivalto Sante SAS – an operator of health clinics and a portfolio company of Azulis Capital, France Arkea Capital Investissement, BNP Paribas Developpement and SOCADIF acquired Groupe Fides from Naxicap Parners and Galia Gestion for an undisclosed amount. Based in France, Group Fides is an operator of nursing homes.

Kindred Healthcare Inc acquired Gentiva Health Services Inc, a US-based home health care services provider, for a consideration of €1.7bn. Kindred Healthcare is a NYSE-listed provider of post-acute care services in the US.

Team Olivia AB, a Sweden-based portfolio company of Procuritas AB, acquired Pär Sonesson AB, a short-term foster home provider based in Sweden. Team Olivia is comprised of many companies, working in the areas of personal assistance, home services and care & rehabilitation.

 

Pharma & Biotech Deals

Mylan Inc, the US-headquartered global generics and speciality pharmaceuticals company, completed the acquisition of Abbott Laboratories’ non-US developed markets speciality and branded generics business for a consideration of €4.5bn. The acquired assets included a portfolio of around 100 speciality and branded generic pharmaceutical products in five therapeutic areas, in addition to several patent protected, novel and/or hard-to-manufacture products.

NYSE-listed Intrexon Corporation, the company engaged in the industrial engineering of synthetic biology, acquired ActoGeniX NV from Gimy NV, Aescap Venture, Life Sciences Partners BV, Saffelberg Investments and Ventech for a consideration of €55m. ActoGenix is a Belgium-based biopharmaceutical company focused on the development and commercialisation of ActoBiotics.

Shire plc acquired NPS Pharmaceuticals Inc, a US-based rare disease-focused biopharmaceutical company, for a consideration of €4.5bn. Shire is an Irish-headquartered global speciality biopharmaceutical company.

Laboratory Corporation of America Holdings (LabCorp), a US-based operator of one of the largest clinical laboratory networks in the world, acquired Covance Inc, a US-based contract research organisation which provides drug development and animal testing services, for a consideration of €4.5bn.

GlaxoSmithKline plc (GSK) acquired GlycoVaxyn AG, the Switzerland-based bioconjugate vaccines developer and manufacturer, from Sofinnova Partners SAS, Index Venture Management SA and Edmond de Rothschild Investment Partners for a consideration of €175m. LSE-listed GSK is a pharmaceutical, biologics, vaccines and consumer healthcare company.

Roche Holding AG, a Switzerland-based pharmaceutical and diagnostic company, acquired Signature Diagnostics AG, the Germany-based cancer diagnostic services provider, for an undisclosed consideration. The transaction provided an exit for MAK Capital One LLC, KfW Bankengruppe, IBG Beteiligungsgesellschaft Sachsen-Anhalt mbH, ILB InvestitionsBank des Landes Brandenburg, BC Brandenburg Capital GmbH and EVP Capital Management AG.

UK-based Alliance Pharmaceuticals, a manufacturer and supplier of pharmaceutical products and a subsidiary of Alliance Pharma plc, acquired MacuVision Europe Limited, the UK-based manufacturer of eye care supplements, for a consideration of €15m.

Ekkio Capital, the France-based private equity firm, acquired Audevard, a France-based veterinary pharmaceutical company, for an undisclosed amount.

 

Medical Equipment & Supplies Deals

US-based private equity firm Shore Capital Partners LLC acquired Summit Medical Inc, a US-based manufacturer of medical devices for the ear, nose and throat (ENT) sector, for an undisclosed amount.

Bunzl plc, the LSE-listed international distribution and outsourcing company, acquired Quirumed SL, the Spain-based supplier of healthcare-related products and equipment, for an undisclosed amount.

Dutch diversified technology company Royal Philips acquired Volcano Corporation, a US-based medical technology company that manufactures a range of intravascular ultrasound products, for a consideration of €1.1bn.

DePuy Synthes Inc, a US orthopaedic and neurosurgery company of Johnson and Johnson, acquired Olive Medical Corporation for an undisclosed amount. Olive Medical manufactures video surgical systems and imaging equipment for the OR.

Venta Medical Inc acquired Formed Polymer Solutions LLC, a US-based manufacturer of custom plastic components and assemblies for the medical device industry, for an undisclosed amount. Venta Medical is a US medical device contract manufacturer providing comprehensive manufacturing services to medical and life science companies.

Atos Medical AB, a Sweden-based portfolio company of EQT Partners, acquired Countrywide Supplies Limited, the UK-based company engaged in the distribution and dispensing of prescription tracheostomy, laryngectomy, ostomy and renal supplies. Atos Medical is engaged in the manufacture and sale of ear, nose, throat, mouth and jaw prostheses and precision instruments.

Germany-based manufacturer and supplier of electro-therapy medical equipment schwa-medico GmbH acquired Bio-Medical Research GmbH from Bio-Medical Research Ltd for an undisclosed amount. Based in Germany, Bio-Medical Research distributes medical products for back pain, knee rehabilitation and general pain.

Thermo Fisher Scientific Inc, the NYSE-listed biotechnology product development company, acquired Advanced Scientifics Inc, a US-based provider of advanced single-use biopharmaceutical systems for the Healthcare and Life Sciences industries, for a consideration of €265m.