Healthcare sector comment – May 2017 – Pharma

We are increasingly seeing consolidation within big pharma as the largest players focus on their core services and outsource non-core services. This is a trend that has not gone unnoticed by investors and they have mostly been investing their money in two key areas.

The first is in high-end medicine manufacturing of sterile unit doses. With many pharmaceutical manufacturers deciding to focus on developing their range of products, it falls on other companies to provide sterile solutions. In the last few months we have seen the following deals complete:

  • Ardian, Keensight Capital and Parquest Capital jointly acquired Laboratoire Unither SA, the France-based developer of sterile unit-doses, non-sterile liquids, liquid sticks, and solid and semi-solid medications for the pharmaceutical and generic drug industry, for €650m; and
  • Apax Partners LLP acquired Invent Farma S.L., the Spain-based manufacturer of active pharmaceutical ingredients and pharmaceuticals specialties including sterile single-dose solutions, monodoses and infusion bags, for €221m.

The second is in the outsourcing of research services, particularly clinical research outsourcing and pharmacovigilance. As the pharmaceutical market becomes more highly regulated, the expense and complexity of ensuring that products meet exacting standards increases. For this reason many pharmaceutical developers have come to rely more on outsiders who can provide these services and in turn, investors have also been attracted to the sector given its future growth potential. In the past weeks we have observed the following transactions close:

  • HgCapital acquired an undisclosed stake in Evaluate Limited, the UK-based provider of market intelligence and analysis services in pharma and global life science industry; and
  • Quad-C Management, Inc. acquired Pharm-Olam International, the US-based provider of clinical research services including pharmacovigilance, regulatory support and medical affairs services.

At Clearwater International we continue to watch the outsourcing activities of pharmaceutical companies and private equity’s involvement with keen interest.


 A taste of recent deals

Medical Equipment & Supplies

Otto Bock HealthCare GmbH, the Germany-based manufacturer of prosthetics, orthotics and mobility solutions acquired BionX Medical Technologies Inc., the US-based manufacturer of active prosthetic foot and ankle solutions.

GE Healthcare Inc., the US-based manufacturer of diagnostic imaging agents and radiopharmaceuticals acquired Monica Healthcare Ltd, the manufacturer of foetal monitoring devices for use during labour and delivery.

Semperit AG Holding, the listed Austria-based manufacturer of rubber and plastic products acquired a 75% stake in Sempermed USA, Inc., the US-based company that manufactures hand protection products including medical exam, surgical/sterile, and industrial gloves, for €24m.

Hologic, Inc., the listed US-based manufacturer of diagnostics, medical imaging systems and surgical products acquired Cynosure, Inc., the listed US-based medical device developer and manufacturer, specialising in laser and light-based aesthetic treatments, for €1.3bn.

Golden Gate Capital, the US-based private equity firm, acquired Cole-Parmer Instrument Company, LLC, the US-based manufacturer of specialty laboratory equipment, instruments and supplies to pharmaceutical, biotech, healthcare, chemicals and food industries.

Terumo Corporation, the listed Japan-based manufacturer of devices and pharmaceuticals in the areas of cardiovascular, hospital, and blood systems acquired Bolton Medical, Inc., the US-based provider of endovascular solutions for aortic disease.


Health & Social Care

Apposite Capital LLP, the UK-based private equity firm acquired Complete Care Holdings Limited, the UK-based provider of nurse-led complex healthcare in the home and MiHomecare Limited, the UK-based provider of home care services, for €2. Vendor MITIE Group will contribute €11m in two tranches to the funding of trading losses and the cost of the turnaround plan.

Target Healthcare REIT Limited, the listed UK-based real estate investor acquired Two Care Homes in Dorset, UK on a 35 year lease.

WNS (Holdings) Limited, the US-listed, India-based provider of business process management services acquired HealthHelp Inc., the US-based benefits management company which assists patients in achieving optimal benefits under their health plan’s coverage, for €89m.

NMC Health plc, the listed United Arab Emirates-based operator of hospitals, medical centres and pharmacies acquired Al Zahra Hospital, the United Arab Emirates-based private general hospital, for €527m.

Optum, Inc., the US-based provider of health management solutions and consultancy services acquired Surgical Care Affiliates, Inc., the listed US-based provider of ambulatory, outpatient and specialty surgery services, for €3bn.

Centro de Diagnósticos por Imagem de Cuiabá Ltda, the Brazil-based provider of diagnostic medicine services acquired Radiologistas Associados Ltda., the Brazil-based provider of radiology services, for €27m.


Pharmaceuticals & Biotechnology

Genesis Biotechnology Group, LLC, the US-based provider of molecular biology and genetics acquired PharmOptima, LLC, the US-based contract research organisation providing consulting and laboratory services.

CROS NT SRL, the Italy-based contract research organisation acquired the Clinical Division comprising regulatory consultancy, study design, feasibility, clinical project management, and monitoring services of PM Clinical Limited, the UK-based provider of pharmacovigilance and quality assurance solutions.

Aspen Global Incorporated, the Mauritius-based supplier of branded and generic pharmaceuticals acquired a portfolio of 25 including Amoxil, Augmentin, Imigran, Kapanol, Lamactil, Mesasal, Timentin, Valtrex, Zantac and Zofran from GlaxoSmithKline plc.

 Lion Capital LLP, the UK-based private equity firm acquired a majority stake in Grenade UK Limited, the UK-based sports nutrition company that produces and delivers weight loss products.

Genstar Capital, LLC, the US-based private equity firm acquired Bracket Global, LLC, the US-based provider of clinical services and clinical technology solutions for various clinical trials.

Merck Animal Health, the US-based manufacturer of veterinary medicines and services acquired a 93% stake in Vallee S.A., the Brazil-based producer of animal health products including parasiticides, anti-infectives and vaccines, for €360m.