Healthcare Sector Comment – February 2016

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Pharmaceutical companies are battling against declining R&D spending, shorter average patents and mounting governmental pressure to keep prices down which means they find themselves looking to further outsource – be that their research, manufacturing and/or marketing requirements.

Additionally, increasing regulation means large pharma companies are spending more time and money ensuring products receive regulatory approval. This pressure is causing increased opportunities for CROs (Contract Research Organisations) which are better equipped to meet these regulatory challenges – another benefit of outsourcing.

This month, NYSE-listed Charles River Laboratories announced its upcoming acquisition of US-based WIL Research, a provider of safety assessment, bioanalysis and contract development manufacturing. This deal, which is expected to close in the second quarter of 2016 and to be worth in the region of €500m, will diversify Charles River Laboratories’ service portfolio by adding new speciality outsourcing services.

In the last eight months, we have seen several other CRO sector deals including:

  • Japanese EPS Holdings, Inc., a provider of contract research and sales, acquired Japan-based Sogo Clinical Holdings Co., Ltd, a clinical services company;
  • US-listed Albany Molecular Research, a provider of chemistry research and development services, acquired US analytical chemistry company Whitehouse Laboratories;
  • UK CRO Chiltern International acquired Theorem Clinical Research, a UK-based clinical research services provider; and
  • French-listed Eurofins Scientific, a provider of analytics testing services, acquired French pharmaceutical lab services provider Bio-Access and French medical testing services company Biomnis.

At Clearwater International, we expect to see continued consolidation in the CRO market and that companies will look to acquire additional vertical services to offer bundled packages. These could include:

  • medical affairs/communications
  • outcome-based services
  • patient recruitment and consulting services

allowing CROs to offer more to the top 20 pharmaceutical companies.

 

 

Health & Social Care

Pamplona Capital Management LLP, the UK private equity firm, acquired listed US-based MedAssets Inc, a healthcare analytics company engaged in providing cost and clinical resource management and data & analytics tools, for a consideration of €2.3m.

Luz Saude SA, the Portuguese operator of health institutions, acquired Portugal-based Casas De Saude de Guimaraes SA’s Guimaraes- and Gaia-based hospitals for a consideration of €18m.

Air Methods Corporation, the listed US provider of emergency aeromedical transportation, acquired US-based Tri-State Care Flight LLC, a provider of air ambulance services, for a consideration of €187m.

Team Olivia AB, the Swedish provider of geriatric care, personal assistance and home services, acquired Denmark-based Focus People A/S, a home health care services provider, for an undisclosed amount.

Korian SA, the listed French operator of healthcare facilities and medical establishments, acquired Casa Reha Holding GmbH, the German care home operator, from HgCapital, the UK PE house. Financial terms were not disclosed but the deal is believed to be worth in the region of €280m.

 

Medical Equipment & Supplies

CryoLife Inc, the listed US-based biological medical device company, acquired US-based On-X Life Technologies Inc, which develops, manufactures and markets artificial heart valve replacement and repair products, for a consideration of €430m.

Tenex Capital Partners LP, a US private equity firm, has acquired US-based Ohio Medical Corporation, the medical air and vacuum products manufacturer, for a consideration of €35m.

Panasonic Healthcare Holdings Co. Ltd, the Japanese healthcare products provider, acquired US-based Ascensia Diabetes Care LLC, the diabetes diagnostic division of German listed pharmaceuticals and chemicals company Bayer AG, for a consideration of €990m.

Sinocare Inc, the listed Chinese bio-sensing technology company, acquired the US-based Nipro Diagnostics Inc, the blood glucose management systems and diabetes products manufacturer, from Nipro Corporation, the Japanese medical equipment manufacturer. As part of the €228m deal, Nipro Diagnostics was renamed Trividia Health Inc.

VWR International LLC, the listed US laboratory supplies distributor, acquired US-based Therapak Corporation, the supplier of diagnostic test kits, and UK-based Therapak Pharma Services Ltd, a supplier of pre-packaged convenience kits, for an undisclosed consideration.

Smith & Nephew plc, the lised UK orthopaedic medical device manufacturer, acquired US-based Blue Belt Technologies Inc, an orthopaedic procedures and medical devices manufacturer, for a consideration of €230m.

CONMED Corporation, the US surgical device company, acquired US-based SurgiQuest Inc, the medical device developer specialised in surgical devices and instruments for general surgery, for a consideration of €230m.

 

Pharma & Biotech

Horizon Pharma plc, the Irish NASDAQ-listed biopharmaceutical company, acquired US-based Crealta Holdings LLC, a company engaged in developing and marketing pharmaceutical products, for a consideration of €428m.

Merck & Co. Inc, the listed US-based pharmaceutical company engaged in discovery, development, manufacturing and marketing of vaccines and medicines, acquired UK-based IOmet Pharma Ltd, a company engaged in the discovery and development of novel small molecules for the treatment of cancer. The deal is estimated to be worth €353m but the terms were not disclosed.

Juno Therapeutics Inc, the US-based biotechnology company engaged in developing cancer immunotherapy products, consolidated its operations when it acquired US-based AbVitro Inc, a biotechnology business, for a consideration of €110m.

Allergan plc, the listed Irish pharmaceuticals business, agreed to acquire US-based Anterios Inc, the clinical-stage pharmaceutical company, for a consideration of €78m.