This morning, inVentiv Health announced that it will acquire Ingenix’s clinical development outsourcing business. According to press releases from both organizations the proposed transaction covers “businesses that generate approximately $400 million in annual gross revenue” and business units being acquired by inVentiv Health will retain the i3 brand name.
This is a bold move for inVentiv Health, which was taken private in August of 2010 by Thomas H. Lee Partners. Previously known more for its sales and marketing-related services to the life sciences industry than its clinical services, inVentiv Health now becomes a major player in the contract research organization (CRO) market. As part of inVentiv Health, i3 will continue to be led by CEO, Glenn Bilawsky, a CRO industry veteran with a proven track record of driving growth and innovation.
Now that inVentiv Health has a broad and deep portfolio of assets across the clinical and post-marketing life sciences services market, the most intriguing part of this transaction will be to see how and if inVentiv Health can integrate these different service lines and whether they will be able to successfully leverage customer relationships that both companies have in their respective businesses today to drive additional revenue. Historically, the sales and marketing teams in life sciences companies have had very little interaction with research and development, so it will be interesting to see if inVentiv Health is able to create new types of services that drive more collaboration across their clients’ operations and ultimately lead to better life sciences products.
From the Ingenix standpoint, this transaction is a clear illustration of the increased focus healthcare payers and providers are placing on health outcomes and comparative effectiveness of life sciences products. The remaining assets from i3 that are not being sold to inVentiv Health, including the Innovus, Quality Metric, Pharma Informatics, and Drug Safety/Epidemiology business units, and the CanReg and ChinaGate Regulatory Consulting businesses will be part of a newly-formed Ingenix Life Sciences division. According to a press release from Ingenix, these units “offer global solutions for evaluating health economics outcomes and late phase research, market access and reimbursement, data and informatics services, epidemiology and drug safety, patient-reported outcomes and regulatory consulting.”
With more and more blockbuster drugs going off patent and the economic pressures being felt across the healthcare industry, life sciences manufacturers can no longer rely on large marketing budgets to drive demand for their products. Healthcare payers have become much more selective in the products they will reimburse and have sponsored outcomes studies and comparative effectiveness research to help determine which care regimens create the highest return on investment. Additionally, with additional reimbursement risk being shifted to providers as a result of healthcare reform, physicians are and will continue to seek out products that will create the best outcomes for the lowest costs. These dynamics are clearly the impetus behind today’s announcement from Ingenix.
For now, we’ll continue to monitor this deal and new emerging ramifications of this deal on the sector…we’d be interested to know what you think.
Have a great week!