May 2022 M&A activity highlighted continued momentum on several compelling themes:
- The Growing Importance of Specialty Pharmacy Capabilities: Several factors, including the continued vertical integration of health plans with pharmacy benefit managers (PBMs), accelerating approval of specialty pharmaceuticals, and the need for improved clinical coordination has put a new spotlight on specialty pharmacies. Specialty pharmacies provide medications to treat chronic and rare illnesses. According to AHIP, these specialty drugs represent 1-2% of overall drug utilization but account for more than 50% of total drug spend. Healthcare systems that have specialty pharmacies position themselves to become the provider of choice in the eyes of the consumers, with access to data supporting every aspect of the patient’s health. Recent M&A activity suggests the demand for such integration is essential to effectively manage not only specialty medications, but the overall health of consumers.
- Investment and Innovation in the Treatment of Women’s Health: Women play a significant role in the healthcare market as one of the most influential consumer groups and utilizers of the healthcare system in the United States. According to Fortune Business Insights, the global women’s health market is expected to reach ~$41B by 2027 and the recognition of disease prevention, expanded insurance coverage for preventative services, and the rising need for fertility treatment has contributed to heightened transaction activity. Of note, the OB/GYN market represents a fragmented and growing market that also serves as the patient entry and referral point to other women’s health subsectors (e.g. fertility clinics and mammography centers). Additionally, in a value-based care environment, women’s health providers have an opportunity to supply women with a comprehensive set of solutions to capture the growing market.
- The Impact of Consumerism in Drug Development and Medical Communications: The patient continues to be a core priority in both the fields of medical research and development as well as medical communication. Payers favor a patient-centric approach to drug commercialization strategies, as a study from the Economist Intelligence Unit Committee (EIU) found that a patient-centric design led to a 41% increase in drugs being added to the payer formula. Representing the growing emphasis on consumerism in healthcare, the study also found that drugs developed using a patient-centric approach were 90% more likely to be launched than those that did not. Not only are patients at the forefront of research and development, but they are also the focus in terms of service and personalization within medical communications. In 2020, a study from AHIP found that seven of the top ten largest pharmaceutical companies (by revenue) spent more on marketing and advertising than research and development. This trend has been furthered by the COVID-19 pandemic as firms look for ways to continue to engage customers in a virtual world.
Several transactions in May aligned with the above themes:
- Trellis Rx, a technology-enabled specialty pharmacy services provider and portfolio company of Francisco Partners, has been acquired by CPS Solutions, a provider of enterprise pharmacy solutions to pharmacies and hospitals. The new combined company will offer a diverse set of end-to-end solutions across inpatient, outpatient, and specialty pharmacy settings for health and hospital systems. TripleTree served as a financial advisor to Trellis Rx for this transaction.
- Centene, a multi-national healthcare company that provides services to government-sponsored and commercial healthcare programs, divested its interest in PANTHERx to an investor group comprised of Nautic Partners, The Vistria Group and General Atlantic. PANTHERx is one of the largest and fastest growing specialty and rare pharmacies in the United States. Rare disease drug development is accelerating and specialty pharmacies serve as a critical lynch-pin in ensuring drug distribution to patients who need them most.
- Through a separate transaction, Centene also divested Magellan Rx to Prime Therapeutics. Magellan Rx offers industry-leading specialty drug management solutions that serve more than 16 million members. For the foreseeable future, Magellan Rx will continue to operate as a stand-alone business entity under Prime to ensure continuity with its current customers.
- EW Healthcare Partners, one of the oldest and largest private healthcare investment firms, has entered a definitive agreement to acquire TherapeuticsMD, a leading healthcare company invested in the commercialization of exclusively female novel products. EW Healthcare Partners brings an extensive network and capital that will allow TherapeuticsMD to continue empowering women of all ages through a therapeutic focus in family planning, reproductive health, and menopause management. As part of the transaction, TherapeuticsMD will be combined with Majorelle as part of a unique opportunity for Majorelle to enter the United States market.
- Texas Children’s Pavilion for Women announced the completion of the acquisition of Austin Perinatal Associates, a provider specializing in fetal diagnostic imaging to assist with potential pregnancy complications. Building on 60 years of success, patients will now have access to specialized clinical support across invasive fetal diagnoses and treatment, infectious diseases, cancer during pregnancy and critical obstetric care.
- Astorg has announced its acquisition of OPEN Health, a global provider of scientific communications and market access services, from Amulet Capital Partners. OPEN Health counts 48 of the top 50 pharmaceutical companies as its customers and serves as a key partner in developing approaches to evidence generation and data communication. Astorg will actively support and accelerate OPEN Health’s next phase of growth and innovation through organic initiatives and strategic acquisitions.
- JPA Health announced the completion of its growth recapitalization with Great Point Partners. As a leading public relations, marketing, and patient advocacy firm, JPA Health aims to build on its reputation of providing quality pre- and post-approval medical communication services for pharmaceutical and biotechnology organizations.
TripleTree continuously monitors the market to identify the forces and themes impacting the healthcare industry. Thanks for reading and, as always, let us know what you think!