Southern Life Systems, Inc. (DBA Nurse Rosie), of Savannah, Georgia, designs and provides a wide range of medical devices and products. Nurse Rosie is a market leader in the long-term care medical device market and electronic health record (EHR) connectivity solutions.READ MORE >>
In the first half of 2021, medtech M&A deals already surpassed the total number of deals from last year, and this bustle in activity is forecast to continue through the second half of the year, as medtech companies have stockpiled billions of dollars in cash. The dollar value of deals in 2021 is also expected to far outpace that of 2020. Eleven megadeals were announced in H1, with a total deal value of around $128 billion.
Medtech M&A activity kicked off 2021 right out of the gate, with at least 10 deals announced in January alone. Companies emerged from 2020 flush with cash reserves and were ready to spend on dealmaking. The medtech sector recorded a total of 33 deals in the first half of 2021. That's up from 25 total in all of 2020. In fact, the first quarter of 2021 was the busiest for medtech M&A since 2016. While the initial rapid momentum may have slowed, the second half of 2021 should be abundant with new deals.READ MORE >>
The Covid pandemic has placed us squarely in unprecedented times. We know this is not exactly news at this point. However, counter to the tenor of most pieces you've probably read on the topic during the past 12 months, this one aims to shine some light on one industry that has thrived: The US healthcare market, more specifically, healthcare M&A. Healthcare M&A has generally been a big winner in 2020 and into 2021 and it's happening at both ends of the market.READ MORE >>
As we reach the middle of Q3, a look back at the past several months in the healthcare sector indicates certain key trends for the industry and how it is expected to undergo transformation into the future.
Even during a pandemic, innovation and development continues. Pharmaceutical, biotech, healthcare IT and medical device companies are persevering with new and highly advanced mechanisms that will impact outcomes and patient experiences. From specialty drugs to artificial intelligence applications and from 3D printing to virtual reality, the healthcare and life sciences sector is expected to remain an attractive investment area into the future.
Under the demand for COVID-19 testing, contact tracing, and the race to find a vaccine, governments are shifting more of their budgets to healthcare services. Also, in vitro diagnostics testing (IVD) will continue to increase as major players such as CVS and Walgreens build it into their location infrastructures.
Healthcare IT companies have lofty aspirations for enterprise-grade artificial intelligence platforms that can predict pandemics, forecast patient volumes, authenticate reimbursement, and enhance drug management and self-care. Big data in healthcare also continues to draw interest and grow at a high CAGR.
Social distancing and COVID-19 has resulted in the deferral of elective and non-urgent medical procedures. According to a study by JP Morgan:
- 13% of respondents will be postponing elective procedures until there is a vaccine available.
- 15% will be waiting until a treatment is developed.
- 40% said they plan to wait until within a few months of the crisis subsiding.
The use of telehealth services continues to grow in popularity as patients prefer to avoid in-person visits due to pandemic concerns. Prior to the pandemic, telehealth saw slow growth due to a lack of state and federal reimbursement, physicians’ resistance to adopting the new technology, and patient unfamiliarity with virtual visits. COVID-19 and changes to reimbursement have resulted in a massive uptick in telehealth visits over the past several months, growing at a rate of 7.9 percent. Telehealth is also being used more frequently for virtual urgent care and ER visits, as well as for mental health.
The healthcare labor market has been impacted by the current recession and other factors. 1.4 million healthcare jobs were lost as of April but 380,000 jobs were added back in May. Hospitals lost an additional 26,000 jobs. Many clinicians not treating COVID-19 as well as administrative staff are working remotely for the first time in an industry that has typically resisted virtual work. A certain level of virtual work is expected to remain in place into the future.
Because of the global pandemic, many private equity firmshave a heightened focus on their own portfolio businesses. However, the majority are still open to looking at quality opportunities; in addition, strategic buyers such as health systems and hospitals are considering M&A plans in the medium term. Overall, deal volumes are expected to increase between now and H1 of 2021.
Ready to Make a Move?
The M&A experts at Benchmark International are eager to start the conversation about your future, whether it is growing your company, selling your company, maximizing its value, or planning your exit strategy. We are committed to getting you results that fulfill your ambitions and exceed your expectations.READ MORE >>
Common drivers of mergers and acquisitions in the global health and life insurance industry include the entry into new markets, access to new technologies, valuation trends, and reaction to regulatory changes. With growth strategies leading the charge, market expansion is often made possible through the acquisition of target companies that optimize product portfolios and customer bases, especially those that provide relatively easy yet quite valuable add-on opportunities, as organic growth does not come easily in the insurance space.READ MORE >>
Globalization of healthcare contributes to a continually developing global medical services industry that encompasses hospital, physician and clinical, nursing and continuing care facilities, home healthcare, surgical facilities, emergency services, laboratories and other providers.
An industry that was once about volume-based care has strategically shifted to value-based care. Because this requires improvements in facility efficiencies and quality, it also calls for more specialized external service providers. One tactic that medical services companies are using to gain competitive advantage is to keep their core caregiver and third-party caregiver groups under the same roof. As medical services must now deliver on value-based care, there is an increased need for integration of care and management of financial constraints.
As populations increase, especially aging populations, and chronic diseases remain prevalent, the demand for medical services increases, and so does the demand for specialized medical caregivers.
By the year 2030, it is estimated that the global demand for health workers will reach 80 million workers, while the supply of health workers is only expected to reach 65 million over the same period. This will result in a worldwide shortage of 15 million health workers.
When regulatory burdens on healthcare companies are reduced, technological advancement escalates, creating opportunities for medical technology companies including mobile and wireless providers. Also, advancements in surgical techniques result in less invasive treatments and shorter recovery times, altering the traditional hospital model. Additionally, third-party lab providers and research companies grow in demand along with the need for more complex clinical tests and services.
M&A Due Diligence
Mergers and acquisitions in the medical services industry require especially savvy due diligence in order to obtain a completely accurate assessment and valuation. Deals can be particularly complicated between hospitals and health systems.
As a seller, it can be extremely important to have sell-side due diligence conducted. Getting ahead in the process months in advance can be well worth the costs. When it comes to the medical services industry, billing and coding issues can trigger major delays in any M&A transaction.
Other benefits of sell-side due diligence include:
- Enhanced credibility and positive reputation of the seller on the market
- The increased possibility of higher bids
- Adequate preparation for management and employees so that there is minimal disruption in workplace operations
- The potential of a shorter due diligence cycle on the buyer’s side
- A decrease in the chances of surprises that can derail a deal, which can increase the likelihood of the transaction being a successful one
Medical Services M&A Drivers
Among the key drivers of M&A activity in the global medical services industry, the top reasons include:
- The goal of increased market share to broaden networks and patient access
- Improved integration across the continuum of care
- Keeping pace with increasing prevalence of consumerism, which includes more convenient, non-traditional care settings
- Gaining access to capital for investment in staff, new technologies, medical equipment, and improved operations
- A way to improve efficiencies and enhance patient satisfaction
- Reaction to rising consolidation among insurance payers
- A growing need for alternative payment models, which reimburse providers based on value rather than volume of services
Traits of High-value Targets
In this sector, the attributes of high-value M&A transactions can vary greatly, however certain characteristics can be found to be consistent across most successful deals:
- A defined operating model with strategic vision and revenue-growth and cost-reduction strategies
- Transparency in communications regarding culture and organizational goals
- Focused integration planning that aligns with the deal’s rationale
M&A in Diagnostics
Diagnostics present unique circumstances for M&A activity apart from the medical services industry. Clinical laboratories in the medical services industry vary in size, business model, areas of concentration, R&D capabilities, as well as in their relationships with providers and payers. With countless labs in operation, acquiring the right one can be challenging. Large public labs tend to focus on deal volume, while other buyers are interested in the laboratory testing market, and private equity leans towards companies with attractive cash flow yields. In many cases, because diagnostic manufacturers, life-science companies, and big pharma all need access to patient and pathology samples for research and development, labs are strategically acquired by non-laboratory healthcare companies.
If you are looking for exit and growth strategies, Benchmark International offers unique ways to identify the perfect buyer, take your company to the next level, and create dream exits. We look forward to working with you.READ MORE >>
The provision of healthcare to patients is the delivery of interventions within an organizational or home setting, including medical services, devices, health insurance, pharmaceuticals, and facilities.
Healthcare Around the World
The provision of public healthcare was not a priority until the last 100 years. Prior to World War I, public healthcare expenditure on healthcare was less than 1% of all national incomes worldwide. Today, the countries with the highest levels of public healthcare spending commit nearly 10% of their national revenue to it.
Wealthier nations spend more per person on healthcare and, not surprisingly, they have longer rates of life expectancy.
In most countries, government is heavily involved in healthcare markets. And in most wealthy countries, such as in Europe and Canada, the government runs the healthcare system. Universal healthcare is achieved in these nations through:
- Government tax-funded systems
- Privately run but government funded systems
- Private insurance but with regulation and subsidies to ensure universal coverage and non-discrimination based on pre-existing conditions
The United States is the only industrialized nation with no universal healthcare option, where big pharmaceutical companies and insurance giants wield heavy influence on the industry.
Many developing countries make an effort to provide universal healthcare but face challenges associate with poverty, corruption, and inequality. There is also reliance on foreign aid.
A major difference between government-funded and market-based healthcare lies in the realm of medical innovation and advancement in new, effective treatments. Under government-financed systems, price and budgetary limits and other restrictions reduce investment in medical research.
Healthcare provision is extremely complex and is also subject to cultural, political, social, and economic conditions. This makes the sector very different from other business markets that operate based on supply and demand, especially when governments ensure that healthcare provisions are distributed in adherence with certain policies.
A New Era in Healthcare Provision
Healthcare spending makes up a growing share of the world economy. As the 21stcentury progresses, the provision of healthcare to patients is undergoing changes to the overall landscape. People are living longer and spending more on healthcare. Evolving technologies are changing every aspect of healthcare. Chronic diseases remain a burden on healthcare systems. And more integration is needed for the continued improvement of the provision of healthcare to patients.
New technologies, such as fitness monitors for example, are empowering people to take more control over their own health. There is an opportunity to further help patients play a larger role in symptom disease management and their overall health through continued innovation in the healthcare sector.
There is a massive opportunity to improve patient outcomes through the engagement between clinicians and patients. Healthcare facilities are being reimagined so that they are designed around patient experiences rather than the need of the providers. They are also being digitally equipped with interfaces that streamline admission processes and recordkeeping, improve the continuity of care, and ultimately provide better patient care. New digital frameworks are allowing facilities to be updated rather than entirely rebuilt when technology undergoes drastic changes.
Integrated care is a growing focus in the healthcare provisions sector. How communities work with facilities is being reexamined to formulate the right platforms for patients and alleviate the demand for inpatient beds.
Healthcare Provision and M&A
Mergers and acquisitions in healthcare tend to always be a topic of debate, as they can have a serious impact on the patient experience. And as M&A healthcare deals become more frequent, concerns over monopolies arise. However, structure changes can be quite vital for some companies to survive in an ever-evolving industry. Additionally, M&A can actually help patients have better access to quality care and improve costs.
- According to the American Hospital Association, certain mergers can boost access to capital and other resources, lowering costs for patients.
- When small independent facilities are acquired by larger organizations, they can remain open and patients do not lose access to care.
- Under a merger, it is common to streamline protocols, which can lead to enhancements and new standards in quality care. This can also reduce the instances of patients undergoing surgical procedures at a facility with limited experience in that area.
Is it time to make a deal? At Benchmark International, our expert M&A advisors are looking forward to your call. Together we can do great things.READ MORE >>
Even though consolidation in the pharmacy services industry has been ongoing for several years, ample opportunity remains for mergers and acquisitions activity. It is inevitable that people will continue to need treatments for illnesses, which means that the demand for pharmaceuticals is always a robust market, and that directly correlates to the pharmacy industry. High demand translates to unique opportunities for sellers.
If businesses plan to stay competitive in the pharmacy industry, there are certain areas of focus in which they will need to remain vigilant.
- The pressures of an increasingly on-demand society and getting medications to patients faster
- Transparency must be clearly demonstrated when it comes to costs and start-ups are poised to capitalize on this market
- Enhanced offerings to patients such as improved medication compliance or unique services that will help maintain a competitive foothold within an aggressive industry
The subsector of specialty pharmacy has been a burgeoning industry and includes pharmaceuticals that are subject to certain criteria. They are used to treat chronic, rare, or complex conditions, and they typically come with a high price tag. Availability for these specialty treatments is only through exclusive or limited distribution and they can often require special handling, storage, or administration requirements. Their safety is under continuous monitoring and patients who require these treatments also require significant education regarding their use.
Therapies categorized under specialty pharmacy are often injections or infusions, but can also include oral biopharmaceuticals. The types of diseases typically managed by specialty pharmacies include cancer, multiple sclerosis, rheumatoid arthritis, HIV/AIDS, and hepatitis C.
It has become common for specialty pharmacies to collaborate with hospitals, retail, and manufacturers. Such collaborations can improve patient access and patient care. It has also become more common for specialty pharmacies to consolidate for growth of market share and enhanced capabilities. New technologies play a large role in specialty pharmacy scalability. While scale is a clear marker of success, growth spans beyond the biggest companies to mid-tier pharmacies. Independent retail community pharmacies are finding more cost-effective ways to serve customers by creating collaborative networks that also make them more appealing partners for manufacturers. When it comes to M&A in the arena of limited-distribution drugs, strong capabilities and payer relationships are key to gaining exclusive access to these higher-priced therapies.
Infusion therapies are already a major driver of revenue growth, and are seeing more attention in the specialty pharmacy market to boost margin growth amid a slowdown in the introduction of new drugs. Additionally, more and morepatients are being treated in outpatient settings and in their own homes. Herein lies a major opportunity for specialty pharmacy to establish complementary strengths in infusion therapy.
Nursing homes, hospitals and hospices that do not have an on-site pharmacy rely on institutional pharmacies to repackage and deliver prescription medications and other services for administration. Demand in this sector grows as the population ages, and there is a need for nontraditional revenue streams such as patient therapy evaluations, regulation compliance strategies, and clinical management programs that employ newer technologies.
In this multi-billion-dollar market, institutional pharmacy providers are faced with a particularly intricate set of organizational and regulatory challenges. Navigating these issues requires innovative solutions for institutional pharmacy providers across a multitude of topics that range from pricing to compliance.
Keys to Successful M&A in the Pharmacy Sector
Innovation is driving the charge to unlock rapid growth in this space with focus on smart, actionable data, lower cost-of-care workflows, and better technology platforms. A skillfully executed M&A strategy makes all the difference in achieving meaningful growth aspirations.
A solid integration strategy plays an important role in pharmacy M&A to ensure that the structure creates advantages and retains talent while aligning corporate cultures, values and objectives. M&A transactions in the pharmacy space require careful planning, due diligence, and attentiveness to manage the intricacies of integrating multiple systems, processes, and organizations. Aspects that should be evaluated include relationships, clinical platforms, therapeutic areas, IT capabilities, business development, marketing, and sales.
Market timing is key, and you must have a concrete plan for how to partner effectively to expand capabilities. These deals demand a clear vision and organizational leadership focus across multifunctional disciplines in order to achieve M&A synergy.
Are you ready to sell your company? Even if you are not sure, it is a great idea to have a conversation about your future with our M&A specialists. We can offer you expert strategies for how to grow your business, create a winning exit strategy, and executing a lucrative deal.READ MORE >>
The animal pharmaceutical market isn’t as heavily regulated as human pharmaceuticals, and as a result, is a more attractive industry. Traditionally the market was dominated by divisions of large pharma companies. However, this has changed over the last few years. The sector has seen significant changes following Pfizer’s 2013 spin-off of its animal health business, now known as Zoetis. This helped inspire the spin-off of Eli Lilley’s animal health business and then later in the year, Bayer announced it would leave the industry.
Because of these changes, we have seen substantial consolidation in the animal health space, with the number of transactions in the industry more than doubling since Pfizer’s spin-off in 2013 to 2018 – and due to the number of deals already completed this year, we expect another increase in deal volume.
Furthermore, the global animal health market was valued at $45B last year, and industry experts expect to see a compound annual growth rate of 5% leading to 2026. The market is being driven by a rise in food-borne diseases, and as result companies are making more of an effort to control these diseases. Furthermore, this prevalence has led to businesses producing more advanced vaccines and pharmaceuticals.
Additionally, the market is being driven by a significant increase in pet ownership - with pet owners over the last few years spending more than ever. The number of companion animals increases with income levels and the percentage of smaller families. This is a result of pet owners, particularly millennials humanising their pets, and becoming more willing to invest heavily in their pet's health and well-being.
Key Industry Trends
· Better Surveillance of Disease: Through portable devices and technologies, such as smartphone/tablet apps and ‘smart ear tags.’
· Emphasis on Animal Welfare: Owners are putting more emphasis on both pets and livestock to maintain health and quality of life.
· Public and Private Collaboration: Recent prevention of the bluetongue and Schmallenberg diseases in animals are prime examples of collaboration between the two sectors.
· More Treatments Available: The range of treatments has increased over recent years, with a range of treatments for even minor species, such as fish.
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Call Benchmark International today and speak with one of our analyst about your company's exit or growth strategies.READ MORE >>
Quality, affordable healthcare remains an important issue for people all over the world, from Europe and the United States to Asia and Africa. As global healthcare spending continues to skyrocket, people are demanding more bipartisan policies from their political leaders to address the problem. This is why value-based care solutions are starting to play a major role. The industry is undergoing a shift in focus from treating illness to achieving and maintaining wellness. These solutions are more productive and less wasteful, as they aim to avoid unnecessary testing and interventions. Up until now, this role has been typically driven by health plans, but physicians and health systems are getting more involved in the full spectrum of care. All of these elements of value-based care represent huge growth opportunities in the digital healthcare coming-of-age, with various forms of technology as the major impetus.
Technology, Artificial Intelligence, and Data
Technologies that automate nonclinical duties such as paperwork are being developed to save physicians time and allow them to focus on patients. The implementation of electronic health records (EHRs) and artificial intelligence tools is expected to better connect patients, physicians, health systems, and health plans. Physicians will be able to utilize EHR data to manage illnesses with fewer scheduled in-person appointments.
Virtual care is also an emerging market factor in the changing healthcare landscape. Many people put off doctor visits until their condition worsens, which increases costs such as emergency room expenses. New virtual care technologies are enabling patients to see a physician from the comfort of home. It also means that physicians are able to see more patients. TeleHealth Services is an ideal example of this trend. It uses digital information, computers and mobile devices to access and manage health care services remotely. In the last few years, nearly three quarters of major employer health plans had incorporated TeleHealth software services into their benefit packages.
Tech-enabled medical devices and services are another growing trend. This includes wearable devices, digital therapeutics, and applications that collect and communicate data. Last year, FitBit acquired Twine Health, a health-coaching platform that helps people improve health outcomes while helping health systems, plans, and providers reduce healthcare costs. Last summer, Amazon acquired the online pharmacy PillPack for almost $1 billion, and drug giant GlaxoSmithKline entered into a four-year agreement with the online platform 23andme, the world’s leading DNA-testing-kit resource for consumers. Also in 2018, Roche acquired Flatiron, which uses oncology EHRs to connect oncologists, academics, hospitals, researchers and regulators on a shared technology platform.
Cloud technology also brings new benefits to the table, such as easy integration of immense datasets, and AI capabilities that analyze data and provide insights remotely. Cloud technology is expected to continue to gain momentum, as data—both big and small—are finally being used in ways that may make a meaningful difference for the healthcare industry.
Healthcare Mergers & Acquisitions (M&A) in 2019
The industry saw ample M&A activity last year, and this activity has already carried over into 2019, with several major deals already closing in January. There are also some big moves in the works that everyone is watching. A proposed merger between retail pharmacy CVS and insurance giant Aetna has drawn much speculation and scrutiny as it still awaits regulatory approval as of this month. Walmart has been in talks to merge with insurance provider Humana, another sign of major retailers attempting to take a stake in the healthcare industry.
With the growing digital health market and continued pharmaceutical innovations, M&A strategies remain a preferred growth plan for executives and it is expected that there will be lively M&A activity throughout 2019. Southeast Asia has drawn abundant attention, with a 92 percent increase in healthcare IPO volume last year. Plus, the stock exchange in Hong Kong introduced new rules allowing biotech companies to issue shares even before recording revenue or profits. Singapore, Indonesia and Malaysia all have ripe environments for new opportunities. And even despite trade tensions, rising interest rates, and volatile markets, deal-making activity in the region remains forecasted to grow.
What it Means for You
Whether you are seeking a new investment, looking to grow your company, or considering selling your business, a great deal of financial opportunity lies in the global healthcare industry. 2019 may very well be the right year for you to make a move. If you contact our specialists at Benchmark International, we will use our global connections and mergers and acquisitions expertise to help you carefully craft the ideal opportunity for you and your next venture.READ MORE >>