Deals, Investments

OVERVIEW: Several big deals were announced or executed in the past quarter including J&J’s largest acquisition ever, which observers say demonstrates how far a pharmaceutical company is willing to go to remain innovative and competitive. Other transactions demonstrated a continued interest among deal makers and healthcare executives for businesses in patient engagement and analytics. Because of rulings by federal courts, mergers planned for both Aetna-Humana and Anthem-Cigna have stalled or been cancelled. Other deals possibly percolating were mentioned in the media: WebMD may be up for sale and J2, Everyday Health’s new parent, may look to divest some of the firm’s non-core assets.

The federal government plays an enormous role in shaping the M&A environment, especially DOJ’s powerful anti-trust division. With the selection of Makan Delrahim to head this division, large company acquisitions may get a boost, and Healthcare M&A may be playing an especially prominent role going forward. According to The International Business Times, Delrahim was a lobbyist for Anthem, and his firm was engaged to work in support of the Cigna deal.

The recent bout of uncertainty surrounding the repeal of the Affordable Care Act does not appear to have slowed down M&A activity, or investments in innovative startups. The Digital Health sector continues to grow through private equity and strategic investments from major healthcare players—especially from major players in the pharmaceutical and medical device sectors. For example, Omron Healthcare participated in venture rounds for two digital health innovators, AliveCor and Cohero. Even as investments continue into Digital Health, more advanced companies in the sector continue to struggle with sustainable revenue models. There continues to be optimism that the next round of healthcare reform in Washington will clarify the reimbursement model for digital health solutions.

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Details from the media over the past quarter:

Johnson & Johnson to Acquire Actelion in $30 Billion Deal

Johnson & Johnson agreed to acquire Swiss rare disease drug maker Actelion Ltd. for $30 billion. It’s the biggest deal in J&J history. It’s also unusual in that it will spin out the 20-year-old Swiss biotech company’s drug-discovery operations. Actelion had resisted selling that part of the business. The company’s CEO feared that an acquisition would squelch his company’s new drug creation process. The deal also shows the high price pharmaceutical companies are willing to pay to keep their drug pipeline vibrant as many of their drugs lose IP protection and face competition from generics or other less expensive alternatives.

The Wall Street Journal

HMS Holdings expands its healthcare engagement services with a $170M purchase

HMS Holdings agreed to buy Eliza Corporation, a Danvers, Mass. health engagement management company, from Parthenon Capital for $170 million. Eliza is a healthcare engagement management solution delivering a “personalized conversation” with ……

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