IBM really stands out from the digital health crowd with this deal.
Allergan (former Actavis) is restructuring its operations with the divestment of its generics business to Teva for approximately USD 41 billion in cash and stock ($33.75 billion in cash and Teva shares valued at $6.75 billion, giving it a 10% stake in Teva).
But it’s not done. According to an interview with the Financial Times, the CEO, Brent Saunders, is eager to sign another mega deal with the proceeds from the sale mentioned above. Allergan can then be put on the list of serial deal makers.
On the other side of the table, Teva is about to join the club of the biggest pharmaceutical companies. According to a Business Insider UK article, “Allergan’s generic business is generally seen as a better fit than Teva’s previous target Mylan because it will improve Teva’s distribution channels and because Allergan is strong in so-called biosimilar drugs.”
In the generics market, Teva will stay one step ahead of Novartis Sandoz division (estimated proforma 2014 sales of USD 15.7 billion for Teva-Allergan vs. USD 8.5 billion for Novartis Sandoz division).
In this context, Teva will probably drop its pursuit of rival Mylan, which in turn will be able to focus on buying Perrigo.
Allergan signals appetite for new mega deal after $41bn disposal – Financial Times (Subscription required)
A truly interesting article of the transformation of Medtronic Diabetes business
2015 could be a year to remember as the start of a new era in improved diabetes management thank to digital tools.
Diabetes management at Medtronic & deals history
It started several years ago but back in May 2001, a transforming event took place: Medtronic bought Minimed as well as an affiliated company for USD 3.8 billion. Looking only at Minimed, Medtronic paid USD 3.28 billion for USD 400 million in sales (8.2x 2001 sales). Despite its price, quoted as high by some investors and analysts at that time, the deal rationale was pretty compelling as it allowed Medtronic to enter the diabetes management arena. MiniMed offered a beachhead into the field of technological management of diabetes, one of the fastest-growing chronic diseases in the world and one that affects an estimated several millions of people. The devices produced by MiniMed help patients manage their insulin needs and monitor glucose levels.
Since 2001, several deals and partnerships paved the way up to where Medtronic is today. After having a look at my deals database, I can say that some of them clearly stand out:
– November 2004: agreement with Novo Nordisk on prefilled insulin cartridges;
– August 2007: co-promotion & co-marketing with Lifescan and Bayer of blood glucose meters (in USA together with Lifescan and outside USA with Bayer extended in 2011). These devices had wireless data transmission to insulin pums;
– June 2009: acquisition of PreciSense, a medical device company developing CGM (continuous glucose monitoring) technology. A step forward for “closed loop” systems dedicated to insulin delivery;
– August 2013: acquisition of Cardiocom, a developer and provider of integrated telehealth and patient services for the management of chronic diseases;
– June 2014: global strategic alliance with Sanofi, aimed at improving patient experience and outcomes for people with diabetes around the world. The priority is the development of drug-device combinations and delivery of care management services to improve adherence as well as simplify insulin treatment.
Medtronic has built its Diabetes franchise over the last several years and is still fully committed to be the leader in this field. This pledge could lead to the achievement of the digital pancreas, a fully autonomous device (closed loop system) monitoring blood glucose continuously and adjusting insulin doses as perfectly as the biological pancreas without human interaction. Some researchers already have prototypes, studies are ongoing, universities and hospitals are teaming up. The field is really at its boiling point!
Deals and partnerships in 2015
In this FierceMedicalDevices article, we can see Medtronic advancing its franchise by investing with determination and dedication in new technologies.
Many partnerships have been signed in 2015: Diabeter (a diabetes clinic and research center dedicated to providing comprehensive and individualized care for children and young adults with diabetes), DreaMed (artificial pancreas technology for integration into future Medtronic insulin pumps). Beyond healthcare companies, Medtronic is also expanding its network into consumer electronics with Samsung (integration of mobile and wearable devices to improve disease management with an Android mobile app) and diabetes data with a startup called Glooko. It also partnered with IBM Watson Health for next-generation disease management solutions.
All these deals are clearly accelerating innovation at Medtronic but in a patient-centric fashion as in every deal we can see the benefits for them and the management of their disease. What could be the next step? A deal with Apple in order to nearly fully cover all the mobile OS in the world.
For my conclusion I will quote Medtronic CFO, Gary Ellis: “We’re focused on transforming our diabetes group from a market-leading pump and sensor company into a holistic diabetes management company focused on making a real difference in outcomes and costs,” summed up Medtronic CFO Gary Ellis on the most recent quarterly conference call.
A mind-blowing report from IEEE about the human body’s operating system
Can we harvest digital health data from trackers and sensors to improve our health and well-being? I summarized below what you will find on the IEEE dedicated web page. I was amazed by the variety and depth of all the innovations presented in these pages. Some of them have certainly the power to be game changers in the health care world. I’m looking forward to seeing all the advances coming to life!
Reading the Code
Several technologies are close to the market and will help us monitor our health. A very good example is the biostamps developed by John Rogers from the University of Illinois. These tiny, stretchable and skin-like sensors are able to send information and data to our smartphone alerting us whether something is happening in our body. More and more complex data could be sensed such as blood oxygen, blood glucose and even muscle weakness or sleep patterns.
Another fascinating example that could change the life of Type 1 diabetes patients is the artificial pancreas. It links “data from an implanted blood-sugar sensor to a computer, which then controls how a pump worn on the hip dribbles insulin under the skin through a pipette. In its fully realized form, the machine would take the patient out of the decision-making loop”. Advanced versions of the system are currently in clinical trials. Continuous monitoring is a huge advance in the field of disease management. It could strongly lighten the daily burden of each patient.
Another field where wearable are very popular: athletes. They are always eager to test the last innovation in the wearables arena. Physiological measurements can be extremely useful to optimize training and rest periods, improve performance and avoid injuries. Sleeves, wristbands, sensors equipped with highest technology can really make a difference in the way we monitor and track performance.
A device rapidly diagnosing any medical condition or disorder… Sounds like science fiction, right? Like in Star Trek… Some of you may recall the tricorder. And guess what? It’s about to become reality thank to a competition launched by Qualcomm. 300 teams registered, 10 finalists which are about to deliver their prototypes very soon. Once the winner has been chosen, real life clinical trials will start and we will know if it’s really working as expected. It’s a huge step forward as it will allow the diagnosis (and maybe the start of a treatment) for a lot of people, not only in US or Europe but also in emerging countries where the lack of medical infrastructure is killing human beings…
Analyzing the Code
Technology companies showed their interest in healthcare only recently… It’s welcomed because without technology you cannot do anything with data sets. However, some people are afraid of their data becoming public and being hacked. I think that between these two extreme opinions, we can take the good from both sides and see what this can bring us. “Apple, Google, Microsoft, and Samsung, have all launched e-health initiatives, mostly based around smartphones and wearables. Indeed, the fast-growing health care business would seem a natural next step for the tech giants”. A lot of deals have been signed between pharmaceutical companies and technology firms: Google and Novartis; IBM, Apple, Medtronic & JNJ… These are deals to follow in order to analyze the outcomes. Great initiatives could really emerge and I think we are at the beginning of a new era!
The new era of precision medicine is making a big difference for patients. An open-source platform has transformed the way patients are being treated. Surgery is not always the best option in oncology for example and sometimes drug treatment is much more effective. A thorough and careful analysis of all the parameters will help doctors taking the right decision for the right patient at the right time.
Real-time epidemics modelling could have saved lives. Building treatment centers at the right locations, anticipating the spread of the disease (in this case, Ebola) and how to limit the contagion were several of the criteria used to run the model. We will never know what would have happen without such a model but globally we can say that modelling is critical in disease management. Additionally, it is not the use of a single model that will be helpful but the customized and accurate modelling for each and every epidemic, according to its characteristics.
Changing the Code
Performing surgical interventions at very small scales is becoming a reality. “Thanks to developments in microfabrication and other areas, researchers are pushing the limits on the size and capabilities of objects small enough to move through the human body”. “With the right design, researchers say, a microrobot—or a swarm of them—could deliver a highly targeted dose of drugs or radioactive seeds, clear a blood clot, perform a tissue biopsy, or even build a scaffold on which new cells could grow”. For the time being, tests have only been run in animals.
A new emerging medical field: electrical therapy. Vagus nerve stimulation has the potential to treat several conditions from migraine to asthma, even immune diseases. Progress is very slow and several failures have made history… but new startups are created and renew the interest in this type of technology.
W like Watson, the digital MD. Watson is based on machine learning: “bringing together computer scientists and clinicians to assemble a reference database, enter case studies, and ask thousands of questions. When the program makes mistakes, it self-adjusts. Researchers also evaluate the answers and manually tweak Watson’s underlying algorithms to generate better output. Here there’s a gulf between medicine as something that can be extrapolated in a straightforward manner from textbooks, journal articles, and clinical guidelines, and the much more complicated challenge of also codifying how a good doctor thinks.” Progress is under way.
2014 was spectacular and fascinating with a lot of deals… What’s next?
Tremendous amount of reports have been produced (some of them, a selection from the bests, are at the bottom of this post). Rumors are sometimes saying it’s the end on Monday, it’s just the beginning on Tuesday and sky is the limit on Wednesday…
Internet serendipity is great! Indeed, I came across a very interesting website offering free reports on the pharmaceutical industry: Kurmann Partners. Just have a look! They are M&A consultants for several industries (I do not work for or is paid by them).
They put online another useful tool which will be a good starting point to look at M&A multiples: a visualization tool offering several types of charts to monitor the M&A activity over the years from different standpoints and for private companies: Multiples. Below is an example of a chart you could find.
2015 – What happened up to now and what’s ahead?
The trend seems here to stay as there is still a need to replenish pipelines and build a competitive advantage in specific therapeutic areas. I suppose that some domains will attract more buyers than others like immuno-oncology (a very hot topic today), antibiotics (as the governements are trying to incentivize companies). More generally, all therapies that could stand out from the crowd by being innovative (and not “me-too“-improved version of already existing drugs) will attract opportunity hunters.
2015 Global life sciences Outlook – 2015 – Deloitte – Starting on page 8, you have a overview of the deals that happened in 2014 and some thoughts on what could happen next
Royalty Rates and Deal Making Survey – 2015 – IMS – This short report gives a very good overview of a large survey (that can be bought) realized by IMS on royalty rates and deals during the first months of 2015. Access it here: 2015_RoyaltyRateDealmakingSurveyOverview
Global M&A report – Pharma/Biotech 2015 – 2015 – IMAP
Firepower fireworks drive record M&A in 2014. What’s ahead for 2015? – 2015 – Ernst & Young
HBM Pharma/Biotech M&A Report 2014 – 2015 – HBM Bioventures – It is a very interesting overview with a perfect coverage of the topic, from an global overview to some detailled analysis of the deals done by public as well as private companies. It is a MUST-HAVE.
The deal in 4 points
25% premium over the last closing price.
USD 15.3 billion of pro-forma combined sales in 2014.
Would be the biggest health care deal year to date, ahead of AbbVie-Pharmacyclics (USD 21bn) and Pfizer-Hospira (USD 16.7bn).
A very interesting article from BioPharmaDive is analyzing the last trends in M&A. 2014 as well as the start of the year have been exciting as we mentioned in a dedicated post. For more on what happened in 2014, have a look at the Evaluate Pharma 2014 Year in Review below.
Some speculation and trends have been deduced from the past by the editor of BPD. He thinks that there is more to come and here what he’s anticipating:
The deal — the latest example of a big drugmaker swooping on a biotech firm to refill its medicine pipeline — confounds expectations that Pharmacyclics would sell out to Johnson & Johnson.
Canbex has granted Ipsen an option giving Ipsen the exclusive right to purchase 100% of Canbex shares upon completion of the Phase IIa study of Canbex’s lead candidate for the treatment of spasticity in people with multiple sclerosis (MS), known as VSN16R (Phase I successfully completed). As stated by Marc de Garidel, Chairman and CEO of Ipsen, “it could be a valuable companion product to Dysport® in the treatment of spasticity”. Read more