Health care M&A activity continues to soar in 2015
CVS Health and Target announced on Monday, June 15, that they have a made a deal for CVS to acquire Target’s pharmacy and clinic businesses for $1.9 billion.
According to CNN Money, CVS is rebranding the 1,660 pharmacies that Target operates within its stores in 47 states as well as over 80 clinics as MinuteClinic.
With plans to have 1,500 clinics by 2017, CVS’ deal with Target will allow the company to expand to into new markets such as Seattle, Denver, Salt Lake City, and Portland.
RELATED TOPIC: The 3 most expensive pharmaceutical mergers and acquisitions
In light of this event, the strategic advisory and investment banking firm Hammond Hanlon Camp LLC (H2C) released the Merger and Acquisition Trends in Healthcare Services report.
According to the report, health care mergers and acquisitions reached an all-time record-high value of $388 billion in 2014, which was over $136 billion higher than 2013 levels.
Among the industry’s service sectors, long-term care and hospitals were leaders in terms of number of transactions and value over the past two years. Continued impact of the Affordable Care Act (“ACA”), cost pressures, and access to capital and patient sources were key drivers of hospital merger and acquisition activity.
“Mergers and acquisitions remain a key avenue by which many organizations are responding to trends and pursuing growth,” said Michael Hammond, H2C Principal, in an issued press release. “Furthermore, creative partnerships are becoming a vehicle in regional markets that have reached saturated consolidation and concentration.”
The outlook for health care M&A activity in 2015 and beyond remains strong, according to H2C, with the impacts of reimbursement changes, price transparency, technology costs, competitive pressures of ACOs/ health exchanges, and need for efficiencies continuing to fuel transactions.
Increased investment in the health care industry is likely to be seen among private equity and venture capital firms, especially within technology and specialty sectors that can be aggregated for future sale. Those companies that demonstrate capabilities that improve quality, patient satisfaction, cost efficiency, and utilization of “big data” to drive performance will be in high demand.
RELATED TOPIC: Is this the best alternative to health care M&A?
“The rising use of technology and ‘big data’ in all aspects of delivering care will have a transformative effect on health care cost, quality, and convenience factors, influencing future M&A trends,” said Bill Hanlon, H2C Principal.
To learn what else H2C has to say about the future of health care M&A activity, visit them online.
NHS trials test that predicts sepsis 3 days in advance
A new test that can predict sepsis before the patient develops symptoms is being trialled at a National Health Service (NHS) hospital in the south of England.
Clinicians at Portsmouth’s Queen Alexandra Hospital are leading medical trials of the blood test, which they hope will help them save thousands of lives a year.
The test is being developed by government spin-out company Presymptom Health, but the research began over 10 years ago at the Defence Science and Technology Laboratory (Dstl). This included a study of 4,385 patients and more than 70,000 samples, the largest study of its kind at the time.
From the samples taken, a clinical biobank and database were generated and then mined using machine learning to identify biomarker signatures that could predict the onset of sepsis. The researchers found they were able to provide an early warning of sepsis up to three days ahead of illness with an accuracy of up to 90%.
Unlike most other tests, Presymptom Health identifies the patient’s response to the disease as opposed to detecting the pathogen. This is an important differentiator, as sepsis occurs as a result of the patient's immune system’s overreaction to an infection or injury, which can then cause life-threatening organ dysfunction.
Worldwide, an estimated 49 million people a year contract sepsis, while in the UK almost two million patients admitted to hospital each year are thought to be at risk of developing the condition. If Presymptom's test is effective, it could save billions of pounds globally and improve clinical outcomes for millions of sepsis patients.
The initial trials at Queen Alexandra Hospital will last 12 months, with two other sites planned to go live this summer. Up to 600 patients admitted to hospital with respiratory tract infections will be given the option to participate in the trial. The data collected will be independently assessed and used to refine and validate the test, which could be available for broader NHS use within two years.
If successful, this test could also identify sepsis arising from other infections before symptoms appear, which could potentially include future waves of COVID-19 and other pandemics.
Dr Roman Lukaszewski, the lead Dstl scientist behind the innovation, said: “It is incredible to see this test, which we had originally begun to develop to help service personnel survive injury and infection on the front line, is now being used for the wider UK population, including those fighting COVID-19.”