Biotech, pharmaceutical in addition to medical device companies tend to acquire companies that will can fill their research in addition to development pipelines or make them category leaders. They also divest assets to refine their portfolio.
Johnson & Johnson bought in addition to sold many assets across its businesses last year. that will acquired Actelion in addition to its arsenal of pulmonary arterial hypertension drugs for $30 billion. that will sold Codman Neurosurgery to Integra LifeSciences for $1.05 billion while scooping up a few smaller equipment in addition to device companies.
“The important thing to remember for those industries, unlike say the (pharmacy benefit management) business or the health business, will be that will’s massively more fragmented,” Stafford said. “There are hundreds of pharmaceutical companies of significant scale in addition to dozens of significantly scaled medical device companies to combine around therapeutic areas.”
For payers, including health insurers in addition to pharmacy benefit managers, the story will be a bit more complicated. Their industries are already consolidated, in addition to regulators have blocked attempts to contract even more.
Some companies are right now considering some other types of matchups. CVS Health, both a drugstore chain in addition to a PBM, will be planning to hire health insurer Aetna for $69 billion inside the largest corporate deal of 2017. Another insurer, Cigna, plans to buy PBM Express Scripts.
Walgreens Boots Alliance was also reportedly considering acquiring the part of drug distributor AmerisourceBergen that will that will doesn’t already own earlier This kind of year, though talks have cooled. Walmart in addition to health insurer Humana are having early-stage talks about strengthening their existing partnership, people familiar with the matter told CNBC.
Stafford compares the pressure of sponsors on the system to the movement of tectonic plates on the Earth’s surface. Companies feel that will in addition to are jockeying for more growth in addition to value.
These dynamics aren’t going away, he said.
“Do we expect these deals to continue? Yes, absolutely,” he said. “The better question will be why wouldn’t they continue? We don’t see pressure on health systems abating.”