Industry Trends
Changes in Healthcare Laws in Nevada May Foreshadow Future of Industry
Nevada Democratic lawmakers passed a bill, that they claim will reduce healthcare costs for their state’s residents. The law allows for a “public option” in which private insurers can offer lower-priced healthcare plans. Critics from both sides of the aisle and the healthcare industry say it represents government overreach that could adversely affect providers. The new law may foreshadow what is to come at the federal level. Congress is currently seeking public comment on a national version of a public-option structure that includes a government-run health insurance agency that offers lower prices to compete with commercial insurers.1
Walgreens and CVS Rebound with Vaccine Rollouts Across Nation
During the early stages of the pandemic, the two largest pharmacy chains suffered significant revenue losses due to people staying at home and not seeking routine medical care. However, as the companies began offering COVID-19 vaccinations, COVID-19 related products, and employer-sponsored return-to-work programs across the United States, the narrative shifted to a more positive note. As a result, the substantial revenue increases outweigh the costs of operating during a pandemic. So far this year, shares of CVS and Walgreens have outperformed the broader market.2
Amazon’s New Care Service Sees Multiple Companies Sign On
Amazon’s foray into the healthcare industry is a deviation from the company’s e-commerce and distribution business but sets a precedent for larger corporations eager to explore other industries. The telehealth service enables virtual connections between the patient and healthcare professional to make an initial diagnosis. Following online visits, these patients can be greeted by a mobile medic who can perform routine tests and provide prescriptions via delivery service to the patient’s home. Amazon has invested billions since the start of the pandemic and sees Amazon Care as being particularly well suited for the post-pandemic world of remote workers.3
Pear Therapeutics Plans On Going Public Via $1.6 Billion SPAC
Pear Therapeutics, a medical technology company, plans to go public through a SPAC merger associated with the Pritzker Vlock Family Office, with an initial proforma equity value of ~$1.6b. Pear Therapeutics is a market leader in digital therapeutics, a prescription software that delivers therapeutic intervention to treat medical disorders and diseases. Like other companies that have gone public through SPACs earlier this year, Pear Therapeutics is not yet profitable. But with its innovative products and potential to drive down healthcare costs through improved patient retention, it is poised for continued growth.4
Affordable Care Act Left Untouched by Supreme Court
The Supreme Court rejected a challenge to the Affordable Care Act in a 7-2 decision, citing that the case lacked standing. GOP-led efforts, initially backed by the Trump administration, wanted the ACA to be struck down based on technical arguments after Congress eliminated the tax penalty for failing to carry health insurance. The plaintiffs failed to prove they suffered injury because of zeroing out the tax penalty. This decision marks the third time the Supreme Court has upheld the 2010 healthcare law and is seen as a potential end of the line for major legal challenges to the law.5
New Alzheimer’s Drug Approved by FDA Among Doubters
The FDA approved a new Alzheimer’s drug created by Biogen Inc., called Aduhelm, to combat the memory-robbing effects of the disease. Many doctors question the efficacy of the drug and have recommended against its approval. The Food and Drug Administration supported its decision with scientific evidence indicating Aduhelm’s ability to reduce a substance in the brain called amyloid that is associated with Alzheimer’s. After approval, Biogen experienced a surge in its share price, adding $16.5b in market value. As the first Alzheimer’s drug approved since 2003, this is a victory for the struggling company and for individual’s suffering from the degenerative disease. 6
Biden To Take Aim at Big Businesses Strategies and Corporate Consolidation
To protect consumers, the Biden administration is signing an executive order to encourage more competition in specific markets to limit corporate consolidation, which can lead to higher prices and fewer choices in the marketplace. The healthcare industry is one of the main targets of this executive order. Specifically, the order calls for the Federal Trade Commission to ban “pay for delay” deals between drug manufacturers competing against each other, which can slow the release of generic drugs. Additionally, the order encourages the Department of Health and Human Services to fight high prescription drug prices and support cheaper generic drugs, to increase healthcare accessibility.7
Philip Morris International Acquires Vectura Group in $1.2 Billion Deal
Philip Morris International Inc. agreed to buy Vectura Group, a pharmaceutical and inhaled medicines producer, in an all-cash deal valued at $1.24 billion, helping the company to move past its prominent tobacco and nicotine lines. Philip Morris is more commonly known for selling the Marlboro brand products, but this new push signifies a turning point towards inhaled therapeutics. Philip Morris is evolving as a broader healthcare and wellness company and the purchase of Ventura is a step towards securing this vision. By 2025, the company plans to generate more than half of its revenue from smokeless products, focusing on respiratory drug delivery and self-care wellness products.8
Largest Transactions Closed
- Target
- Buyer
- Value($mm)
- Nutrition & Biosciences business of DuPont de Nemours, Inc.
- International Flavors & Fragrances Inc.
- $26,541.56
- Immunomedics, Inc.
- Gilead Sciences, Inc.
- $20,891.17
- Livongo Health, Inc.
- Teladoc Health, Inc.
- $19,093.64
- Varian Medical Systems, Inc.
- Siemens Healthineers AG
- $17,159.96
- MyoKardia, Inc.
- Bristol-Myers Squibb Company
- $13,134.86
- Majority of Alliance Healthcare Businesses of Walgreens Boots Alliance, Inc.
- AmerisourceBergen Corporation
- $6,470.52
- Momenta Pharmaceuticals, Inc.
- Johnson & Johnson
- $6,366.71
- Gainwell
- Veritas Capital Fund Management, L.L.C
- $5,000.00
- Cantel Medical Corp.
- STERIS plc
- $4,912.49
- Asklepios BioPharmaceutical, Inc.
- Bayer Aktiengesellschaft
- $4,000.00
Source S&P Capital IQ as of 7/13/2021 and PCE Proprietary Data
Contacts
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Data Assumptions This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only. Glossary EBIT - Earnings Before Interest and Taxes Sources:
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