Biden Orders Feds to Target Health Care Consolidation but Deals Continue
This month’s big stories in M&A deal making come not just from the market but the regulatory front. New Biden Executive Order Targets Health Care Consolidation Consolidation in the health care market has been a major concern, particularly in the past two years when hospitals, health networks and corporate equity funds began swallowing up independent physicians’ practices at accelerated rates. Against this backdrop, as well as a new report from the Physicians Advocacy Institute (PAI) finding that only 30 percent of all physicians in the U.S. are practicing medicine independently, President Biden issued a new Executive Order (EO) on July 9 calling on the Department of Justice (DOJ), Federal Trade Commission (FTC) and other federal government agencies to vigorously enforce the antitrust laws across all markets, including health care. The EO identifies four segments of health care as priority areas for enforcement: Hospital consolidation; Prescription drugs; Health insurance consolidation; and Hearing aids. The EO stresses that hospital mergers can be harmful to patients, especially in rural areas left underserved by consolidation. Thanks to “unchecked mergers,” the 10 largest healthcare systems now control a quarter of the market, the EO notes, adding that138 rural hospitals have shuttered since 2010, including a […]
This month’s big stories in M&A deal making come not just from the market but the regulatory front.
New Biden Executive Order Targets Health Care Consolidation
Consolidation in the health care market has been a major concern, particularly in the past two years when hospitals, health networks and corporate equity funds began swallowing up independent physicians’ practices at accelerated rates. Against this backdrop, as well as a new report from the Physicians Advocacy Institute (PAI) finding that only 30 percent of all physicians in the U.S. are practicing medicine independently, President Biden issued a new Executive Order (EO) on July 9 calling on the Department of Justice (DOJ), Federal Trade Commission (FTC) and other federal government agencies to vigorously enforce the antitrust laws across all markets, including health care.
The EO identifies four segments of health care as priority areas for enforcement:
- Hospital consolidation;
- Prescription drugs;
- Health insurance consolidation; and
- Hearing aids.
The EO stresses that hospital mergers can be harmful to patients, especially in rural areas left underserved by consolidation. Thanks to “unchecked mergers,” the 10 largest healthcare systems now control a quarter of the market, the EO notes, adding that138 rural hospitals have shuttered since 2010, including a high of 19 last year, in the middle of a healthcare crisis. Research shows that hospitals in consolidated markets charge far higher prices than hospitals in markets with several competitors. The EO thus recommends that the DOJ and FTC review and revise their merger guidelines and directs HHS to support existing hospital price transparency rules and finish implementing bipartisan federal legislation to address surprise hospital billing.
Mologic Becomes a Social Enterprise and PerkinElmer Makes a Big Play
Meanwhile, M&A deals did come down during July, including a pair of blockbusters. The first, which was announced on July 19, represents a kind of counterpoint to the consolidation-is-bad message of the new Biden EO issued just nine days earlier. Instead of greedy insurance executives and Wall Street corporate raiders, financing for the acquisition of rapid diagnostic test maker Mologic and its sister firm Global Access Diagnostics (GAD) by the Soros Economic Development Fund is coming from the Bill & Melinda Gates Foundation. Mologic and GAD will become part of Global Access Health, a social enterprise dedicated to expanding access to affordable medical technology in underserved low- and middle-income countries around the world.
Teeming with COVID-19 testing cash, PerkinElmer announced that it has agreed to plunk down $5.25 billion in cash and stock to acquire antibodies and reagents provider BioLegend, a firm with over 700 employees and expected 2022 revenues of $380 million. The acquisition, the largest in company history, positions PerkinElmer to enter new segments of the life sciences research market. San Diego-based BioLegend will become PerkinElmer’s global center of excellence for research reagent content development. The combined company will become a “true powerhouse that will have the skill to be able to accelerate scientific advancement and new product innovation across the company and around the world,” according to the statement of PerkinElmer CEO Prahlad Singh.
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Here’s a summary of the key new M&A diagnostic deals announced in July 2021:
MERGERS, ACQUISITIONS & ASSET SALES
Acquiring Company | Target(s) | Deal Summary |
---|---|---|
PerkinElmer | BioLegend |
|
Pacific Biosciences | Omniome |
|
PathAI | Poplar Healthcare |
|
Becton Dickinson | Velano Vascular |
|
Meridian Bioscience | Otsuka America Pharmaceutical |
|
Sapphiros | Biocrucible |
|
XPhyto Therapeutics | 3a-diagnostics |
|
BioIVT | Tissue Solutions |
|
Kiromic BioPharma. | InSilico Solutions |
|
Soros Economic Development Fund with support of Bill & Melinda Gates Foundation | Mologic + Global Access Diagnostics |
|
Genetic Technologies | EasyDNA |
|
Inotiv | MilliporeSigma |
|
Nephros | GenArraytion |
|
ACT Genomics | MC Diagnostics |
|
Ro | Kit |
|
Q² Solutions | Myriad Genetics |
|
Sebia | Orgentec Diagnostika |
|
Twist Bioscience | iGenomX |
|
DCN Dx | IVD Vision |
|
GenesisCare | PreludeDx |
|
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