The Health Care Investor : Healthcare Lawyers & Attorneys for Life Science Companies & Investors

Since the beginning of 2011, medical diagnostic and monitoring device companies have been performing in an established and even an exceptional manner. To date, these specialized medical device businesses have shown double-digit EPS growth and organic revenue growth in the middle-to-high-single digits.

Sales from medical tool companies have risen 14%, diagnostics companies 15%; up 5% as compared to the Standard & Poor. The prior year saw the diagnostics/tools sector up nearly 30%.  Perhaps the most desirable companies are those that have been in existence for a number of years in such emerging markets as China and India, where they are able to capitalize on the resources of the region.

A most interesting classification is the role of genomic testing in clinical diagnostics. DNA sequencing, a combination of chemistry and engineering is, arguably, the most dynamic segment of the medical device market, as well as the fastest growing.

Of the approximately 300 leading healthcare companies that are actively investing in all types of medical products and services, about 10% are in the areas of diagnostic and monitoring devices, with diagnostics seeing four times more companies than monitoring.

Besides monitoring and diagnostic device companies, other tools, services and software being developed by healthcare companies include therapeutic and surgical devices, pharmaceuticals, drug delivery systems, medical records, hospital/patient/clinic services, biotechnology, elderly/disabled care, laboratory services and medical supply companies.

Companies with rapid growth in the fields of diagnostic and monitoring devices include: Securus Medical Group, which has raised $750,000 of a planned $1.5 million Series A venture funding; Intuity Medical, which has raised Series D funding of $76 million and NanoDetection Technology, which has raised Series A funding of $2.3 million from its lead investor.

Monitoring and diagnostic device companies look to be poised to lead healthcare manufacturing and technology companies into the new year.

 

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PPD/Pharmaceutical Product Development, an international contract research firm that has just been named to the 2011 InformationWeek 500, is being taken private by affiliates of the Carlyle Group and Hellman & Friedman in a cash deal valued at $3.9 billion. The two PE firms have reportedly paid $33.25/share for PPD, a 29.6% premium over its September 30^th closing price. Subject to shareholder approval and regulatory regulations, the merger is expected to become final by the end of the year.   Companies like PPD provide contract research services for all phases of clinical trials in the pharmaceutical, biotechnology and medical device industries, specializing in all aspects of data and biostatistics management.

The Burrill Report states that “the deal is a turn-around for private equity buyouts, which have been slowed down in the third quarter [2011] due to market volatility and a tough financing environment”.

PPD, according to a company press release, was recognized for its “…PatientView®, an innovative online portal linking clinical trial participants with biopharmaceutical companies, physicians and health care resources to enhance patient connectivity and improve patient retention in clinical trials”.

PPD, with offices in 44 countries and a roster of over 11,000 professionals, has clients and partners in pharmaceutical, biotechnology and medical device companies, as well as academic and government agencies. The company has recently announced its expanded clinical microbiology laboratory, further strengthening its testing services in infectious diseases, one of the leading arenas for clinical researchers and developers.

With the FDA Amendments Act of 2007, and its requirement for mandatory mega trials of new drug protocols and Risk Evaluation & Mitigation Strategies (REMS), the importance of national and international CROs are seeing increased valuation.

Many industry analysts believe that the contract research industry looks to be a positive investment possibility as international economic conditions appear to be recovering, particularly in emerging markets.  Morningstar analyst Lauren Migliore reports, “The emergence of the strategic partnership model, which has seen the world’s largest drugmakers pair up with leading CROs…has helped fuel this return to growth in the industry.”

The PPD deal is the biggest PE buyout of a contract research company in the last three years. Others include Nautic Partners’ acquisition of Omnicare Clinical Research, Thomas Lee Partners’ buyout of InVentive Health, Avista Capital Partners and Ontario Teachers’ Pension Plan’s acquisition of INC Research and the Warburg Pincus buyout of ReSearch Pharmaceutical Services.

Other opportunities surrounding the growing research industry may also emerge, including high-tech business information systems for the medical research field.

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