Abolon advises the owners of Sophi on its sale to Rayner

Abolon was the exclusive advisor to the shareholders of THIS AG on its sale to Rayner, a global leader in products for cataract surgery, headquartered in the UK. The acquisition closed today, 17th January 2024. It was agreed not to disclose the purchase price.

Rayner announced today that it has entered into a definitive agreement to acquire Swiss-based THIS AG, the inventor, developer and manufacturer of Sophi phaco emulsification machines.

Sophi (Swiss Ophthalmology Innovation) is an innovative phaco technology providing mobility, simplicity, and safety within the operating theatre. With advanced features including triple pump fluidics, active IOP control, clean venturi and day cassette, cable free power supply and wireless communication, Sophi presents a truly advanced surgical system. The acquisition will enhance Rayner’s breadth of high-quality products for cataract surgery, enabling provision of a full offering also encompassing IOLs, OVDs, eye drops, pharmaceuticals, digital tools, and single-use recyclable instruments. 

Abolon advises VITAL Zahnärzte on its sale to a leading dentistry group

Abolon was the exclusive advisor to the shareholders of VITAL Zahnärzte dentistry group on its sale to one of the 3 largest European oral care organizations. The transaction was completed in early October 2022. It was agreed not to disclose the transaction value.

VITAL Zahnärzte consist of 3 dental clinics in Southern Germany, leading Southern Germany in size. The group offers the full range of dentistry services with a focus on high-quality treatment, fully digitalized processes, local lab support in each practice and patient-friendly opening hours.

Abolon advises L&W Intensivpflege on its sale to Linimed

Abolon was the exclusive advisor to the shareholders on the sale of L&W Intensivpflege Group to Linimed, one of the leading German providers in the field of outpatient intensive care. The transaction was completed at the end of February 2022. It was agreed not to disclose the transaction value.

L&W Intensivpflege (consisting of Advivo – ambulante Beatmung GmbH, L&W Intensivpflegedienst GmbH und L&W Intensivpflege GmbH) is a specialized care service for intensive care and home ventilation in out-patient living groups (`Wohngruppen`) and 24-hour care at home in the greater Munich area and Lower Bavaria.

Abolon advises Halder on the acquisition of an acute care hospital in Germany

Abolon has introduced Halder, a leading German investment company into DACH mid-size companies, to the Helios Klinik Volkach situation and acted as an adviser on this acquisition through an investment vehicle founded by Halder. Alongside the hospital, previously the district hospital, two partner policlinics (‘MVZs’) have been part of the transaction. The transaction has been signed in early September 2021. The transaction value has been agreed to be kept confidential.
Klinik Volkach is a SGB V, §108, clinic listed in the state hospital plan (‘Landesbettenplan’). The hospital has increasingly focused on orthopaedic surgery.

Abolon advises Renaissance on its investment in Baitella AG

The Renaissance Investment Foundation has become a majority shareholder in Baitella AG. Together with the management, Renaissance will develop the globally successful quality products for medical applications under the “Fisso” brand.

Baitella AG was founded by Carlo Baitella in 1978 and, with its Fisso products, is the world's leading supplier of high-quality articulated tripods. The company supplies both the medical and industrial segments with articulated tripods and accessories in standard and customer versions.

Abolon has advised Renaissance investment with a team of specialist advisors on this transaction.

Abolon advises Medipart on the sale of a majority stake in Actiol GmbH, an innovator in ophthalmic biomaterials

Abolon has been the exclusive adviser to Medipart AG, Switzerland, ("Medipart") on the sale of its majority stake in the share capital of Actiol GmbH ("Actiol" or the "Company") to an international investor group. The transaction has been closed end of June 2021. The transaction value has been agreed to be kept confidential.

Actiol is a stock corporation with registered office in Amöneburg, Germany. The Company is active in development and manufacturing of ophthalmic biomaterials, particularly acrylic IOL polymers.

Armira has invested in PflegeButler

Abolon was the exclusive adviser to Armira, a leading investment holding and family office, on its investment in PflegeButler group. PflegeButler is a highly successful and rapidly growing alternative outpatient care provider, offering superior value to clients by combining assisted living and a range of innovative care services. The company currently operates 9 facilities in Lower Saxony and plans to expand rapidly. 

The transaction was announced two weeks ago. Armira’s investment will be used to accelerate the growth of the group, initially in Lower Saxony through the development of greenfield facilities.

Abolon served Armira with a dedicated team of specialised advisers, building on numerous projects in the care sector throughout Europe during recent years.

Mobility player acquires leading patient handling company

A Nordic supplier of assistive devices to people with special needs, has acquired a leading patient handling company in the DACH region. The acquired business is a specialist in the development, production and distribution of patient transfer products and a well-known and respected supplier to nursing homes, hospitals and the homecare sector. 
For the acquirer, Germany is an important market that offers opportunities for further growth across the group’s product and service portfolio. The acquired business’s products will become part of the international offering of the Nordic mobility player.
The purchase price was agreed to be kept confidential. Abolon acted as the exclusive advisor in the transaction process to the sellers of the patient handling company. 

Abolon advises VITAL Zahnärzte on their acquisition of ARS Dentalis

VITAL Zahnärzte today signed sales and purchase agreements with the entities comprising the ARS Dentalis group of dentistry practices and dental laboratories. The transaction was announced this morning and is subject to the usual approval procedures. The purchase price was not disclosed. 
 
The ARS Dentalis practices will be renamed VITAL Zahnärzte. With 4 large dental clinics in Southern Germany, the group offers the full range of dentistry services with a focus on high-quality treatment, fully digitalized processes, local lab support in each practice and patient-friendly opening hours (365 days per year). VITAL Zahnärzte intend to expand their large-practice, dentist-friendly model (“developed by dentists for dentists”) to other locations over the coming years. 
 
Abolon advised VITAL Zahnärzte, building on Abolon’s expertise in M&A, financing, insolvency procedures and dentistry. This transaction follows other successful Abolon transactions in the UK/European out-patient healthcare practice sector incl. Amethyst Radiotherapy (radiotherapy, 2019), RADx (diagnostic imaging, 2017), Dr. Hansen (dentistry, 2016), Corius (dermatology, 2016), Alanta/Zytoservice (oncology, 2016), Amedes (medical labs/gynaecology/IVF, 2015) and Medica Group (teleradiology).

The Rohatyn Group has invested in Amethyst Radiotherapy 

Abolon was the exclusive adviser to The Rohatyn Group ("TRG"), an emerging markets focused asset management firm, on its investment in Amethyst Radiotherapy, obtaining co-control of the Company alongside the two co-founders. Amethyst is one of the largest operators of radiotherapy clinics in Europe and provides radiotherapy treatment for most types of common cancers. The transaction was announced yesterday.
Amethyst operates centres across France, Romania, Italy, Poland and Austria, treating over 10,000 patients annually. TRG’s investment will be used to accelerate the growth of the Company across Europe through the roll-up of clinics, the development of greenfield centres and outsourcing partnerships with hospitals.
Radiation therapy (also called radiotherapy) is a cancer treatment that uses high doses of radiation to kill cancer cells and/or to slow down their growth by damaging their DNA. Abolon served TRG with a dedicated team of its specialised advisers, building on numerous projects in the broader radiotherapy & radiology space during recent years.

Abolon advises Medipart on the sale of a majority stake in listed HumanOptics to a Chinese investor

Abolon has been the exclusive adviser to Medipart AG, Switzerland, ("Medipart") which has signed a share purchase agreement on 30th August 2019 to sell its stake of 73.4% in the share capital of HumanOptics AG ("HumanOptics" or the "Company") to a Chinese investor. The closing of the sale is subject to customary closing conditions, including approval by the Chinese public authorities.
 
HumanOptics is a listed stock corporation with registered office in Erlangen, Germany. The Company is active in the development, manufacturing and distribution of implantable premium intraocular solutions. The Company's shares are listed in the open market of the Frankfurt Stock Exchange. Its market capitalisation was € 56.5 million as of 29 August 2019, pre announcement of the transaction.
 
Abolon AG is a healthcare-focused advisory firm with a long track-record in medical devices transactions. This transaction follows a series of transactions involving publicly listed entities including Sigvaris' acquisition of compression stockings business Pani Teresa Medical (Warsaw stock exchange) and WaveLight's (German stock exchange) sale of its urology laser unit.

Afinum acquires a majority stake in evitria

Abolon was mandated by Afinum, the DACH-based private equity firm, on its acquisition of a majority stake in Swiss biotech company evitria, which provides custom antibodies for research purposes.

evitria has been conducting more than 30,000 transfections and has been producing more than 5,000 different antibodies to date. The company’s success is based on a unique, highly standardized and automatized production process that minimizes throughput times and guarantees high concentrations and quality levels, thereby perfectly addressing its customers’ need for specific, tailor-made antibodies. Its business model has allowed evitria to build a reputation of a superior biotech specialist and trustworthy outsourcing partner.

The transaction has been closed today. The enterprise value was not made publicly available.
Abolon was exclusively mandated by Afinum.

Trimb Healthcare acquires BioClin

Abolon was mandated by Trimb Healthcare, the rapidly-growing OTC and consumer healthcare company with products sold in over 60 countries, on its recent acquisition of Bioclin, a leading intimate healthcare company based in the Netherlands. Trimb has announced the transaction. 

The transaction value was not disclosed.

The BioClin portfolio includes several well-known, all-natural brands that are rapidly growing and today are sold in pharmacies and drugstores in over 60 countries worldwide.

Kontivia invests in Brütsch

Kontivia has acquired a majority participation in Brütsch Elektronik, a Switzerland-based development and production (CDMO) service provider to medical device OEM customers (www.kontivia.com/images/uploads/webseite/Medienmitteilung_neue_Partnerschaft_Bruetsch_Elektronik_und_Kontivia.pdf)

Brütsch's core competences are the company's high innovativeness, integrated project expertise across electronics, mechatronics and software solutions as well as its strong regulatory knowhow in launching products and maintaining product registrations. The transaction value was not disclosed.

Abolon was exclusively mandated by Kontivia.

Ufenau acquires DermaClin

Ufenau acquires DermaClinUfenau Capital Partners successfully acquired the DermaClin Holding AG (“DermaClin”). DermaClin represents a highly specialized and renowned clinic for minimal invasive neurosurgery treatments and will serve as platform to execute a systematic Buy-&-Build strategy in the highly attractive and fragmented market of outpatient dermatology and minimal invasive services. The platform was founded in 1991 and treats more than 6’500 patients annually.

RAD-x acquires IRD

In January 2017, RAD-x, a pan-European diagnostic imaging platforms at the forefront of the outpatient radiology market consolidation in France, Germany and Switzerland backed by Gilde Healthcare, acquired Geneva-based IRD SA, a leading diagnostic imaging provider.

The parties have agreed not to disclose the purchase price.

Abolon acted as commercial due diligence advisor to Gilde Healthcare and RAD-x.

Dietz has become Eureha’s main shareholder

In December 2016, Dietz, a Germany-based provider of rehabilitation and care products, acquired 60% of Eureha, one of the leading manufacturer of bathlifts in the world.

The parties have agreed not to disclose the purchase price.

Abolon’s M&A team acted as exclusive M&A advisor to the owners of Eureha. The DME (durable homecare market) is one of Abolon’s key area of expertise and Abolon has successfully been involved in numerous transactions during recent years.

Leading German dentistry group Dr. Hansen Zahnärzte closes growth financing

In November 2016, dentistry group Dr. Hansen Zahnärtze, leader in Germany in terms of fully owned practice sites, closed a growth financing round that will allow the group to open 4 new practices in 2017. Dr. Hansen Zahnärzte operates 6 practices in Germany and 1 practice in Mallorca, Spain.

Abolon's Corporate Finance team advised Dr. Hansen Zahnärzte.

IK Investment Partners to acquire ZytoService

In November 2016, IK Investment Partners, a European private equity firm, acquired ZytoService Group, a leading compounder of pharmaceuticals for patient-individualised infusions, from the founders and Capiton. ZytoService is, through the acquisition and greenfield opening of outpatient oncology practices, also the largest focused oncology practice group in the DACH region.

The parties have agreed not to disclose the financial terms of the transaction.

Abolon acted as exclusive commercial due diligence advisor to IK Investment Partners.

SIGVARIS acquires Pani Teresa Medica

In December 2015, SIGVARIS Group, a world-leading manufacturer of medical compression textiles, has acquired Pani Teresa Medica (PTM), the market-leading Polish manufacturer of medical textiles. SIGVARIS subsequently took PTM off the Warsaw Stock Exchange

Abolon acted as the M&A advisor to SIGVARIS Group.

Charterhouse acquires Cooper

In October 2015, Charterhouse Equity Partners, a London-based private equity firm, acquired the leading French over-the-counter (OTC) products company Cooper (Cooperation Pharmaceutique Francaise) from Caravelle.

The parties have agreed not to disclose the purchase price.

Abolon acted as commercial due diligence advisor to Charterhouse Equity Partners.

Antin Infrastructure Partners acquires Amedes Group

In July 2015, Antin Infrastructure Partners, a Paris and London based infrastructure fund, acquired Amedes Group, the second-largest medical laboratory group in Germany, from private equity investor General Atlantic.

The purchase price was not disclosed. The transaction is subject to approval by the competition authorities.

Abolon acted as the exclusive commercial due diligence advisor to Antin

Nordic Capital Acquires Sunrise Medical from Equistone

In June 2015, Nordic Capital acquired Sunrise Medical, a world leader in the development, design, manufacturing and distribution of adult manual wheelchairs and seating and positioning products. With the addition of Sunrise Medical, Nordic Capital makes another investment in the high quality mobility products and services sector.

The parties have agreed not to disclose the purchase price. The transaction is subject to approval by the anti-trust authorities.

Abolon acted as commercial due diligence advisor to Nordic Capital.

EQUITA acquires a majority in Windstar Medical

In November 2014, EQUITA Management has, alongside management, acquired a majority stake in Windstar Medical, a developer of non-prescription health products, marketed by Windstar in the mass-market channels (drugstores, supermarkets). The company is active in the DACH region and some other markets. The effective transfer of ownership is expected to occur on December 15, 2014. The existing management team will continue to manage Windstar Medical, with the company's founders retaining a significant stake. Abolon supported EQUITA Management on selected aspects of the commercial due diligence.

Duke Street acquires Homecare business in UK and Ireland

Duke Street, the mid-market private equity group, has acquired Air Products’ Homecare operations in the UK and Ireland. The business delivers oxygen-therapy, sleep apnoea therapy and non-invasive ventilation therapy services to patients in the home across 3 regions in the UK and the whole of Ireland. The consideration has not been disclosed.

Led by CEO Adam Sullivan and the former Air Products Homecare management team, the Crewe, UK headquartered business will be rebranded Baywater Healthcare following completion. Douglas Quinn, the former CEO of Paragon Healthcare (now Voyage and formerly a Duke Street portfolio company), joins the business as Chairman.

Commenting on the transaction, Charlie Troup, a partner at Duke Street, said:

“This transaction represents an exciting opportunity to acquire a high-quality but non-core healthcare business from a global industrial group. We have significant experience of the healthcare services sector, which we see as well suited to the Duke Street approach to company development, and we see exciting opportunities to build on Baywater’s position as a provider of high quality services to patients in their homes. The firm remains keen to back strong management teams in pursuing organic growth and operational improvements, as well as acquisition-led growth.”

DPE has acquired OmniaMed

In July 2013, the Management of OmniaMed Deutschland GmbH and Omnia-Med Ltd., the Germany and UK based companies engaged in providing online medical education, acquired the company in a management buyout transaction, backed by Deutsche Private Equity GmbH (DPE), the Germany-based private equity firm, from MC Holding Corporation, the US based provider of medical education, for an undisclosed consideration.

The management team is led by Martina Schreck and Jonathan Morely. The transaction is in line with DPE's investment strategy to invest in the sector and will also help the future growth and development of OmniaMed Deutschland GmbH and Omnia-Med Ltd.

CBPE Capita has acquired Medica

In May 2013, CBPE Capital LLP, the UK based private equity firm, acquired Medica Reporting, Ltd., the UK based company engaged in providing technology solutions, remote radiology reporting and consulting services, from Nuffield Health, the UK based provider of healthcare services, for an undisclosed consideration.

The transaction is in line with Medica’s strategy to strengthen its radiology options and thereby improve its UK patient base. Previously in January 2008, Nuffield Health acquired Medica.

Ardian has acquired Riemser Arzneimittel

In September 2012, Ardian (previously known as Axa Private Equity) completed the acquisition of Riemser Pharma, the specialty pharma business from the owners and funds managed by TVM and GE Capital. Abolon’s M&A team had been mandated by Ardian alongside Abolon’s commercial DD team on this transaction.

Riemser Arzneimittel generated annual revenues of EUR 100m in 2011 and has 500 employees. With this transaction, Ardian will be supporting Riemser’s strategy of continued specialization and internationalization.

Deggendorf District has sold its specialty clinic

Zeneus GmbH, Germany based healthcare provider group, has acquired Fachklinik für Amputationsmedizin Osterhofen GmbH, the Germany based amputation surgery and rehabilitation specialty clinic, for an undisclosed consideration. Abolon acted as advisor to Zeneus.

As a part of the transaction, 110 employees of the clinic will be transferred, and Zeneus is expected to develop and expand the specialist clinic as well as invest continuously over the next five years.

Roha Arzneimittel has acquired Boerner Arzneimittel

In September 2007, roha arzneimittel GmbH, the Germany based nutritional ingredients company, acquired Boerner Arzneimittel GmbH, the Germany based manufacturer and distributor of pharmaceuticals and cosmetic products, for an undisclosed consideration. Abolon initiated the transaction and acted as advisor to roha arzneimittel.

roha expects a turnover of EUR 40m for the year 2007. The acquisition will strengthen roha’s position as a distributor and manufacturer of health products. Post acquisition, Boerner’s employees will be headed under roha arzneimittel GmbH.

Otto Bock has sold its homecare division to Drive

In January 2007, Drive Medical Design & Manufacturing, the US based company engaged in the manufacture and distribution of durable medical equipments, sold Peter Endres GmbH & Co. KG, the Germany based manufacturer and distributor of bath lifts and patient aids, from Otto Bock HealthCare GmbH, the Germany based supplier of prosthetic and orthotic devices (also engaged in manufacturing mobility and seating devices for disabled adults), for an undisclosed consideration. Abolon acted as advisor to Otto Bock.

WaveLight has sold its laser urology unit

In July 2006, the Management of urology laser division of WaveLight AG, the listed Germany-based company engaged in the development, production, marketing and sales of laser systems, acquired the company in a management buyout transaction, backed by BayBG Bayerische Beteiligungsgesellschaft mbH, the Germany based venture capital firm, and S-Partner Kapital AG, the Germany based private equity firm, for an undisclosed consideration. Abolon acted as advisor to WaveLight AG.

The management team was led by Werner Falkenstein, division manager of WaveLight. Post acquisition, urology laser division will be renamed as StarMedTec GmbH and Werner Falkenstein, division manager of WaveLight, will continue as CEO of StarMedTec.

Merz Pharma has acquired Denfleet Pharma

In June 2006, Merz Pharma GmbH & Co. KGaA, the German healthcare company, acquired Denfleet Pharma Ltd, the UK based pharmaceutical company, for an undisclosed consideration. Abolon initiated the transaction and acted as advisor to Merz Pharma

Merz intends to use Denfleet's capability and strong hospital presence, especially in the CNS area, as a platform in the UK. The acquisition is in line with Merz’s strategy to expand its presence in Europe.

How will new landmark legislation affect Germany’s private hospital groups?

The new Hospital Structure Act could force small, low quality public sector hospitals to the wall. But it could also cap growth for big private operators. We examine likely scenarios.

Germany’s economy is performing well, with the lowest unemployment rate in the EU (4.3%) and an all-time high in tax revenues. But public healthcare struggles with overcapacity, and hospital funding remains a touchy political issue for the federal government and municipalities.

Germany has one of the highest healthcare expenditures in Europe at 11% of its GDP.  Hospital beds and discharges per 1.000 inhabitants were 8.3 and 240, respectively, compared to an average 4.9 and 155 in the OECD.  Germany also sits top of the ranking for overtreatment and long stays. It performs 3 knee replacements per 1.000 inhabitants, twice the EU average.  The average length of stay for these elective procedures is at 11 days, more than double that in the United Kingdom!

Contrary to most European countries, there’s been traditional barriers for hospitals to provide outpatient treatment outside emergency and inpatient services.

A new measure has been brought to deal with these issues. The Hospital Structure Act is set to transform the framework in hospital financing, promote the shift to outpatient treatment and, potentially, deliver the coup de grâce to loss-making public hospitals.

It also introduces quality measurements and gives more power to hospitals and sickness funds to negotiate volumes on an individual basis. The act came into place on 1 January 2016, but won’t be fully implemented until 2018-2020. Much of the reform is still up in the air now that the federal government has passed the baton to sickness funds to negotiate next year’s price levels in the autumn 2016.

In a nutshell, the reform penalises growth. The discount on additional volumes above allocated budgets will go from 25% to 35-55%. On the upside, DRG rates will be the same for all hospitals, whether they take on additional volumes or not.

Starting in 2018-2020, there will be penalties and rewards based on quality indicators. This could have a substantial impact on earnings. “It is still being negotiated. But considering that the average EBITDA margin across the hospital sector is just 8%, and that many hospitals are making losses, these penalties and rewards can ‘t be more than, let’s say, a 5 percentage points corridor,” said Dr. Markus Hamm, managing director at Schön Klinik. That would still be pretty drastic setting the EBITDA margins in a 5-10% range based on outcomes.

Finally, the reform includes a €660m annual fund to hire new nurses that will be halved after 2018. The federal government will also make available €500m to states to fund the reconversion of smaller hospitals to outpatient clinics, as long as they commit to invest an equal amount. This is also still up in the air, since many states are reluctant to make these capital investments.

So what impact will this have on the sector? Insolvency problems in the public and not-for-profit sectors will persist, and many of these will remain dependent on municipal funds to continue operating.  Ultimately, some will be sold off to the private sector, or reconverted to outpatient or palliative care, says Thimo Sommerfeld, partner at consultant Abalon.

More uniform DRG rates and quality-based rewards are good news for the larger private hospitals. They will retain the financial muscle to capture additional volumes, but earnings will suffer initially from the higher discounts, says Boris Augurzky, health economist at the Rheinisch-Westfälisches Institut.

The lack of growth opportunities in the private hospital sector remains an issue, however. Helios bought the Velbert municipal hospital earlier this year, so we might see more deals of this kind. But operators have little interest on smaller hospital privatizations – these look more appealing to private investors and private equity houses. So what we might see, instead, is greater consolidation with big deals like Helios and Rhön’s in 2015.

The pressure to expand internationally will increase and, indeed, Helios and Asklepios are already looking at assets abroad. But there’s a lot of scepticism that these conservative groups will make the move any time soon.

Negotiating volumes

Currently, hospitals can negotiate higher volumes at 75% of standard reimbursement rates during the first three years, whilst also accepting a lower DRG rate. The Hospital Structure act removes the DRG rate reduction, but it introduces the “fixed cost digression discount”, which means that reimbursement for additional volumes will fall to 45-65%. The discount will be higher when the volume increase is financially motivated – this could apply to elective surgeries, for example.

“It’s not a draconian cap. The higher discounts will rather work as a more sophisticated macro tool,” said Abolon consultant Sommerfeld. Indeed, it’s unlikely that the reform will prevent further volume increases in the long term. “The demographic bomb is ticking,” he said. Germany has an aging population and chronic patients are adding up, so there are no prospects that demand for healthcare services will fall. It is rather a question of who can afford to take on these higher three-year discounts and, hence, capture additional volumes in the long term.

There’ll be greater flexibility for sickness funds to bundle volumes and realize discounts with the big groups. So, for the moment, private groups are racing to build volumes and gain leverage ahead of the negotiations in autumn – although operators are being secretive about exactly how they’re doing this.

What about quality?

The Hospital Structure Act makes clear the move to pay-per-performance with penalties and rewards based on quality indicators. Germany implemented mandatory quality reports in 2006, but it will take several years to extend the reform to all procedures.

“Only a fifth of the mandatory indicators are measuring risk-adjusted patient outcomes, and those are the ones that matter to patients in the end”, says Joachim Engelhard, knowledge expert at the Boston Consulting Group (BCG). “Private operators have invested heavily in measuring and publishing outcomes metrics that go beyond mandatory indicators. However, most public hospitals were forced to focus on cost control instead.” Sickness funds have also been traditionally unconcerned with quality measurements, said Abolon consultant Sommerfeld.

The government is working on a standardized big data system that combines all hospital statistics and fosters transparency. The next step is to agree on the reimbursements, which is no small feat. For instance, most outcomes can only be assessed a few weeks after the patient has left the hospital. If these patients receive outpatient treatment in the meantime, hospitals’ indicators could be affected by a third party’s performance.

The Initiative Qualitätsmedizin (IQM) groups the interests of the big private groups in these negotiations.

Sommerfeld from Abolon says that pay-per-performance could translate into cuts in the more federally dependent states to the North. On the other hand, richer Southern states are well capable of rewarding quality and paying prices above the DRG rate. So it’s important that penalties and rewards remain equal within a single federal state to avoid regional imbalances.

That privatization pipeline…

The privatizations pipeline in Germany has dried up in the last year, said Alexander von Friesen from PwC. Public budgets are relatively good, and municipalities can subsidize their loss-making public hospitals instead of selling them off.

There’s also the upcoming federal election in 2017. Privatizations are immensely unpopular, so some could wait until after the election.

Either way, the Hospital Structure Act certainly doesn’t improve the prospects for Germany’s host of chronically underfunded, small and medium-sized hospitals in the public and not-for-profit sectors. Municipalities hate their huge deficits, but they fear losing votes if they shut them down. It seems clear that insolvent hospitals won’t be able to make the capital investments necessary to implement quality improvements and compete with private groups, so the quality penalties could be the last straw for them.

So what are the opportunities for the private sector? There’s been huge consolidation in recent years in Germany. In 2015, Helios bought 47 hospitals from competitor Rhön. Perhaps due to this saturation many have sought to grow by acquiring public hospitals. Indeed, Helios bought the 500-bed Velbert municipal hospital in March. And Schön has bought three public hospitals in the past five years.

Other like Rhön and Asaklepios have struggled to find the right opportunities, Sommerfeld said. Many of these loss-making hospitals are poorly located, they struggle with occupancy rates and they have less than 200 beds. Some of them, quite simply, are of no interest to operators. Some municipalities are even struggling to find buyers to sell off their hospitals, says Engelhard from BCG, and are pending of state funds to reconvert them to ambulatory services, instead.

On top of that, privatizations aren’t a permanent solution to lack of growth in Germany. There’s the general assumption that the federal government will keep at least a third of provision under public hands. And private groups are increasingly wary of the reputational risk that comes with buying a public hospital.

Since all players, even in the outpatient sector, need a hospital license to operate in Germany, buying these smaller hospitals could serve as a platform to start specialized or outpatient chains, even if there’s no real interest in running the hospital itself. This could also apply to loss-making hospitals with a low EBITDA margin, as long as they can be easily restructured and there’s no capex backlog, von Friesen points out.

Stephan Rau, partner at McDermott Will & Emery law firm, says that private investors and private equity firms have been closing small €2-3m deals for this purpose. They will normally look for operations where the former management team is willing to stay, and they will offer them all hospital profits in return.

Will German hospitals internationalize?

Whilst most operators are optimistic about pay-per-performance and higher DRG rates, the Hospital Structure Act doesn’t seem to solve the private sector’s lack of growth problem. There are two possible scenarios – either private group look outside and internationalize, or there’ll be further consolidation within Germany, with more big deals like Helios and Rhön’s in 2015.

Helios’ sister company Fresenius Medical Care came close to buying Irish outpatient and hospital network Mater Private, but pulled out at the last minute. This would have been the conglomerate’s first hospital operation outside Germany. Schön will open a new orthopaedics clinic in Central London in 2017, and Asklepios has a small operation in Abu Dhabi.

Asklepios has also been quite vocal in recent times about expanding into Poland and it has already taken a look at assets in that country, consultant Sommerfeld said. In fact, many investment analysts see Poland as the natural space for German hospital groups to expand due to cultural affinity, proximity and attractive public-private opportunities. Prospects might have dimmed since the new, more statist-oriented government came into power in Poland. But, on the other hand, there may be good opportunities to partner with local players like Medicover, von Friesen suggested.

It might still take years, however, before we see one of the big four internationalizing if they maintain their conservative stance. Official sources from Asklepios continue to insist that the group aims merely at 2-3% organic growth. Sana, on other hand, is focusing on competing with Helios at several regional locations, and it recently appointed its former CFO Thomas Lemke as its new CEO.

So, could we see instead a new wave of private deals in the German hospital sector? Private equity house Carlyle will seek to exit Ameos in the next few years.

Rumours of Asklepios taking over Rhön are recurring. Many speculate that Asklepios and German medtech group B. Braun will merge, says Dr. Rau from McDermott. Both groups already joined forces in 2015 to buy stakes in Rhön, in an attempt to sabotage the deal with Helios. Both groups combine a 35% stake in Rhön, and a merger could pave the way for an acquisition. At the same time, both groups are family-owned and Asklepios faces a succession problem. The merger could give way to a hospital-medtech giant similar to Fresenius and Helios. On the other hand, Sommerfeld suggests that Asklepios itself could become the target of the next big German deal if it were to list.

The Generics Fascination

Handelsblatt Publishing Group

During the last decade, the generics industry has changed at a rate not observed in any other segment of the healthcare sector. R&D pharma (“Big Pharma”) companies have started to diversify during the last three to five years and now complement their innovative pharma operations with their own generic business units, through partnerships and through joint ventures with companies already established in emerging markets. This book was born of a fascination with the pace and dynamics volatility of the generic pharma market: the intellectual challenges facing each participant; the fundamental regulatory shifts; the aggressive competition and the great achievements of the smart and deal-driven individuals who have shaped this young industry over its first five decades until today. 

Bayer explores further acquisition opportunities

Wirtschaftswoche

Marijn Dekkers, chief of Bayer, has the ambition to make Bayer the number one player in prescription-free medicines worldwide. Indeed, Bayer just acquired Merck’s consumer care business for $14.2bn. With the distribution power of Bayer, these Merck medicines will be further strengthened in other countries. „Interesting international markets for OTC-medicines are South America, China, Southeastern Europe, Scandinavia, and Poland“, is Abolon’s opinion as quoted by Wirtschaftswoche.

Teva wants to develop more of its own medicines

Handelsblatt

Teva, the world's largest producer of generics, now wants to strengthen the development of its own medicines. „The border between manufacturers of generics and original medicines weakens more and more“, is Abolon’s opinion as quoted by Handelsblatt.

Ranbaxy – How Indian's largest pharmaceutical producer became the fear of established pharma giants.

WirtschaftsWoche

„Ranbaxy will take more market share from original drug manufacturers“, is Abolon’s opinion that was quoted by WirtschaftsWoche. The company is a „very strongly growing competitor for the established pharmaceutical companies“.

Stada aims to grow in Russia

Handelsblatt

Stada aims to grow in Eastern Europe, esp. in Russia, in the coming years. Generics have a high level of acceptance in many Eastern European markets. „Companies such as Stada, that have a large business in Eastern Europe, will hold strongly in the generics market in the next decade.“

Watson set to buy Actavis for € 4.5 bn

Financial Times

Deutsche Bank is close to selling Actavis to US generics drugmaker Watson Pharmaceuticals. The deal is expected to value Actavis at about € 4.5 bn.

Thimo Sommerfeld of Abolon says: „The companies’ positioning is highly complementary, offering numerous sales synergies. Watson has branded niche products and many global brands, Actavis has a presence in generics markets where generic product branding is still possible and justifies a price premium.“

The pharmaceutical industry set off for copying drugs

Handelsblatt

Innovative pharmaceutical companies and generics producers are equally interested in the so-called biosimilars. Due to the growth of emerging economies that provide more affordability to healthcare, as well as cost pressures in established markets, generics and biosimilars are expected to play an increasingly important role in the future. Thimo Sommerfeld and Niclas Schiffer from Abolon wrote about this topic in their new book „The Generic Fascination“.

The expensive future of generics

Handelsblatt

The merger of Watson and Actavis at the end of April was a highlight in the generics market that has been consolidating for years, said Abolon’s Thimo Sommerfeld. He expects more mergers and acquisitions in this field in the next few years: „Companies will be increasingly forced to bring their perspectives outside of the classical generics business, since this does not bring enough profit margins anymore.“

Abolon Summer Healthcare Reception – The Future of Pharmaceutical Generics

Abolon’s Munich office has invited industry participants and financial investors to discuss the future of pharmaceutical generics. The event took place on 10/2/2011 and the discussion was highly rewarding as assessed by participants.
 

Abolon Autumn Healthcare Reception – Direct Contracting in German Healthcare

Abolon’s Munich office has invited industry participants and financial investors to discuss contracting opportunities in the German healthcare market. The event took place on 1/9/2011 and the discussion was highly rewarding as assessed by participants.

Abolon Summer Healthcare Reception – The Future of Pharmaceutical Generics

Abolon’s Munich office has invited industry participants and financial investors to discuss the future of pharmaceutical generics. The event took place on 1/7/2011 and the discussion was highly rewarding as assessed by participants.
 

A moving market: Core competences should be built for the optimization of portfolios

Pharma Marketing Journal

Developing product families such as biosimilars and asthma inhalators requires substantial resources and know-hows but also reduces competition and price decay. These product families bring high value to the society, and therefore facilitate partnerships with payors and physicians. 

Generics producer Ratiopharm is struggling with business losses and brutal price wars

Capital

The former gem of the Merckle Empire is losing momentum, as its business model is outdated. „The business model of the so-called branded generics is outdated in the German market“, commented Thimo Sommerfeld from the consulting firm Abolon.

Tough sell – The timing for selling Ratiopharm's business is unfavourable

Süddeutsche Zeitung

„Ratiopharm would be an interesting target for pharmaceutical companies, less so for financial investors“, commented Thimo Sommerfeld from Abolon. Yet, Ratiopharm does not seem to be a good fit to any pharmaceutical bidder. The generics market leader Teva would indeed have liked to have the large sales team of Ratiopharm – but Teva wouldn't need the production facilities.

A multi-billion-dollar deal in the pharmaceutical industry – Generics company Teva buys Barr

Süddeutsche Zeitung

Barr is the second largest US generics manufacturer and one of the largest exporters of US goods. „Barr has always been a significant market player“, said Thimo Sommerfeld from Abolon. Teva paid US$ 8,96 billion for Barr, three and half times Barr's revenues from last year. In 2007, sales of Barr were US$ 2,5 billion. The acquisition of Barr was expensive, in the opinion of generics experts. „The price appear extraordinarily high“, said Sommerfeld. In 2007, Barr only made a profit of US$ 128 million.

Daiichi Sankyo took over Ranbaxy

Handelsblatt

The Japanese pharmaceutical company entered the generics market with a billion-dollar purchase in India. Industry insiders therefore expect another wave of consolidation in the generics sector. „Both strategic investors from the pharmaceutical industry as well as financial investors develop strong interests in the generics sector“, Abolon is quoted.

Teva prepares for expansion - The world's largest generics company strives for high growth

Financial Times Deutschland

Organic growth will not be sufficient. „If Teva wants to achieve this goal, it must pursue mergers and acquisitions – selective small acquisitions will not be enough“, said Abolon’s Thimo Sommerfeld.

Stada completes further acquisitions in Eastern Europe

Financial Times Deutschland

Poland is a lucrative destination for investors. „Stada positioned itself at the top of western generics companies through extensive acquisitions in Eastern Europe in the past few years and gathered valuable experience“, said Thimo Sommerfeld from the consulting firm Abolon.

PDF DOCUMENT

Generics' appeal to innovative pharma

Journal of Generic Medicines

Innovative pharma companies have difficulties in developing strategies for entering and exploiting selected generic markets. In spite of barriers to entry, their interest in specific generic segments is definitely high.

Merck generates turbulences in the generics market

Handelsblatt

Drugs from original pharmaceutical companies are composed of more and more biological ingredients, which are difficult to copy. „The perspectives for the generics industry are still under control until 2011, afterwards the business plans are rather unpredictable“, said Thimo Sommerfeld from Abolon.

The rise of the third largest generics company

Süddeutsche Zeitung

The US company Barr took over the Croatian company Pliva for US$ 2,5 billion. This transaction is key, as it is the first time a US generics company acquires such a large European company. „This move does not come as a surprise“, says Thimo Sommerfeld.

Specialized consulting firms conquer the market

Handelsblatt

Over the last years, specialized consulting firms have established themselves, such as Stratley in Cologne in the chemical industry and Abolon in Munich in the healthcare sector. The founders are often previous managers from the respective industries. This is how they quickly gain market acceptance: Abolon has already advised on three transactions in its first twelve months. „Six transactions are expected this year and this would be more than any investment bank in the healthcare sector“, one of Abolon’s managing directors is convinced.

Generics consolidation enters the next round

Handelsblatt

„In the coming years, companies will also be expected to expand stronger in Western Europe“, said Thimo Sommerfeld from Abolon.

Sanofi-Aventis strengthens through the purchase of the generics firm Zentiva

Handelsblatt

„The Eastern European pharma market is growing strongly“, said Abolon's Thimo Sommerfeld.

Indians enter the German pharmaceutical market

Handelsblatt

„Indian companies now recognize that the acquisitions do not offer strong bases to further develop the business“, said Thimo Sommerfeld from Abolon.

The power of tactical pricing in medtech

MedTech Business Review

Due to ever-increasing discounts on list prices, a more tactical approach to pricing has evolved that add an integrated perspective on how price levels and profitability develops over time.

Private equity’s growing role in the generics industry

Journal of Generic Medicines

Private equity plays an increasingly important role in a number of industries. In the future, one is likely to see financial investors taking a closer look at the pharmaceutical industry — and at generics opportunities in particular.

Etac acquires Convaid

The Deal: In December 2015, Etac, a Sweden-based developer and manufacturer of mobility solutions and rehab products, acquired Convaid Products, a California US-based manufacturer of custom-made, compact-folding, lightweight, adaptive-assisted wheelchairs.

Rationale for the Selection as the ‘Healthcare Deal of the Month’:

• Market dynamics: Factors driving the growth of global wheelchair market are demographics, incl. the baby-boomers reaching retirement age, and elderly people with the accepted need to remain mobile. However, the sector needs to cope with increasing tender activity (esp. in the US as a result of ‘Obamacare’) and increasing consolidation of the DME (durable medical equipment) distribution market.
• Strategic rationale: Etac gave up commodity rehab and weak areas such as powered wheelchairs, now strengthens its international footprint (selectively) and high-growth areas (e.g., lifters) and those areas where strong market shares are important (e.g., adult wheelchairs). The combined geographical footprint of both companies in North America provides very strong coverage and infrastructure to provide distributors and end users with comprehensive services. The strong Etac distribution network should support the accelerated growth of Convaid’s export business.
• Deal value: Etac and Convaid have agreed not to disclose details of the transaction.

Nordic Capital Acquires Sunrise Medical from Equistone

The Deal: In June 2015, Nordic Capital acquired Sunrise Medical, a world leader in the development, design, manufacturing and distribution of adult manual wheelchairs and seating and positioning products. With the investment in Sunrise Medical, Nordic Capital signs another transaction in the mobility market.

Rationale for the Selection as the ‘Healthcare Deal of the Month’:

• Market dynamics: Factors driving the growth of global wheelchair market are payors aiming at avoiding in-patient care cases and elderly people with a strong need to remain mobile. The industry needs to cope with increased tenders (esp. in the US as a result of ‘Obamacare’) and increasing consolidation of DME retailers.
  The transaction is subject to approval by the anti-trust authorities.
• Strategic rationale: Abolon acted as commercial due diligence advisor to Nordic Capital and may not comment on details of the situation.
• Deal generation: Macquarie had approached a comparatively large number of potential buyers.
• Deal value: Nordic and Equistone have agreed not to disclose details of the transaction.

Ardian-backed Novacap acquires CU Chemie Uetikon

The Deal: In May 2015, Ardian-backed Novacap, a France-based chemicals group, has acquired CU Chemie Uetikon, a Germany-based producer of pharmaceutical ingredients, from Equistone.

Rationale for the Selection as the ‘Healthcare Deal of the Month’:

• Market dynamics: The API market is growing at attractive rates: Historic growth rates of 6% during the last 5 years render the API market one of the faster-growing segments of the pharmaceutical industry. The API market continues to expand in the future, reflecting growing pharmaceutical sales and increased production outsourcing by pharma in order to focus on R&D and M&S. As the market continues to be fragmented Western players focus on technological superiority.
• Strategic rationale: Abolon was mandated by a bidder in the CU Chemie Uetikon process and may not comment on the specific situation.
• Deal generation: A broad sales process with an extended number of bidders had preceded the signing of the transaction.
• Deal value: Terms of the deal were not disclosed.

Drive Medical Acquires Specialised Orthotic Services

The Deal: In January 2015, Drive Medical, a leading manufacturer and distributor of durable homecare products in Europe, acquires Specialised Orthotic Services, an innovative manufacturer and distributor of specialised seating and mobility products. Drive has been an Abolon client on earlier transactions and Abolon had introduced Drive to its very first European acquisition (Peter Endres).

Rationale for the Selection as the ‘Healthcare Deal of the Month’:

• Market dynamics: Global mobility and seating products are a € 2.6bn market and are expected to grow at a rate of almost 2% p.a. over the next five years. Increased regulatory scrutiny incl., in the US, tenders restricts higher growth rates as supported by demographic factors and payors’ preferences for care in the homecare setting. New strategic positioning and sustainable business models incl. backward and forward integration are necessary requirements for incumbents.
• Strategic rationale: The acquisition of Specialised Orthotic Service is a strategic acquisition for Drive and complements Drive’s U.S. Wenzelite product line of mobility and seating products for children and adults. The acquisition of Specialised Orthotic Services extends the rapidly growing presence of Drive Medical in Europe and helps expand Drive’s portfolio of products in the specialised seating and rehabilitation market.
• Deal Generation: Nine organisations entered the bidding process, four made final offers for the company, with Drive Medical emerging as the preferred bidder.
• Deal value: Terms of the acquisition were not disclosed.

SM Europe Joins Riverside’s Orliman Platform

The Deal: In December 2014, Orliman, owned by The Riverside Company, has acquired the French orthopedic soft goods (OSG) company Soft Medical Europe (SM Europe). SM Europe designs and distributes non-invasive braces and supports in France.

Rationale for the Selection as the ‘Healthcare Deal of the Month’:

• Market dynamics: In spite of selected transactions, the OSG market is one of the less consolidated healthcare segments. Reasons are the comparatively attractive prices/reimbursement rates and profitability of potential sellers, high level of specification of national standard-setting bodies and a comparatively large number of distribution channels. Still, companies with international ambitions have started to acquire national strong brands in order to “become locals” and have even considered forward-integration. The acquisition of a French company by a Spanish firm with private-equity support is a typical case that signals another round of acquisitions.
• Strategic rationale: Both businesses complement each other well geographically and, through their locally focused portfolio, also from a specification perspective. Adding SM Europe helps Orliman further internationalize, while adding a suite of products, knowhow and distribution capabilities. Orliman, with export activities in Italy, Portugal (and Russia), can credibly claim to be a regional Southern-European OSG group.
• Deal value: Terms of the acquisition were not disclosed.

Siegfried acquires Hameln Pharma

The Deal: In November 2014, Siegfried Group acquires Hameln Pharma in Germany, consisting of Hameln Pharmaceuticals GmbH and Hameln RDS GmbH. Hameln Pharma engages in the development and production of sterile liquid pharmaceutical products for international pharma companies. To date, Hameln Pharma was a part of the privately held Hameln Group.

Rationale for the Selection as the ‘Healthcare Deal of the Month’:

• Market dynamics: The global CMO market, sized € 51bn, is expected to grow in the high single-digits by 2017 driven by strong volume growth (less price pressure than in finished dosage forms), a steadily growing outsourcing rate by Rx pharma and consumer health/OTC companies and “resourcing” into Western markets from South-East Asian markets. The CMO market is highly fragmented with the TOP 10 players accounting for less than 25% of global sales. The market is consolidating rapidly from a low level, driven by overcapacity in the solid dose market and increasing quality requirements.
• Strategic rationale: So far, private equity-backed CMOs (Catalent, Aenova, Aesica) have made acquisitions in order to achieve scale and scope, allowing value creation at comparatively low risk. With Hameln Pharma, a family-owned company (Switzerland-based Siegfried) has entered the buy-and-build market. With the acquisition, the Siegfried Group will considerably strengthen its sterile filling segment. Furthermore, Siegfried has successfully implemented its TRANSFORM strategy, integrating both forward and backward. In 2012, Siegfried had already made an acquisition, Alliance Medical Products, a business in the US active in a comparable market segment as Hameln Pharma.
• Deal value: For 2014, Hameln Pharma expects sales of approx. CHF 85 million. The purchase price amounts to CHF 60 million.

Waterland acquires MEDIAN Kliniken

The Deal: In October 2014, Waterland agreed to buy MEDIAN Kliniken, Germany's largest privately owned chain of rehabilitation clinics, from buyout firm Advent and property investor Marcol.

Rationale for the Selection as the ‘Healthcare Deal of the Month’:

• Market dynamics: The German rehab market has been going through a beneficial phase of growth since 2005/06 when the GMG (Public Health Insurance Modernization Act) was implemented. Still, the inpatient rehabilitation market will be exposed to a variety of adverse factors in the coming years. The resulting financial pressure makes some owners, esp. those with the necessary financial means, pursue so-called buy-and-build strategies, while others have started to sell out based on positive financials during recent years.
• Strategic rationale: Abolon was mandated by one of the last bidders in the MEDIAN Kliniken process, so cannot comment on the specific situation.
• Deal generation: A broad structured sales process with a comparatively large number of bidders had been kicked off in July 2014.
• Deal value: The deal value was just below € 1.0bn, representing a double-digit EBITDA multiple. Waterland will sell MEDIAN Kliniken's real estate for approximately € 705m to U.S. REIT Medical Properties Trust in a sale-and-lease-back transaction and expects to realize synergies by combining MEDIAN KLINIKEN with its existing portfolio company RHM Kliniken.

Consort Medical to acquire Aesica

The Deal: In September 2014, Silverfleet Capital agreed to sell Aesica Pharmaceuticals to Consort Medical.

Rationale for the Selection as the ‘Healthcare Deal of the Month’:

• Market dynamics: Increasing outsourcing across the full pharmaceutical value chain continues to trigger capacity growth of pharma support services and an integrated offering by contractors to their pharmaceutical clients. Private equity players have been attracted by the various service provider models (CROs, drug delivery players, API producers, CMOs, CSOs) as these companies benefit from increased outsourcing by pharmaceutical companies and the benefits of expanding across the pharmaceutical value chain. Less successful attempts to provide a comprehensive offering to pharma, e.g., entertained by pharma wholesalers, show that operational execution is key in order to create value – a lesson that appears to have been understood by pharma-savvy investors.
• Strategic rationale: With the acquisition of Aesica, Consort Medical pursues its historic strategy of diversifying into adjacent markets and technologies with the goal of capturing additional value in the drug supply chain. The acquisition will allow Consort to optimise ‘drug delivery’ within a single group, to realize synergies such as cost reduction in complexity-driven drug development cost and to broaden its geographic manufacturing footprint.
• Deal generation: Consort Medical made a preemptive approach on Silverfleet, so completed this transaction on a, de-facto, exclusive basis from the earliest stages of the transaction process.
• Deal value: The transaction value of € 294m, representing a sales multiple of 1.3 times and a EBIT multiple of 19.0, reflects a strategic premium in relatively capital-intensive segments of the healthcare sector.

Siemens Health Services to be acquired by Cerner

The Deal: In August 2014, Siemens Healthcare divested its hospital information system business (HS) to the US-based company Cerner Corp.

Rationale for the Selection as the ‘Healthcare Deal of the Month’:

• Market dynamics: The prospects of the health IT business incl. the introduction of electronic health records (EHR) are currently receiving substantial momentum, driven by increasing demand for clinical information technology and sector-specific administrative solutions and services.
• Strategic rationale: Cerner infrastructure provides a powerful platform to Siemens' healthcare and medical solutions, propelling the combined business to the no. 1 position ahead of Epic. As part of the agreement, Cerner and Siemens will form a strategic alliance to bring to market new solutions that combine Cerner's health IT leadership and Siemens' strengths in medical devices and imaging. Also, establishing EHR requires substantial R&D efforts the funding of which requires a strong industrial or financial backer. Finally, the geographic presence and respective client base are highly complementary (Siemens strength in Germany, Nordic Countries, Spain, Portugal / Cerner strength in the Anglosaxon markets).
• Deal value: The deal value was € 963m which reflects a strategic premium.

Dietmar Hopp’s dievini acquires LTS shares from Novartis and BWK

The Deal: In July 2014, LTS Lohmann – market leader in transdermal patches – was completely acquired by dievini Hopp.

Rationale for the Selection as the ‘Healthcare Deal of the Month’:

• Market dynamics: The transdermal market is expected to grow due to pharma’s need for alternative delivery systems that help protect active ingredients, supported by advanced technologies and demographic shifts. Still, local skin irritation, limitation on the dosage to be transdermally delivered, the conservative adoption of transdermal technologies by larger pharmaceutical companies and resolving diversification restrict the wide adoption of transdermal delivery systems.
• Deal generation: After LTS Lohmann’s three owners had not agreed on a price at which they would be prepared to sell the business as a whole, the structured sales process was discontinued and dievini acquired all shares from co-shareholders Novartis and BWK, a regional investment firm.
• Deal value: The deal value was € 1.2bn, reflecting once again today’s high valuation expectations in the healthcare industry and the limited investment opportunities for those investment firms sitting on "full suitcases".

Sebia acquired by Montagu and Astorg

The Deal: In June 2014, Astorg and Montagu have jointly acquired the Sebia Group, a global IVD specialty company developing diagnostics solutions for biologists and physicians in the fields of oncology, haemoglobin disorders and metabolic disorders including diabetes.

Rationale for the Selection as the ‘Healthcare Deal of the Month’:

• Market dynamics: The IVD market is expected to grow due to rapidly growing healthcare in emerging markets, technological innovations and the aging of the population in developed countries and emerging markets. Yet, budget constraints have forced healthcare payors constrain their healthcare budgets and put pressure on the prices of IVD tests in most western countries.
• Strategic rationale: As Abolon is conflicted on this situation, we cannot comment on the quality of the asset.
• Deal generation: Montagu and Astorg completed the deal on an preemptive basis, before none of various bidders appears to have been aware of other pre-emptive moves.
• Deal value: The deal value was € 1.2bn.

Merck's consumer care business to be acquired by Bayer

The Deal: In May 2014, Bayer has agreed to acquire the consumer care business of Merck U.S. This Acquisition helped Bayer in becoming a global leader in the OTC market. Yet as quoted by Wirtschaftswoche, Abolon’s conclusion is that Bayer can only achieve its ambitious growth targets through further acquisitions – so expect more to come!

Rationale for the Selection as the ‘Healthcare Deal of the Month’:

• Market dynamics: Despite the financial crisis, sales of non-prescription pharmaceuticals have continued to grow due to recent innovation, greater promotion and increased access to customers through expanding distribution channels. Going forward, the prospects for the OTC sector remain promising as it continues to outperform the prescription pharma sector. Consumer brands go international and are getting ever larger. Accordingly, it is getting harder for local consumer brands to retain or even gain market share as they are competing with large OTC marketing budgets.
• Strategic rationale: With the acquisition, Bayer is the global number two player in non-prescription products and will significantly enhance its business across multiple therapeutic categories and geographies. Bayer also expects the integration of the businesses to generate significant cost synergies, for example about US$ 200m of annual marketing spend and cost of goods per year by 2017. Revenue synergies from Bayer’s extended geographic commercial presence are expected to amount to already about US$ 400m annually by 2017.
• Deal value: The purchase price was € 10.4bn, representing sales multiple of 6 times and pro forma EBITDA multiple of 21 times. This certainly qualifies for a rich valuation.

Orpea announces the acquisition of Silver Care

The Deal: In April 2014, The Orpea Group acquired Silver Care[1] in Germany from private equity firm Chequers Capital.

Rationale for the Selection as the ‘Healthcare Deal of the Month’:

• Market dynamics: High demand due to an aging population and mandatory healthcare cost containment are counteracting drivers for nursing care growth. A strong role of private players drives capacity growth and consolidation in the nursing care market. Still, the continuously growing nursing care market in Germany supported by a stable regulatory and funding environment attracts the interest of international investors such as Orpea that have, in vain, tried to acquire a suitable platform previously. The high fragmentation of the German nursing care market offers significant potential for consolidation and synergies.
• Strategic rationale: After the acquisition of Senevita in Switzerland last March, the acquisition of Silver Care in Germany will further support Orpea's international expansion strategy. Silver Care's quality of services (none of 61 homes subject to imposed admission stop/Belegungsstopp), regional expertise (local responsibility for site development and marketing) and strong local management teams should enable Orpea to play an active role in the on-going sector consolidation and the launch of new facilities in Germany. Silver Care is also said to provide a good fit with Orpea's culture and strategy, namely growth with a focus on local quality of care and accommodation.
• Deal generation: Orpea completed this deal while a transaction process was being prepared. Orpea’s preferred status had led to repeated delays of the auction process.

[1] Silver Care’s underlying valuation was not disclosed.

Montagu has acquired Arkopharma

The Deal: In March 2014, Montagu acquired a majority stake in French pharmaceutical company Arkopharma.

Rationale for the Selection as the ‘Healthcare Deal of the Month’:

• Market dynamics: Self-medication has been highly rated by pharma companies and financial investors alike, reflecting the conviction that an important element of cost containment in healthcare will be the higher involvement of patients in the cost of treatment. Demand for health-related product companies has been such that valuations for OTC and nutritional supplements portfolios have soared well beyond the point where financial investors are likely to make acceptable returns. Yet, since EFPIA guidelines on healthcare claims were implemented there is limited residual risk to the health claims used for today’s OTC products of natural origin and nutritional supplements. Lifecycle management/product development cost continues to be reasonable if compared to innovative pharma development and lifestyle products is not subject to pricing regulations. Finally, regulatory and competitive changes open new channel opportunities (such as French parapharmacies), and high-quality product managers in mass retail groups (such as German drugstore chains) are prepared to offer attractive conditions for differentiated consumer products. The acquisition of Arkopharma shows that the potential for plant based and other products of natural origins is recognized. The Arkopharma deal may represent the turning point in historically declining valuations for this ‘natural’ complement to classical medicines.
• Strategic rationale: With private equity backing, Arkopharma has the potential to become a valuable consolidation platform in a fragmented industry growing in France and internationally.
• Deal generation: Montagu won an auction process for this primary buyout target against a small number of other growth-oriented investors. Previously, it had become clear that there would be very limited strategic competition.
• Deal Valuation: The enterprise value was € 300m, a sales multiple of 1.5 times.

Bayer to acquire Algeta

The Deal: In February 2014, Bayer completes its voluntary takeover offer for Norwegian pharmaceutical company Algeta.

Rationale for the Selection as the ‘Healthcare Deal of the Month’:

• Market dynamics: Oncology continues to be the most important area of pharmaceutical R&D. This is not a surprise as it benefits from a benevolent FDA, premium pricing, and prevalent off-label usage. Algeta is the first company to have developed, and to have received approval for, an alpha-particle emitting radioactive compound: Xofigo is a targeted therapy in the promising field of cancer radiology, one of the fastest-growing segments of the cancer treatment market, and has shown advanced selectivity in the treatment of patients with castration-resistant prostate cancer (CRPC). Algeta’s thorium platform may serve as a novel form of targeted therapy.
• Synergies of the combined businesses: Bayer strengthens its oncology business by taking full control of Xofigo – a prostate cancer medicine – and Algeta’s pipeline of experimental radiation therapies. Xofigo is one of Bayer's top five recently launched pharmaceutical products and is estimated to achieve peak annual sales of at least EUR 1bn. The new organization allows Algeta to further explore its thorium platform.
• Deal generation: Bayer has co-developed and commercialized radium-223 dichloride Xofigo with Algeta since 2009, so knew the target well which should result in limited integration risk.
• Valuation: The offer represents an enterprise value of EUR 1.9bn delivering a considerable cash premium to Algeta’s shareholders.

Ottobock acquires Jos America

The Deal: In January 2014, the two family companies Ottobock (Germany) and Jos America (Netherlands) have merged under the Ottobock umbrella brand. Ottobock has acquired 100 percent of the shares in Jos America[1].

Rationale for the Selection as the ‘Healthcare Deal of the Month’:

• Market dynamics: The distribution channels in major orthopaedic markets are undergoing dramatic changes. Players such as Ottobock are leading the (non-invasive) orthopaedic market in vertically integrating into distribution channels (such as acquiring a 51% participation in sanitary shop group Pohlig) and in horizontally integrating into equipments for prosthetic production by local sanitary shops.
• Synergies of the combined businesses: Through this merger, Ottobock is complementing its already extensive portfolio for equipping orthopaedic workshops with machinery and equipment for orthopaedic footwear production. The new organization allows Jos America to stay ahead in production equipment through its close ties with Ottobock. Ottobock will make its network of 49 country organizations available to Jos America.
• Deal generation: Jos America approached Ottobock as the preferred future owner. So Ottobock completed this deal on an exclusive basis from the earliest stages of the transaction process.

[1] Jos America’s underlying valuation was not disclosed.