M&A up and down the pharma value chain

Thumbs up for J&J-Actelion; thumbs down for Aetna-Humana; Walgreens, McKesson actions


The New Year is starting with a flurry of activity involving mergers and acquisitions—or their cancellation. There’s a certain degree of boldness in all this since the Trump Administration is aiming to tear up large swaths of traditional business activity in healthcare and elsewhere, which could change the dynamics of many parts of pharma commercial activity.

The first and biggest (in dollar value) news item is a federal judge’s ruling that the Aetna-Humana merger is anti-competitive and should not go forward. That proposed $37-billion merger ran aground mostly over how the merger would affect Medicare Advantage plans, which are a form of private healthcare insurance. The fact that Aetna had withdrawn from a number of states where Affordable Care Act exchanges had been set up (thus reducing competition that the exchanges are supposed to foster) didn’t help Aetna’s case. Aetna is considering an appeal of the decision; it is also on the hook for a $1-billion break-up fee if the deal is dead. This decision also casts doubt on the other major insurer merger announced in 2016: Anthem Cigna, which the Justice Dept. has also filed an action against.
Meanwhile, Johnson & Johnson has announced a $30-billion takeover of Actelion, the Swiss-based manufacturer; both companies’ boards have approved the action, expected to close around mid-year. Actelion has a variety of commercial franchises, especially in hypertension, but confidence in its developmental pipeline apparently led to a decision to spin out its R&D activity as a separate company, in which J&J would have a minority share. The new company will start with $1 billion in cash, and be led by the current chairman of Actelion, Jean Pierre Garnier, and current CEO, Jean-Paul Clozel.

Farther along the pharma value chain, leading US distributor McKesson has announced a $1.1-billion acquisition of CoverMyMeds, a Columbus, OH software firm that coordinates prior-authorization approvals for patients. CoverMyMeds management says that they have worked closely with McKesson Relay Health, a network for pharmaceutical claims processing, closely in the past, and currently have agreements with 47,000 pharmacies and 700,000 prescribers.

John H. Hammergren, chairman and chief executive officer. “Our announced acquisition of CoverMyMeds supports McKesson’s commitment to provide a comprehensive set of services and solutions that drive value across the healthcare continuum and secure patients’ access to their prescribed drugs, said John Hammergren, McKesson CEO, while announcing the company’s Q3 results on Jan. 25. “McKesson continues to further enhance its diverse suite of pharmaceutical technology solutions to support the very best in patient care.”

Finally, the clock is ticking down on the deadline for approval of the Walgreens-Rite Aid merger, announced last year but held up while those parties negotiate with the Federal Trade Commission over how many pharmacy locations need to be divested. Walgreens had announced that some 865 stores would be sold to Fred’s Pharmacy, a regional player based in Tennessee; but a final FTC decision is still pending. Under the original bid, the deal needs to close by Jan. 27, but Walgreens management says that the deadline could be extended.