The digital health sector is benefitting big-time from the explosion in drug discovery transactions in 2017. Investors are now targeting eHealth companies specializing in clinical trial software.
The statistics behind the surge in mergers and acquisitions in the drug discovery market are impressive. Through the first week in November, 43 deals targeting contract research organizations (CROs) have been announced, up nearly 70% from this time in 2016, and a 760% increase from this time in 2015. Biotechnology deals are speeding up as well, up nearly 30% from the past two years.
Pharmaceutical companies are a main driver of demand in these sectors. Rather than fund in-house R&D, Big Pharma has turned to buying start-up biotech firms or outsourcing their research to contract research organizations.
These trends have impacted the digital health market, as investors are now targeting eHealth companies that specialize in clinical trial software. In the first 10 months of 2017, 10 of these deals have been announced, marking a 67% increase from all of 2016, and a 150% increase from all of 2015.
The largest was the 2016 Quintiles-IMS merger, valued at $12.9 billion. The combination improved clinical trial design, recruitment and execution in the $100 billion biopharma product development market.
The only acquirer to disclose a price in 2017 has been Invitae Corporation (NYSE: NVTA), a genetic information company, when it acquired AltaVoice, aka PatientCrossroads. AltaVoice is a patient-centered data company with a global platform for collecting, curating and coordinating safeguarded data from patients and clinicians to facilitate trial recruitment, education and track patient outcomes.
Invitae purchased all of AltaVoice’s stock for $5 million in Invitae common stock issuable upon closing, and up to an additional $10 million in Invitae common stock issuable based on certain future milestones. Invitae’s ongoing testing business combined with AltaVoice’s database of more than 75,000 patients will create a network for combining genetic information with clinical data to accelerate research, clinical trials, and disease management for the diagnosis and treatment of hereditary issues.
A few other targets this year include Parallel 6, Inc., a mobile clinical SaaS platform designed to recruit, enroll, engage and manage patients in clinical trials; Cytel, Inc., which provides software solutions for the design and analysis of clinical trials; and ClinPlus, which offers a full suite of products used for the performance of clinical trials.
