Digital health lawsuits. Express Scripts pressure. Facebook + Pharma.
Prescription For Drug Price Inflation
We analyzed where large pharmaceutical companies are investing in private markets. You can see the full research on our blog, but here are some interesting notes:
For the most part, pharma companies invest or acquire smaller biotech/pharma outfits as a means of outsourced R&D in areas like experimental cancer treatments, orphan disease, fungal disease, etc.
Novartis was the most active player between their venture arm and parent company.
Certain investors like Merck’s Global Health Innovation Fund have a particular focus on digital health. Roche has a particular interest in genomics, including their $1B+ acquisition of Foundation Medicine and investments in Fabric Genomics and Second Genome.
See the rest of the research here, including who has made multi-billion dollar acquisitions and companies with the most pharma investors on their cap table.
If you’re a client of CB Insights, here’s a deal search to see the line-by-line deal activity of these players.
Speaking of pharma companies, there have been quite a few stories in the past year about price gouging. But pharma says it’s not them, it’s the middlemen like pharmaceutical benefit managers (PBMs).
Companies like Express Scripts are supposed to negotiate down drug prices on behalf of pharmacies, but whether they pass the cost savings to consumers is now being called into question and is also why Express Scripts lost its biggest client.
To make matters worse for Express Scripts, a certain tech company that specializes in price transparency, logistics, and getting better deals for their customers seems to be entering the arena. If you don’t know who I’m talking about, this is a live look at their CEO as he made this plan (maybe).
It’s not just big tech companies, we put together a list of new startups in the pharmaceutical distribution space. These companies are hoping to provide a significantly better user experience in buying drugs, which will hopefully eventually get them enough customers to negotiate with pharma companies directly and eliminate the middleman like PBMs.
These pressures might mean Express Scripts feels some heat. They announced their desire to make strategic acquisitions several times in their last earnings call, and have already made 2 private market plays this year, the first time since 2012. We can probably expect more from them in the near future.