Everyday Health acquires Cambridge BioMarketing Group, perhaps a sign of the M&A that lies ahead in digital health.
In healthcare, the merger and acquisition (M&A) scene is hot.
According to mobilehealthnews, M&A is on the rise in digital health. In 2013, the site tracked 17 M&A deals. In 2014, this number nearly doubled to 33 deals.
The M&A trend isn’t specific to digital health, though. In the healthcare sector, Healthcare Finance News lists 28 M&A deals year-to-date. Tom Baldosaro, CFO at South Jersey Healthcare Regional Medical Center in Vineland, New Jersey reasons: “Big is going to be better. Small is not going to survive."
Two companies combined are worth more than just the sum of their parts. Strong companies acquire other companies to sharpen their competitive edge, and become more cost-efficient. Many smaller companies agree to deals because they feel they may not succeed alone.
Companies make acquisitions to gain clients, and to gain access to proprietary designs, data, and technologies. In an emerging field like digital health, there are thousands of start-ups – all with unique business models – out there trying to make a go of their ideas. Often, M&A is the answer to questions of scalability, as larger firms often have more resources when it comes to manufacturing, marketing and communications, and access to legislators.
Everyday Health Acquires Cambridge BioMarketing Group
Everyday Health paid $33 million to acquire Cambridge BioMarketing. In addition, the equity-holders of Cambridge BioMarketing are eligible to receive up to an additional $5 million in cash based on Cambridge BioMarketing's performance in calendar year 2015.
The deal, signed on March 23, broadens Everyday Health’s marketing and communications footprint in the orphan and rare disease market. Estimated to grow from $90 billion in 2013 to $176 billion by 2020, according to Everyday Health’s press release, the orphan and rare disease market should account for about 19% of all branded drug sales by 2020 (from just 9% in 2006).
A rare disease is one that affects fewer than 200,000 Americans at a given time, according to the National Organization for Rare Diseases, and there are 6,000-7,000 rare diseases affecting 25 million-35 million Americans. Drugs in development as possible treatments for rare diseases are referred to as orphans – there’s often not a lot of research and development money to support this important work.
Commercializing new pharmaceuticals in small global markets can be complex. It requires clinical understanding and highly targeted digital marketing capabilities. Existing clients of Cambridge BioMarketing may find that the acquisition adds to its services while increasing access and visibility across a wide range of channels.
"Cambridge BioMarketing has achieved great success providing innovative marketing solutions to launch and grow the leading brands in the fast-growing orphan and rare disease categories," said Ben Wolin, Co-Founder and CEO of Everyday Health. Wolin continues:
We believe this acquisition makes us the premier digital partner for the leading pharmaceutical companies across their entire portfolio. We now service our pharmaceutical partners across the entire spectrum of their therapeutic areas, including orphan, specialty and mass market brands. In addition, we provide solutions throughout the entire lifecycle of pharmaceutical marketing -- from the strategic phase of pre-launch, during the growth years and maximizing a mature product. We believe we can truly be a one-stop shop for our customers.
Maureen Franco, Cambridge BioMarketing’s Chief Executive Officer and its existing management team will continue to lead the Cambridge BioMarketing business. Ms. Franco commented:
Accessing Everyday Health's large consumer and physician audiences will dramatically improve our ability to execute innovative marketing solutions across the growing orphan and rare disease therapeutic categories. Likewise, leveraging Everyday Health's leading sales force and relationships with collaborators such as Mayo Clinic will help us offer even more powerful solutions to existing clients, as well as diversify new offerings and insights.