Zeneca Group to Purchase 50% Stake in Salick Health : Health care: The deal creates a partnership between a cancer drug maker and an operator of cancer and kidney centers.
In a groundbreaking move by a pharmaceutical company to get more directly involved in patient care, British drug maker Zeneca Group said Thursday that it will buy a 50% stake in Salick Health Care, an operator of outpatient cancer clinics, for nearly $200 million.
The deal creates an unusual partnership between Zeneca, a leading maker of cancer drugs, and Los Angeles-based Salick Health, which operates cancer and kidney dialysis treatment centers throughout the United States.
In recent years, pharmaceutical companies have tried to cope with rapid changes in their global markets by investing in generic drug makers or in firms that manage prescription drug programs for employers or insurers. But Zeneca’s deal takes a different tack, in effect putting the drug maker directly at the patient’s bedside.
David Barnes, Zeneca’s chief executive, said the deal gives his company access to valuable medical-outcome data from Salick clinics that should help Zeneca’s scientists “better target their drug research and development efforts.” The deal also helps the British firm move into the U.S. managed care market and better understand how to cost-effectively treat cancer patients.
“This isn’t just another way to push more Zeneca products through Salick,” Barnes said. “Where appropriate, (Salick) will use Zeneca products, and where appropriate they will use products by Bristol-Myers Squibb or other companies.”
The deal gives Salick Health the financial resources it needs to expand its operations in the United States and move into Britain and other overseas markets, officials said. And it caps a personal success story for Salick’s chairman, Dr. Bernard Salick, who founded the company in 1973 to provide kidney dialysis treatment and later built a highly regarded chain of 10 cancer clinics affiliated with hospitals such as Cedars-Sinai Medical Center in Los Angeles.
“There are great benefits from being involved with a company the size of Zeneca,” which had 1993 sales of $6.5 billion, Salick said.
Salick’s shares soared $5.475 to $34.625 in Nasdaq trading on Thursday, an 18% gain. The stock, which also gained $1.50 on Wednesday, had traded as low as $14 earlier this year.
Bernard Salick, who owns about 25% of Salick Health stock, will continue as chairman and chief executive of the firm after the deal closes.
Zeneca’s move comes as pharmaceutical companies are increasingly searching for strategies to respond to rapid changes in their markets, such as the expanding influence of managed-care companies in the United States and government price controls overseas.
One area that has attracted interest from some drug makers such as Pfizer Inc. and Merck & Co. is so-called disease management. Disease management involves developing cost-effective treatment standards for specific diseases and selling those services to health insurers and employers.
Salick recently formed a managed-care subsidiary, SalickNet, that markets cancer management services to health maintenance organizations and other health care purchasers. Earlier this year, Zeneca formed its own disease-management subsidiary focusing on cardiovascular disease.
Under terms of the deal, London-based Zeneca will have the option to buy the remainder of Salick Health’s shares, which would bring the total price of the acquisition to more than $440 million.
Salick stockholders will get $37.75 in cash for each two shares they now hold, plus one share of special common stock worth $1.25 a share. They will have the right to sell it to Zeneca after 2 1/2 years at $42 per share. Zeneca will also have the right for four years to buy the stock at market prices, at a minimum price of $42 and maximum price of $50 a share for 2 1/2 years after the deal closes.
