In the past 18 months, we have seen proposed mega-mergers Anthem-Cigna, Aetna-Humana, and Walgreens-Rite Aid collapse under the scrutiny of the legal system. Despite these failures, M&A fever only seems to be rising. In fact, for the 12th quarter in a row, the US Health Services industry witnessed more than 200 deals. The average number of healthcare “mega-deals” per quarter since 2015 is about 4; in the third quarter of 2017, there were 6, accounting for over $11 billion in deal value.1

Why all the activity? The findings of a recent Deloitte survey of more than 200 senior executives from the healthcare/life sciences industry may shed some light. The respondents noted that economic factors and the regulatory environment are the most important considerations for companies evaluating new markets. However, competitive pressures and a desire to diversify their portfolios are the strongest motivators for companies embarking on mergers or acquisitions.2

Diplomat’s recent announcement of its acquisition of National Pharmaceutical Services (NPS) and LDI Integrated Pharmacy Services is a prime example of this need to diversify.3,4 Along with NPS and LDI, Diplomat has made a series of acquisitions focused on home infusion and pharmaceutical manufacturer services. As a result, Diplomat has significantly changed its balance sheet with only 50% of profits coming from its traditional specialty pharmacy vs >90% 3 years ago. Then there is the $66 billion acquisition of Aetna by CVS Health that would create a vertically integrated health delivery and insurance juggernaut,5 which will have significant leverage throughout the healthcare supply chain.

The recent purchase of eviCore by Express Scripts is another demonstration of vertical integration and balance sheet diversification in action.6 Express Scripts leadership notes that the “independent PBM model and eviCore’s industry-leading medical cost containment capabilities…will create an even more powerful partner for our clients, fully aligned with the interests of patients and payers.” Appropriately, Express Scripts calls out the need to have alignment with that of patient and their consumers.

As the lines between insurance companies, PBMs, hospital systems, and others become increasingly blurred there is bound to be added confusion in the healthcare marketplace. Cutting through the fog will be the growing number of healthcare disruptors. It should be no surprise that technology companies big and small are on this leading edge with a varied focus from reimagining individual insurance, to disrupting drug delivery, to increasing access to care with telemedicine, to leveraging artificial intelligence and machine learning to predict disease.

As payer marketers assess this ever-changing landscape it will be important that they reframe their view on previously niche healthcare companies as these companies become more comprehensive and influential in healthcare delivery. This will push payer marketers to provide a holistic value proposition for not only their drug/device but perhaps for their entire portfolio. Payer marketers will also need to continue to watch healthcare M&A activity closely, as each new entity will have the opportunity to increase leverage across the supply chain, as well as the ability to implement controls within the delivery of healthcare services.

The healthcare landscape is changing through M&A and organic innovation. Manufacturers must be ready to compete in this new marketplace.


  1. 1. Donkar N. US health services deals: insights Q3 2017. PWC Deals. Accessed December 6, 2017.
  2. Deloitte. M&A trends in life sciences and health care: growth at the global intersection of change. Published September 2014. Accessed December 6, 2017.
  3. Diplomat. Diplomat to acquire National Pharmaceutical Services. Published November 6, 2017. Accessed December 6, 2017.
  4. Cision PR Newswire. Diplomat to acquire LDI Integrated Pharmacy Services. Published November 15, 2017. Accessed December 6, 2017.
  5. de la Merced MJ, Abelson R. CVS to buy Aetna for $69 billion in a deal that may reshape the health industry. New York Times. Published and accessed December 3, 2017.
  6. Express Scripts. Business overview. Accessed December 6, 2017.