Spherix Global Insights

November 05, 2020

Private Equity Consolidation in Gastroenterology Practices: The Near-Term Outlook and What it Means for Pharma Companies

Spherix Global Insights and Fraser Healthcare are partnering to shed light in this evolving landscape with a new service that will launch this quarter

 EXTON, Pa., November 5, 2020 /PRNewswire/ — Spherix Global Insights, a market intelligence firm providing independent coverage of specialty markets such as inflammatory bowel disease (IBD), and Fraser Healthcare, a growth strategy firm for Fortune 500 Medtech companies and private equity firms, are collaborating to introduce a new service, Special Topix™: The Business of Gastroenterology (US). The service will help pharma clients track private equity investments and understand the impact on gastroenterology practices (and what it could mean for their product lines) when these agreements are entered into.

Since 2018, there have been over 25 gastroenterology practice transactions/consolidations fueled by private equity investments with an estimated combined transaction value of over $1 billion. As 2021 approaches, close to 1,000 gastroenterologists are now part of private-equity funded practices. These newly formed entities, management services organizations (MSOs), are owned collectively by PE firms and physician partners with the purpose of streamlining administrative functions of medical groups and leveraging economies of scale for specialty practices. In the era of COVID-19, this trend has accelerated in the gastroenterology market, and a three-to-five-year outlook suggests that the practice landscape for this specialty could be substantially different as more groups migrate to this model.

To gain insight, approximately 20 qualitative interviews are being conducted with executive leaders at the leading MSO platform groups – other key players include representatives from GPOs, wholesalers, the on-boarding operations and process teams, as well as physicians who have recently migrated to an MSO model. Coupled with the qualitative interviews, a large-scale survey of US gastroenterologists – from both MSO-affiliates and independent practices, will uncover perceptions about these organizations, identify key performance indicators being used in gastro practices, and describe recent and anticipated future shifts in ancillary services (infusion therapy, pathology, nutrition, specialty pharmacy, etc.).

Importantly, the role of pharma will also be explored. While optimizing infusion therapy (for products such as Janssen’s Remicade and Takeda’s Entyvio) is a key initiative in many MSO-affiliated practices, the IBD pipeline is full of oral agents (JAK inhibitors such as AbbVie’s upadacitinib and sphingosine 1-phosphate receptor modulators including BMS’ ozanimod and Arena’s etrasimod) and subcutaneous biologics (Lilly’s mirikizumab, AbbVie’s risankizumab, and a SC formulation for Entyvio, among others). Striking balance between optimizing infusion services and catering to patient preferences will be critical in the coming years.

A subscription to Special Topix™: The Business of Gastroenterology (US) includes a detailed report integrating the qualitative and quantitative research as well as quarterly updates throughout 2021 on the latest acquisitions and emerging trends.

About Special Topix™
Special Topix™ is an independent service that includes access to a report or series of reports based on current events or topics of interest in specialty markets covered by Spherix. Special Topix™: The Business of Gastroenterology (US) is an independent service that will help pharma stakeholders understand the implications of this evolving landscape, as it will affect strategic decisions around field force deployment, contracting, specialty pharmacy engagement, clinical trial scale, and support services that will be expected from pharmaceutical partners.

 About Spherix Global Insights
Spherix Global Insights is a hyper-focused market intelligence firm that leverages our own independent data and expertise to provide strategic guidance, so biopharma stakeholders make decisions with confidence. We specialize in select immunology, nephrology, and neurology markets.

About Fraser Healthcare
Fraser Healthcare is a growth strategy firm that advises Fortune 500 healthcare companies and leading private equity firms on new market opportunities and strategies. We specialize in management service organizations and ambulatory surgery center management businesses to craft successful commercial strategies for our clients.