United BioSource Acquired for $730M

Medco Health Solutions and United BioSource Corporation (UBC) announced a definitive agreement under which Medco will acquire closely held UBC in an all-cash transaction valued at approximately $730 million.The combination extends Medco’s core capabilities in data analytics and research to further accelerate pharmaceutical knowledge. UBC serves life sciences industry clients to develop scientific evidence to guide the safe, effective and affordable use of medicines. Its information services business initiatives revolve around safety and risk management, as well as health economics and outcomes research, and have included large prospective safety studies, risk evaluation and mitigation studies (REMS), cost-benefit and cost-effectiveness evaluations, budget-impact modeling, and epidemiologic studies among the broad suite of services that it brings to its clients. UBC has the capacity to conduct post-approval research in strategic locations worldwide including the U.S., Europe, and Japan.

Ethan Leder, UBC CEO, founded the company in 2003 with President and CFO, Mark Clein. Clein told Applied Clinical Trials that the acquisition is ultimately about how the decisions around delivering medicines in the near future will be made around scientific evidence. While the UBC executives feel that the companies' missions toward medicine and evidence are completely aligned. The acquisition will also allow UBC to continue to pursue its vision as it has been doing for the past seven years, but with ability to leverage the parent company's--a pharmacy benefits management organization--strengths and resources. "For example, Medco's Accredo Health Group, is the largest, preeminent specialty pharmacy in the marketplace. It is a leader in distribution of biologics. Much of our activities are around biologics and our clients need to develo programs to develop multiple streams of evidence," explained Clein. In the future, Clein envisions a leveraging of the services, which would allow UBC to help pharma clients develop strategy around regulatory planning, payment scenarios incorporating reimbursement and payers, as well as the best drug distribution model to implement.

Upon closing the transaction, UBC would become a wholly-owned subsidiary of Medco that will be run independently from Medco’s core business to ensure compliance with contractual requirements and client expectations. Reaction to Medco's acquisition plans were met with a tepid response from the investment community, largely that they didn't understand what the PBM would do with UBC's services. Clein, a Wall Street veteran, is not concerned. "One of the things typical to Wall Street is what does it mean for next week or the next quarter," said Clein. "They have a hard time figuring out what it means in three to five years. The goal for business is to generate real value over the long-term. Which is another reason why we like Medco. Their CEO David B. Snow Jr., [who is also Chairman] and Dr. Robert Epstein, Medco’s chief medical officer and president of the Medco Research Institute, have long-term vision."

For UBC's pharma clients, the acquisition means no change. As Clein explained, for the pharma industry where acquisitions usually mean a goal toward cost-savings in the form of restructurings and lost jobs, the UBC-Medco agreement will be a welcome change. "Medco doesn't provide any of the services that we do. There are no redundancies. We offer a whole new set of services. So nothing is going to change," said Clein. "This is not about cost savings, this is about growth."