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Merck Spinoff Expands Healthcare Business by Investing $240 Million in Acquiring Alydia Health
Merck, known as MSD outside the United States and Canada, is on a hot trail to ramp up its multibillion-dollar women’s healthcare portfolio by acquiring more companies. On March 30th, it announced that its spinoff Organon has entered an agreement to acquire Alydia Health, a commercial-stage medical device company, for up to $240 million.
The hefty price tag includes $215 million in upfront payment plus an additional $25 million based on pre-discussed milestone payments. The upfront payment will be broken down into several small payments, with the first being a $50 million deposit from Merck, followed by $165 million from Organon upon closing of the acquisition.
The transaction is expected to close after Organon has spun off from Merck and establishes itself as a standalone publicly-traded company, which is expected around late June.
“The acquisition aligns with Organon’s strategy to become a global leader in women’s health by focusing our product development on her unmet medical needs,” said Kevin Ali, Chief Executive Officer of Organon.
“We believe that Organon’s strong global commercial footprint in reproductive health, in conjunction with Alydia’s rapidly growing commercial capabilities in the US, will help enable growth of the Jada System, including potential expansion into Europe and other developed countries, as well as in the world’s least developed markets where Organon has significant experience creating affordable access.”
Alydia Health
Alydia Health was founded in 2010 to bring maternal care to the forefront and thwarting maternal mortality caused due to postpartum hemorrhage (PPH) or abnormal postpartum uterine bleeding. This condition is not only challenging but has now become a global problem due to a lack of proper solutions.
The company’s in-house Jada device has been designed to treat postpartum hemorrhage, and it operates by applying a light vacuum pressure to draw the walls of the uterus together until the bleeding stops. As of August 2020, Alydia has received its 510(k) clearance from the US Food and Drug Administration (FDA) for their Jada System centered on positive results from their pivotal PEARLE IDE Study.
“Alydia Health is thrilled to join Organon as we hold a similar vision to bring technology and therapeutic solutions to market that can improve outcomes for women in need across the globe,” said Rob Binney, Chief Executive Officer, Alydia Health.
“Our goal is to help make childbirth safer for more women. With critical gaps in maternal care, we believe this acquisition will potentially accelerate the delivery of the Jada System to more women and communities in need.”
Organon’s Path Forward
While Organon is yet to leave Merck and establish its own identity, the company is on a path to establish itself as a premier women’s health specialist company. The company has already assembled board members comprising at least 70% women.
The Jada device will join Organon’s growing assortment of contraceptive implants and removable birth control, including Nexplanon and NuvaRing, alongside biosimilar drugs developed with Samsung.
Interestingly Nexplanon, which saw a 12% growth in revenue in 2019, suffered a setback and brought in $680 million or a decline by 14% in 2020. Similarly, NuvaRing had its sales plummet by 73% due to generic competition in the market and managed to rake in only $236 million in 2020.
The company stands by the low numbers and attributes them to the ongoing pandemic while believing that Nexplanon could still be the blockbuster drug they have been looking for. Meanwhile, Organon’s total sales in 2020 were $6.53 billion, which was approximately lower by $1.3 billion in 2019.
This could be a cause of concern, however, the decision-makers of the company said that they intend to redouble their focus on business development, collaboration activities in order to capture market share.
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