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Another roll-up begins
What a way to start a Monday morning with news of the acquisition of the Nicox diagnostic division (and most of its employees) by Valeant. Wow! Doesn’t it seem like this stuff always happens around the holidays? I should be on the lookout for these out-of-the-blue announcements starting every year on Nov. 1.
What does this one mean for our eye care world? There’s no way that this is a “one off” single deal. Valeant runs the McKinsey Model: acquire a “toe-in-the-door” company in a market space, roll up complementary companies with related technology through a series of purchases, and then ring profit from the business group by consolidating and streamlining operations. The strategy works best if the company acquired is either a fit with an established product line or the first of several companies that will be combined in a new division.
The path ahead is only a mystery regarding who and how many are next. The diagnostic space in eye care is filled with small companies like Nicox with really interesting products, companies that lack only the financial heft to become very successful. Nobody’s asked me, and let me say that I have absolutely no inside information, that I’ve not spoken to anyone in these companies, but if I was a betting man I’d be laying odds on RPS and Doctors’ Allergy to start with. There’s no secret that I’ve been a fan of the technology involved in TearLab’s diagnostic unit. In addition to blowing out sales by combining Tear Osmolarity with other ocular surface disease diagnostics, might this also be a golden opportunity for Valeant to put its money where its mouth is and fund the research to expand the capabilities of the TearLab platform? In my opinion, all of these make more sense to a pharma company like Valeant than Tear Science, basically a capital expense device company.
But again, nobody at Valeant asked me either…