January 19, 2019

ResMed-Propeller Deal: What You Need to Know

Chandana Fitzgerald
2018 was quite the year for M&A activity in healthcare. Some big announcements made waves such as the Amazon-PillPack, Roche-Flatiron, Cigna-Express Scripts, CVS-Aetna, ResMed-Propeller deals, but there were hundreds of smaller ones too. There were 342 acquisitions in 2018 in healthcare, and 4 already in just under 2 weeks of Jan 2019!

List of organisations acquired in 2019 so far. Source: HealthXL platform

We also identified who the top acquirers in 2018 and 2019 (so far) were by number of acquisitions. ResMed acquired 4 during the same period - HEALTHCAREfirst, MatrixCare,  Apacheta via ResMed-owned Brightree, and Propeller Health.

Top Acquirers 2018- 2019, representative list. Source: HealthXL platform

We decided to dig a little bit into a recent one - ResMed’s acquisition of Wisconsin-based Propeller Health for $225 million. Here’s the lowdown on why and what.

First, a sneak peek into ResMed’s very active acquisition decade. Below, you can see their acquisition activity by year (since 2010) and which companies and geographies they’ve invested in since then.

ResMed’s acquisition history (2010- 2018)

Acquisition numbers by year. Source: HealthXL Platform
Companies acquired by ResMed (2010- 2018). Source: HealthXL Platform
Sample of regional spread of acquisition activity by ResMed (2010-2018)

It is quite clear from the above charts that ResMed has definitely been an active investor over the last decade. Their suite of acquisitions have predominantly spanned across SaaS, med device (pulmonary) and digital health.

Why COPD and Asthma?

According to the WHO, asthma affects 334 million people worldwide and COPD 380 million people. According to a report by Research and Markets, the global Asthma and COPD market was valued at US$ 39,021.2 Mn in 2016, and is expected to reach US$ 56,507.7 Mn by 2025, expanding at a CAGR of 4.2% from 2017 to 2025. The lifetime value of Asthma and COPD patients is also very high. For eg, in the USA, the lifetime value of a COPD patient is estimated at US$ 200,000, and the average lifetime value of an asthma patient can be three times as large due to higher life expectancy. So, bottomline is that there is a big opportunity in this market for ResMed (or anybody!)

Investments in COPD & Asthma 2000- 2019. Source: HealthXL platform

ResMed’s COPD Journey So Far

COPD causes the progressive deterioration of respiratory function and often leads to intermittent severe exacerbations as the disease advances. Patient outcomes following hypercapnic exacerbations requiring hospitalisation and acute non-invasive ventilation (NIV) are poor, and few treatment options exist for these patients. Exacerbations and hospitalisations also place a significant burden on healthcare systems. ResMed funded a multi-centre, open label, parallel-group, randomised controlled HOT-HMV1 trial that investigated the effect of home NIV plus oxygen on time to readmission or death in patients with persistent hypercapnia after an acute COPD exacerbation (AECOPD) requiring acute NIV. It aimed to identify whether this treatment strategy could improve outcomes for this patient group. They demonstrated that combining home non-invasive ventilation with home oxygen therapy reduces risks of mortality and hospital readmission and even has the potential to be cost effective for COPD patients.

HERE is the study that was published in JAMA outlining the above results.

Why Propeller Health?

If you have been in hibernation for the last few years, just a quick education on who Propeller Health are: Propeller Health is a digital therapeutics company. Propeller’s digital medicine platform helps patients manage diseases like asthma and COPD by delivering concrete insights on symptoms, triggers and medication use. Patients connect a small sensor to their inhalers, which is paired with a mobile app. Through the Propeller platform, patients receive reminders to take their medication, forecasts on asthma conditions and tips for reducing symptoms. Propeller can reveal a patient’s most common environmental triggers, helping them avoid flare-ups. With the patient’s consent, the platform can communicate to the patient’s physician to show how the patient is doing between appointments.

Propeller has demonstrated clinical outcomes in 18 peer-reviewed studies. They have demonstrated the impact of a digital health intervention on asthma resource utilization, high patient satisfaction with their digital medicines for asthma and effectiveness of population health management using Propeller. Propeller has been shown to significantly decrease SABA use, increase SABA-free days, and improve Asthma Control Test scores, as well as drive 58% increase in medication adherence, a 79% reduction in rescue inhaler use, and a 63% increase in asthma control in their patient population.

Propeller Health has received nine FDA clearances to market their platform for use with inhaled medications, including GlaxoSmithKline’s Ellipta inhaler and Diskus dry powder inhaler and Boehringer’s Respimat Inhaler, to list a few. They also have the European CE mark of approval. The regulatory milestone has proven to be a challenge for a number of digital therapeutics companies, but Propeller Health is ahead of the game.  

Propeller Health has carved out strategic relationships with big pharma companies like GSK, Boehringer Ingelheim, Aptar and Novartis, but their partnerships are not limited to pharma. AIR Louisville is a cross-sector partnership in Louisville, KY that collected data from asthmatics in a real-world setting, in collaboration with 25 public, private and philanthropic organizations to use digital health technology to improve asthma. They found a 78% reduction in rescue inhaler use and a 48% increase in symptom-free days based on crowdsourced real-world data points on inhaler use, combined with environmental data. This study informed municipal policy recommendations, including enhancing tree canopy, tree removal mitigation, zoning for air pollution emission buffers, recommended truck routes, and development of a community asthma notification system.

They have also partnered with Express Scripts to accelerate their distribution.

Propeller is able to support people in the different stages of COPD severity levels and this is complementary to ResMed’s own suite of cloud-connected ventilators for those with stage III and IV COPD, including Astral, Stellar and AirCurve 10 ST-A with iVAPS, as well as ResMed’s new portable oxygen concentrator Mobi.

ResMed Speaks

“We’re excited to welcome Propeller, a fellow digital health innovator and high-performing company, into the ResMed family,” said ResMed CEO Mick Farrell. “Propeller’s digital solutions and partnerships strengthen ResMed’s larger suite of products that can treat millions of people at various stages of their COPD and other chronic diseases, all aimed at improving people’s quality of life, while reducing the effects of these diseases, hospitalizations, and the overall cost of healthcare.”
“ResMed shares our belief that connected health solutions create vastly better experiences and outcomes for people with chronic respiratory disease,” said David Van Sickle, co-founder and CEO of Propeller. “Joining forces enables us to accelerate the adoption of Propeller’s solutions at a global scale, and serve as a powerful platform for a broad set of pharmaceutical and healthcare partners.”

What All This Means

Do you have an opinion on the current oh so active investment and acquisition environment in healthcare? We'd like to hear from you! 

Contact chandana@healthxl.com

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We can provide an introduction on your behalf so that you can contact them directly with any questions/queries on this topic. Simply click on the link below to request an introduction.

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