Medco to Buy Diabetes Care Giver Polymedica

Number-one U.S. drug benefit manager Medco Health Solutions said Tuesday it will buy diabetes-care provider PolyMedica Corp. for $1.5 billion. The $53/share all-cash offer represents a 17% premium over Monday's $45.29 close. Medco expects the acquisition to be "slightly accretive" to its 2008 earnings; it should close late this year. The combined company will treat 3.8 million diabetes patients. Diabetes affects 5% of the U.S. population, and accounts for about 15% of all drug spending. Spending on diabetes-related products is growing at 14.5% annually, and is expected to overtake cholesterol as the fastest-growing therapeutic category in 2009, the company said. "PolyMedica has developed a deep expertise and focus in diabetes care and, through the Liberty brand, excels at attracting seniors to their high-value mail-order pharmacy," Medco CEO David Snow Jr. said in a statement. "We expect PolyMedica's brand strength and media profile to prove an important asset to support Medco's growing Medicare and direct-to-consumer initiatives." Deutsche Bank and Lazard advised PolyMedica and Medco respectively.

Sources: Press release, MarketWatch, Bloomberg
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