Dassault to buy Medidata in US$5.7 billion shift to health

Dassault Systemes SE is venturing into the pharmaceutical industry by acquiring Medidata Solutions Inc. (Businesswire pic)

NEW YORK: French technology company Dassault Systemes SE agreed to buy Medidata Solutions Inc., a software firm that analyses clinical trials, for US$5.7 billion to bolster its offerings to the pharmaceutical industry.

The record deal will allow Dassault to offer drugmakers a complete set of services and ride a shift toward personalised medicine, in which research and tools are tailored to individual patient profiles, generating the need to analyse vast amounts of data.

Health is becoming a crucial market for Dassault, which also creates 3D design software, said Pascal Daloz, the company’s chief financial officer. Medidata offers clients wearable sensors that help track patients’ health in real life and biomarker analysis to select which ones may best respond to drugs. It estimates that 13 of the top 15 medicines sold last year relied on its technology.

“This is by far the largest acquisition we’ve ever made,” Daloz said on a conference call, highlighting Dassault’s interest in the health market.

Drugmakers’ costs
The all-cash transaction values Medidata at US$92.25 a share – 17% more than Medidata’s closing price on April 18, the last trading day before Bloomberg reported Dassault’s interest in the New York-based company. Dassault shares fell as much as 3% to 132.40 euros in early Paris trading, before recouping some of the losses.

The deal is expected to close in the final quarter of 2019 and start boosting earnings as early as 2020, the companies said in a statement.

Drugmakers faced with rising development costs are outsourcing many parts of their research and development efforts, using specialised providers of services and technology.

Medidata counts most of the biggest drug companies in the world as customers, according to supply-chain data compiled by Bloomberg. It provides a cloud-based subscription service that helps medical device, diagnostic and pharmaceutical companies manage and analyse clinical trials. Its revenue more than doubled from 2013 to 2018, when it brought in US$635.7 million.

Dassault, with a market value of 36 billion euros (US$41 billion), offers software and services for industries ranging from aerospace and defence to consumer goods. The life sciences business counts many major pharma companies among its clients.

The planned acquisition, endorsed by both boards, marks the first time the French company has resorted to external funding, according to Daloz. Dassault will finance the takeover with a 1 billion-euro loan, a 3 billion-euro bridge-to-loan facility and available cash.