The world’s largest provider of dialysis products, Fresenius Medical Care (FMC), has agreed to buy US-based home dialysis systems manufacturer NxStage for $2bn. The deal, which pending regulatory approval is set to close in 2018, will see FMC North America acquire all outstanding shares of NxStage.
In a statement discussing the acquisition, Rice Powell, CEO of FMC, said: “Combining our two companies [will] strengthen and diversify our business in the US and help meet the evolving needs of our patients.”
Dialysis works as an artificial replacement for kidney function in people with severe kidney failure, and is increasingly prescribed across Europe and the US as the diagnosis rates for diseases such as end-stage renal disease (ESRD) soar.
By acquiring NxStage, FMC will be hoping to increase its share of the growing home care market
People with diabetes are at high risk of developing ESRD and, with diabetes more prevalent in later life, ageing populations in Europe and the US are driving demand for dialysis treatment. Ageing populations are also placing increasing pressure on hospitals, forcing more patients to seek care at home. By acquiring NxStage, FMC will be hoping to increase its share of the growing home care market.
FMC said in a statement: “This acquisition enables FMC to further leverage its manufacturing, supply chain and marketing competencies across the dialysis products, services and care coordination business in a less labour and capital intensive setting.”
FMC expects the acquisition to generate pre-tax operating cost savings of around $80m-$100m a year for the next three to five years. This will initially be offset by integration costs of around $150m, but the deal is expected to generate a net gain by 2021.