In concert with its impending launch as an independent company, IMS Health has made two deals that would boost its already lofty perch atop the drug information business.
Last week IMS announced it had agreed to buy Walsh International and Pharmaceutical Marketing Services in two separate stock swaps valued at $167 million and $180 million, respectively.
"The acquisition of Walsh and PMSI consolidates IMS Health's leadership position in our core markets," said a statement from Robert Weissman, Cognizant chairman and chief executive officer.
IMS is currently a unit of Cognizant Corp., Westport, Conn., but not for much longer. By the end of June, Cognizant plans to split into two publicly traded companies: London-based IMS and Nielsen Media Research, an arbiter of television ratings.
IMS provides sales and market data plus consulting services to the drug industry. Its U.S. operations, under the banner IMS America, are headquartered in Plymouth Meeting, Pa.
Every major drugmaker is an IMS client, said the company, whose only significant U.S. rival is National Data Corp., Atlanta. IMS sells detailed sales territory reports, prescription tracking reports and doctor profiling services to drug companies, which use the data to target and measure their sales efforts.
Recently, the drug companies' use of IMS data-allegedly to undercut hospitals' efforts at standardizing drug use-caused Oak Brook, Ill.-based University HealthSystem Consortium to block IMS' access to purchasing data from the alliance's 130 hospitals (March 9, p. 26).
Instead, UHC now provides data to IMS rival Source Informatics, a division of National Data.
Selling detailed market data to drug companies is a growing and profitable business. In 1997 IMS had revenues of more than $980 million, up 8.4% from $904 million in 1996. Operating income rose 14% to $264 million from $233 million in 1996. Net income for the division was not broken out in Cognizant's 10-K filing with the Securities and Exchange Commission.
The two acquisitions IMS announced last week are expected to close in June, pending approvals by shareholders and antitrust regulators.
Newton, Pa.-based Walsh International provides sales support services to drug companies and had revenues of $54 million for the fiscal year ended June 30, 1997.
New York-based PMSI provides market data and consulting services to the healthcare, managed-care and drug industries. PMSI had revenues of $62 million in fiscal 1997. Its principal U.S. unit is Scott-Levin, a market research and consulting firm based in Newton.