Dassault makes its largest acquisition ever. Spends USD 5.8bn in cash for a clinical trial ISV, Medidata
We usually do not comment on the M&A activities of major PLM ISVs. However, Dassault Systèmes’ acquisition of Medidata, an NYC-headquartered ISV specialized in software to manage clinical trials and commercial
This is the largest acquisition of Dassault Systèmes (DSY), with an enterprise value of USD 5.8bn. DSY is paying in cash. The impact is clear, DSY will put significant M&As on hold for several years, for three years in our estimate.
In short, DSY is spending a fortune in a sector that is outside of its core manufacturing vertical? The company believes the pharmaceutical sector has little-adopted software/digital technologies and is as advanced as the aerospace industry twenty-five years ago. Thus the acquisition that complements that of Accelrys in 2014, an ISV specialized in molecule drug and discovery.
And indeed, there is a white space of the coverage of ER&D vendors both in Europe and the US. In the two regions, the R&D spending of pharmaceutical firms represents 25% to 28% of all R&D spending (among companies spending more than USD 1bn in R&D annually). As far as we can tell, ER&D vendors, in all regions, have only started covering the healthcare sector, targeting medical devices, and also plant IT, processes and quality, but really nothing in the core R&D
The beauty of DSY’s acquisition of Medidata is that it now provides access to clinical trials, and through BIOVIA (based on the Accelrys acquisition) to model drug discovery. This is exciting and and provides an opportunity to ER&D vendors. The competition is however already in place, with Medidata having announced in H1 2019 a service partnership with Cognizant, and also working with Accenture.
This is all very exciting and we will be commenting further, in the coming days on this acquisition and about Veeva, the competitor of Medidata, that is on a stellar growth, and whose technology is based on Salesforce.