Pharma giant Roche is buying healthcare startup Flatiron Health, in a $1.9 billion deal that will enhance its offerings in the field of cancer treatment.
Flatiron analyses oncology data in real time, in order to help patients and doctors manage cancer treatment. Flatiron is backed by Google Ventures, although Roche has also been invested in Flatiron for the past two years. Flatiron said at the time of that investment that they wanted to raise one more round of funding ahead of an IPO, but it now appears that an exit has come along in a different form: an acquisition by Roche.
Flatiron Health Co-Founder and CEO Nat Turner said in the deal announcement that Roche had been a “tremendous partner” over the past two years: “This important milestone will allow us to increase our investments in our provider-facing technology and services platform, as well as our evidence-generation platform, which will remain available to the entire healthcare industry.”
Daniel O’Day, CEO of Roche, stressed the importance of the deal as part of the company’s “personalised healthcare” strategy.
“We believe that regulatory-grade real-world evidence is a key ingredient to accelerate the development of, and access to, new cancer treatments,” said O’Day.
Flatiron is a leader in oncology-specific electronic health record software, suggesting the deal is key to providing Roche with the technology and data analytics infrastructure the company needs as oncology research advances across the industry.
This is Google Venture’s first big return on their investments into healthcare companies. Part of the reason why Flatiron was able to fetch such a steep price is its very effective business model – the front-end users are oncologists, while the data customers are pharma companies. Flatiron has created a unique dataset that pulls information from health records and organises it in a manner that is near clinical research quality. This speeds things up significantly, as it enables users to run queries from existing data rather than having to run a separate study.
So while there’s plenty of M&A activity ahead in this interesting sector, this deal goes to show that there is some very real money to be made for those who can prove they can deliver a genuine advantage.