Specialty pharmacies (SPs) continue to make great impact across the healthcare continuum. Over the past few years the industry has seen tremendous rise in spending on specialty pharmaceuticals, four to six times more than the growth of other drugs, increasing at a rate of 15% to 20% annually. According to Price Water House Coopers, in 2016 specialty drug spending will reach $180 billion and close to $400 billion by 2020. In tandem with this rise, the industry is experiencing a surge of pharmacies, which include independents, hospitals, insurance providers, and other healthcare entities entering the specialty space and private equity groups are taking notice. There has been a small but growing trend of merger and acquisition activities in this sector, where valuation is consistently high.

On December 4th, Salveo Specialty Pharmacy announced that it had completed the acquisition of Mission Road Pharmacy, based in Los Angeles, for an undisclosed amount. The financing of this merger is backed by Three Arch Partners, NewSpring Capital and Petra Capital Partners. Mission Road Pharmacy was co-founded by Amy Tu Nguyen and Kelly Dao Nguyen in 2006. What started out as a small business venture grew into a successful operation with sales exceeding $175 million, pro forma 2012.

According to Amy Tu Nguyen, CEO of Mission Road Pharmacy, what differentiates SPs, particularly Mission Road Specialty Pharmacy, from chains such as Walgreens and CVS or other independent pharmacies is that “we play an active, integral role in managing patients on these complex, high cost medications. Our dedicated team is engaged and involved from the moment our patients come to us, whether it is collaborating with providers to get medications approved, reaching out to foundations on patients’ behalf for copay assistance, or educating and evaluating patients’ complete regimen. Our motto is patients first and that means extending ourselves above and beyond in every aspect to optimize the patient experience, ultimately to ensure medication access, lower financial barriers, and enhance compliance. All these steps (and much more) must take place for patients to benefit from the treatment process. When such mission is achieved all stake holders win.”

In the past couple of years larger pharmacies and private equity groups have taken great interest in merging with and buying out specialty pharmacies, such as Mission Road Pharmacy, for the purpose of expanding their capabilities and merger opportunities, meaning bigger payouts. This trend is expected to grow rapidly as pharmacy benefit managers dip into specialty drug treatment and as insurance companies and pharmacies merge into larger conglomerates, squeezing the smaller players out of this lucrative sector.