“Most [acquisitions] in healthcare get done between $100 million and $200 million,” Radius Ventures Partner Dan Lubin told attendees at the mHealth Summit during a panel session this past week. “Most deals are under $100 million — that is the exit… I think we can build companies, make them really attractive, and sell them to strategics for $100 million. I think that’s a four to [six year] time frame. If we want to build billion dollar companies — and healthcare has billion dollar companies [usually biotech and sometimes medtech] — well, that’s going to take longer. It all depends on how much money you plow in and how long you are willing to wait.”
While Lubin allowed for the possibility of billion dollar valuations in the future, he said that he does not expect to see a company in mobile or wireless health worth $20 billion or $25 billion.
“I agree,” Dr Mohit Kaushal, the co-manager of the West Health Investment Fund, said. “It’s hard to see something at that value just based on proxies.”
Kaushal, who was formerly part of the team at the FCC that drafted the healthcare chapter of the National Broadband Plan, said that he is a deep believer in market opportunities emerging following a change in regulations or policy. Kaushal said the FCC’s Telecom Act in 1996 created “billions of dollars in value” after it passed.
“I think in healthcare we are at a similar inflection point,” Kaushal said. Then he dropped a bomb: “An unnamed payer, I heard, has got 30 companies in the pipeline that they want to acquire. So, I think in the next five to six years there will be a lot of interesting new companies that emerge from… these exits.”
MobiHealthNews’ coverage of the mHealth Summit is brought to you by Preventice.