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Shining a light on PE ownership.

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AL

Alvogen

healthcare
PE-OWNED

Generic pharmaceutical manufacturing and distribution company.

PE-OWNED

Acquired by Ares Management2020-08-11

View PE Firm Profile

What Made It Great

“

Global generic pharmaceutical development and manufacturing platform

What PE Will Likely Do

Predictions

Staffing cuts, with nursing staff and experienced personnel replaced by lower-cost, less-qualified personnel

MODERATEBased on: Ares Management's known cost-cutting tactics and high bankruptcy rate in acquired companies

Aggressive billing practices, such as upcoding procedures and diagnoses to maximize reimbursements

MODERATEBased on: The healthcare industry playbook, which highlights common private equity strategies that negatively impact consumer experience

Discontinuation or reduction of unprofitable but essential services, such as specialized drug manufacturing for smaller patient populations

MODERATEBased on: The specific nature of Alvogen's business as a generic pharmaceutical manufacturer, where cost-cutting can directly affect product quality and availability

Extraction of management fees and other costs that reduce resources available for maintaining quality and innovation

MODERATEBased on: The specific nature of Alvogen's business as a generic pharmaceutical manufacturer, where cost-cutting can directly affect product quality and availability

Expected Timeline

Phases
0-6 monthsCompleted

“0 to 6 months months”

Announcement of 'optimization' initiatives, potential leadership changes

6-12 monthsYOU ARE HERE

“6 to 12 months months”

Staffing cuts begin, with a focus on reducing labor costs

12-24 months

“12 to 24 months months”

Decline in product quality and availability, increased wait times for customers, and potential service line reductions

24-36 months

“24 to 36 months months”

Potential for drug shortages, quality control issues, and potential bankruptcy or sale to another operator

Similar Cases

Other companies that followed a similar path after PE acquisition

Operating

Steward Health Care

Cerberus Capital Management·2010

See full case study
Operating

Envision Healthcare

KKR·2018

See full case study
Operating

US Dermatology Partners

Ares Management·2016

See full case study
Operating

Hahnemann University Hospital

Cerberus Capital Management·2018

See full case study
Operating

Sound Physicians

Summit Partners·2019

See full case study

What You Can Do

Take Action

Actions

  • Monitor for any changes in the availability, quality, or reliability of Alvogen's drug products

  • Be aware of potential shortages or quality issues, and consult healthcare providers for alternatives

  • Voice concerns to regulators and consumer protection agencies if significant declines in product quality or availability are observed

Alternatives

Non-profit health systemsSAFE

Community-focused healthcare

Kaiser PermanenteSAFE

Integrated managed care consortium

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"Alvogen is now PE-owned. Here's what that means for you."