Orshe

The recent $4 billion private-equity buyout of IMS Health raises an irresistible question: What other health-care companies might catch private equity’s eye?

A Bloomberg News story out this morning takes a stab at answering the question, and comes up with a list that includes a few solidly profitable drug makers that have market caps between $1 billion and $3 billion and relatively low debt burdens.

• Endo Pharmaceuticals, which sells pain drugs, was cited as a possible target by a Credit Suisse analyst, Bloomberg notes. The company generated $339 million in free cash flow last year. It had $371 million in debt as of the quarter ended Sept. 30 and has a market cap of $2.6 billion.
• King Pharmaceuticals sells generic drugs and recently had a branded, tamper-resistant narcotic approved by the FDA. The company has a market cap of $2.9 billion. It generated $433.9 million last year in free cash flow and had $400 million in debt as of the quarter ended Sept. 30, Bloomberg says.
• Ratiopharm, the family-owned generic drug maker is collecting bids right now — and as we noted recently, there have been reports that several private equity shops are interested, including KKR, TPG, Permira and Goldman Sachs’s private-equity arm.

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Which Drug Companies Could Be Private-Equity Targets?