Premier, 11 health systems acquire minority stake in Exela to lock down drug supply

In a bid to head off drug supply shortages, healthcare improvement company Premier Inc. and 11 of its partner health systems have acquired a minority stake in the holding company of Exela Pharma Sciences, the organizations announced Wednesday.

The deal will see Premier’s health system members gain an uninterrupted supply of 19 pharmaceutical products developed and manufactured by the specialty pharma company at its Lenoir, North Carolina, location, according to the announcement. Of note, that includes Exela’s 503B pharmaceutical products and several injectables the companies said are often in short supply.

“Leveraging Exela’s significant production capacity, this collaboration is expected to give Premier’s participating members uninterrupted access to high-quality, U.S.-made pharmaceutical products and safety stock,” Michael J. Alkire, president and CEO of Premier, said in a statement. “With this investment, we are committing to support the domestic production of vital medicines for our members and the market—and to bring much-needed solutions to help eliminate drug shortages.”

Financial terms of the deal were not disclosed, although Premier said the investment is not expected to materially impact the results of its 2022 fiscal year.

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According to the announcement, the 11 participating health systems have each signed multiyear commitments to purchase Exela’s products through Premier’s group purchasing organization.

The announcement named 10 of these provider organizations: Baystate Health, Genesis Health System, Henry Ford Health System, McLaren Health Care, Memorial Healthcare System, OSF HealthCare, Riverside Health System, Saint Francis Health System, Texas Health Resources and Universal Health Services.

The deal will help health systems cut down on regional or emergency-related drug shortages while supporting domestic drug manufacturing infrastructure, the companies said in the announcement.

These types of supply chain shortcomings have become stark throughout the COVID-19 pandemic and have increased hospitals’ costs for medical supplies, personal protective equipment, construction materials and more.

The latest investments also recall some of the supply chain deals the partners have made over the past year or so.

In May 2020, Premier and 15 health systems banded together to purchase a minority stake in Prestige Ameritech, the largest domestic manufacturer of PPE such as face masks. Near the tail end of that year, a partnership between global medical manufacturer DeRoyal, Premier and 34 health systems yielded a joint venture dedicated to domestic production of PPE.