SXC-Catalyst merger: Would have been surprising if it hadn’t happened

Mid-sized PBMs SXC and Catalyst are merging. That’s not a big surprise. Adam J. Fein has a good overview of the reasons at DrugChannels and is quoted in the Wall Street Journal’s article, so I won’t rehash everything here.

But from my perspective Catalyst is a dynamic organization that was starting to be limited competitively by the fact that it relies on SXC for its transactional software that drives its core operations. Usually when organizations merge there are operational hiccups as the acquirer digests or rips and replaces the target’s systems and processes. That won’t have to happen in this case. Also, SXC should really understand what it’s getting into, because acting as the software vendor gives SXC excellent insights into Catalyst’s operations.

The combined company is now big enough to be a serious competitor of the big 2 PBMs, but small enough to differentiate itself and rock the boat.

The market seems to like the deal, with both companies rising substantially after the announcement on a day when other PBMs fell. You don’t usually see that.

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