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B2B Marketplace History Lesson: Global Healthcare Exchange (GHX)

The Bowery Capital team is embarking on a ten week journey to cover B2B Marketplaces. We are doing deep dives on various companies, interviewing founders and investors, and learning what it takes to build success in the B2B Marketplace arena. Below is a part of our content series focused on learning from the prior generation of marketplace winners. This week we focus on healthcare and medical supplies marketplace Global Healthcare Exchange (GHX). You can read all of the posts in our series by going here.

Global Healthcare Exchange (GHX) is a marketplace for medical supplies that was founded in 2000 as a joint initiative by five of the leading medical product manufacturers: Johnson & Johnson, GE Healthcare, Baxter International, Abbott Laboratories, and Medtronic. At the time of GHX’s launch, there were as many as 90 other online marketplaces in the healthcare space, all seeking to use the internet to more closely match supply and demand in the complex, multi-step medical procurement process. However, these exchanges lacked functionality for the coordination of large distribution channels and struggled to achieve scale and widespread adoption. And the varied e-commerce platforms that predated GHX handled only a tiny fraction of the industry’s overall transaction volume. GHX’s entry into the market quickly upended the medical product e-commerce space, and Becton-Dickinson, Braun, Guidant, Tyco, Siemens, CR Bard, and other key suppliers each subsequently came on board after the platform’s launch. Unique to GHX were several innovative features including customer-directed distribution, online inquiry of order statuses, more detailed order confirmation, and better insight around contractual terms.

The backing and participation GHX received from the largest players in the medical supply space led to its rapid adoption, and the financing its backers provided enabled GHX to use acquisitions to hypercharge its growth. Within months of its founding, GHX acquired CentriMed, a rival exchange that offered content and discussion forums for hospitals, physicians, and suppliers. In 2001, GHX launched its European operations initially focusing on the German, British, and French markets. By 2003, only three years after its launch, GHX had become the largest of the three remaining online health care marketplaces. In 2005, it acquired Neoforma, a provider of supply chain management technology for the healthcare industry; and by 2010, GHX was handling more than 40% of the total spend associated with US acute care hospitals. The cost savings and ease of use offered by GHX made it a compelling value proposition, and by 2013 more than $5 billion in GMV was being transacted annually on the platform.

GHX was acquired by leading technology investor Thoma Bravo in 2014 for an undisclosed amount. With the private equity firm’s backing, GHX continued to grow through acquisition, purchasing Vendormate, a provider of vendor relationship management software, in 2014. Two years later, GHX acquired Hap-X, a provider of automated payment solutions, as part of its continued expansion of platform offerings. As GHX grew over time, it kept adding new features to drive retention including greater visibility into supply spend; automation of supply chain, procurement, and contract management processes; vendor management tools; and payment solutions. In 2017, Thoma Bravo sold a majority stake in GHX to Temasek, Singapore’s sovereign wealth fund, for a reported $1.8 billion.

GHX’s early success was driven by leading medical product manufacturers coming together to address the inadequacies of the existing online exchanges. As GHX matured, its management team led an aggressive acquisition-driven growth strategy, in both product and geography, that transformed the company into the comprehensive medical supply chain management solution it is today.

If you liked “B2B Marketplace History Lesson: Global Healthcare Exchange (GHX)” and want to read more content from the Bowery Capital Team, check out other relevant posts from the Bowery Capital Blog. Look out for more content on B2B Marketplaces from us in the coming weeks.

 

Michael Brown
Michael Brown
Michael is a Founder & Managing Partner at Bowery Capital based in New York. Prior to Bowery Capital, Brown was a Co-Founder and General Partner at AOL Ventures. Before AOL Ventures, Brown worked for the investment arm of Richard Branson’s Virgin Group. He began his career at Morgan Stanley as an equity research analyst. Outside of his professional life, Brown serves on the Board of Directors of the National Forest Foundation and the Columbia College Alumni Association. He holds a B.A. from Columbia University.