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IBM will use Truven’s trove of medical data to improve its Watson artificial-intelligence system
February 18, 2016, Robert McMillian
http://www.wsj.com/articles/ibm-to-buy-truven-health-analytics-for-2-6-billion-1455804004
International Business Machines Corp. is buying data company Truven Health Analytics Inc. for $2.6 billion, in a bid to expand its already considerable presence in the health-care industry.
The deal will double the size of IBM ’s Watson Health business unit to 5,000 employees as the company adds new technology services to sell to doctors and hospitals.
“We’re now deeply embedded in the health-care system,” said John Kelly, IBM’s senior vice president of Solutions Portfolio and Research.
IBM has been on a health-care spending spree in the past year. It has doled out more than $4 billion to acquire medical-technology companies.
With Truven, as with a number of other recent IBM acquisitions, the prize is data, which IBM will use to improve its Watson artificial-intelligence system, Mr. Kelly said. “We’ve been systematically putting together the platform and the underlying data,” he said, aiming “to reduce costs and improve outcomes.”
Truven, based in Ann Arbor, Mich., provides health-care data services to hospitals and pharmaceutical companies to help them determine the efficacy of products and services. Mr. Kelly said he believed that Watson could better analyze Truven’s data.
The deal, which is expected to close within a few months, is the largest acquisition made by Virginia Rometty since she took over as IBM’s chief executive in 2012. Ms. Rometty is trying to turn around the 104-year-old company’s fortunes by making new investments in data analytics, security and mobile computing as IBM’s core businesses continue to decline.
The company’s other health-care acquisitions include Phytel Inc. and Explorys Inc., companies that maintained clinical data on more than 50 million patients, and Merge Healthcare Inc., which specialized in medical-image technology.
Much of Truven’s data relates to medical costs, which fills a hole in IBM’s emerging Watson Health product line, Mr. Kelly said.
He stopped short of saying that this would mark the end of IBM’s health-care buying spree, but said, “we have all of the major data sets that we need.”
Truven was formerly the health-care division of Thomson Reuters Corp. It was sold in 2012 to private-equity firm Veritas Capital Fund Management, L.L.C. for $1.25 billion.