Canadians get a taste of American medical system with IMS Health buy

IMS buys prescription records in bulk from big pharmacies, strips out the patient names but identifies the doctors, then tells drug companies of the doctors' prescribing habits. This lets the drug companies target their sales efforts.

The picture at the right, taken from IMS' current home page, illustrates the firm's view of it. The little blue ball represents sales, and the nice lady has IMS knowledge to shoot it accurately.

Critics have their own view. New Hampshire sought successfully to stop IMS data collection in court, and the American Medical Association (AMA) runs a program through which doctors can opt-out.

Regardless of your view, it's a data processing company that makes money. IMS earned $311 million on sales of $2.3 billion last year. This made it attractive, and a leveraged buy-out of the company was announced yesterday.

Which is where the Canadians come into the story. The main player here is TPG Capital, run by the renowned financier David Bonderman, but his partner in this deal is the CPP Investment Board.

CPP is the investment arm of the Canada Pension Plan, which you might compare with a privately-run Social Security system. CPP Investment seeks a return on the pension contributions of Canadians. The CPP collects the fees and pays the pensions.

Out of the CPP's $116.6 billion in assets, private investments like this represent "just" $18.4 billion. But that's enough money, and the law offers CPP Investment enough leeway, for it to get into some very interesting deals.

Like this one.

All of which means that Canadian pensions may be riding on the success of an American company performing computing feats that would be incomprehensible in their own country, which is a single-payer system run through the nation's provinces.