Healthcare sector comment: A look back at 2017

2017 saw 2011 deals complete, with Q2 showing the strongest performance with 29.4%, followed by Q1 with 27.6%, Q3 with 24.1% and Q4 with 18.9%. The majority of these deals were in the health and social care sub-sector with 56.3%, followed by pharma and biotech with 27.3% and medical equipment and supplies with 16.4%.

The dominant country driving M&A activity in 2017 was the US in all three of the sub-sectors with 54% of deals, followed by Europe at 28.1%, Asia at 9.7% and the rest of the world at 8.2%. Interestingly, trade led the way with 87% of the healthcare M&A deals in 2017, with private equity making up the balance. Another key M&A driver was the high level of liquidity in this very hotly contested market, provided by debt and private equity funds.

We believe global M&A activity is being driven by companies wanting to remain competitive by acquiring companies that will provide:

  • cost-effective value-added services to payers/funders
  • scale and geographical reach
  • access to human capital, knowhow and technology/IP

The global macros pushing the high demand for healthcare is the:

  • ageing demographics and management of long term chronic conditions
  • continued outsourcing of services and product manufacturing, driven by pricing pressure – by suppliers, customers and payers
  • payers/funders looking for solutions to help drive efficiency in operations or offering a “a one-stop solution”
  • growing demand for private payers looking for high quality healthcare services

Obviously, there are potential headwinds such as the uncertainty around Brexit and the EU relationship, alongside the on-going US Trump-factor and the continued geopolitical rhetoric with the Middle East and North Korea. There’s no doubt these will have a ripple effect on the global market, however we still expect the market to continue to show a similar level of M&A activity in 2018.

A taste of recent deals

Interestingly, the majority of deals in December were in the pharma and biotech sub-sector, the majority of which were in the biotherapeutics area, defined as any therapeutic materials produced using biological means (for e.g. cells, DNA, proteins or vaccines).

Over the last 12 months we have seen 108 deals in the biopharmaceutical space, a third of the deals during December involving China-based businesses. The biopharmaceutical industry is a thriving sector in China, forecasted to grow to approximately 15% of GDP in 2030, becoming an important economic growth point. China is moving from a generic market to a global biopharmaceutical market1.

The selected deals below capture the activity in the biopharmaceuticals market we observed over the last 12 months, which was driven by access to new technologies and pipeline of new drug developments.

Roche Holdings Inc the US-based pharmaceuticals and diagnostics business has agreed to acquire Ignyta Inc, the US-based precision oncology biotechnology company for €1,540.6m

Ipsen SA the France-based pharmaceutical company has acquired Merrimack Pharmaceuticals Inc.’s global oncology assets for €970.4m

Mallinckrodt Plc the UK-based manufacturer of pharmaceutical products has agreed to acquire Sucampo Pharmaceuticals Inc, the US-based biopharmaceutical company for €965.6m

Sanpower Group Co Ltd the China-based industrial conglomerate has acquired Dendreon Pharmaceuticals Inc the US-based biotechnology company for €775.9m

Bioverativ Inc the US-based biotechnology company has acquired The North Therapeutics Inc the US-based biotechnology company for €734.2m

Kite Pharma Inc the US-based clinical stage biopharmaceutical company has agreed to acquire Cell Design Labs Inc, the US-based biotherapeutics company for €440.8m

CSL Behring Asia Pacific Ltd the Hong Kong-based producer of therapeutic proteins has acquired Wuhan Zhongyuan Ruide Biological Product Co Ltd the China-based manufacturer of biological products for €392.7m

Livzon Biotechnology Co Ltd the Hong Kong-based biotechnology company has agreed to acquire Livzon Mabpharm Inc, the China-based provider of biotechnology services for €76.7m

At Clearwater International we will continue to monitor and analyse the global biopharmaceuticals market, and see if the consolidation in China continues, as we’d expect.

1(BUSINESS WIRE)–The 2017 China Biopharmaceutical Industry Report

 

Medical Equipment and Supplies

Becton, Dickinson and Company, the US-based manufacturer of medical supplies and devices has acquired CR Bard Inc, the US-based diagnostic devices manufacture for €23,271m

Stryker Corporation the US-based medical technology company has agreed to acquire Entellus Medical Inc, the US-based developer of products for the minimally invasive treatment for €557.6m

Smith & Nephew plc the US-based developer of medical devices has acquired Rotation Medical Inc, the US-based rotator cuff implants manufacturer for €178.8m

Edwards Lifesciences Corporation the US-based provider of products to treat heart disease has acquired Harpoon Medical Inc, the US-based minimally invasive surgical tool manufacturer for €212.2m

Cirtec Medical systems LLC the US-based medical device consulting company has acquired Vascotube GmbH, the Germany-based manufacturer of tubes for medical devices

Medtronic Plc the Ireland-based manufacturer of device-based medical therapies has acquired Crospon Ltd, the Ireland-based medical devices manufacturer

 

Health and Social Care

Optum Inc the US-based provider of information and technology enabled health services has agreed to acquire DaVita Medical Group, the US-based physician networks operator for €4,159.1m

TPG Capital LP the US-based private equity firm and Humana Inc the US health and Well-being company have agreed to acquire Kindred Healthcare Inc, the US-based healthcare services provider for €3,127.1m

Icade Santé SAS the France-based real estate firm has acquired Clinique de l’Europe SA, the France-based operator of healthcare facility for €87.2m

Euroclinicum a.s. the Czech Republic-based hospital operator has acquired Mamologie S.R.O. the Czech Republic-based operator of mammography centres

Portobello Capital Gestion the Spain-based private equity firm has acquired Clinica Anaga SL, the Spain-based dental clinic operator

Graphite Capital the UK-based private equity firm has acquired Compass Community, the UK-based fostering agency from August Equity the UK-based private equity firm

 

Pharma and Biotech

Hangzhou Aopeng Investment Management Co Ltd the China-based investment management company has acquired the remaining 46% stake in Hangzhou Ausia Biological Technology Company Ltd, the China-based bio-pharma, CMO company for €53.1m

Neovia NSA the France-based company that sells additives for animal health completed the acquisition of Epicore BioNetworks Inc, the US-based biotechnology products manufacturer for €20.5m

ImmunoPrecise Antibodies Ltd the Canada-based provider of hybridoma development services has agreed to acquire Crossbeta Biosciences B.V. the Netherlands-based biotechnology company for €8.5m

Eternity Healthcare Inc the Canada-based medical device manufacturer has agreed to acquire Guizho Tongren Healthy China Biotechnology Co Ltd, the China-based biotechnology company

Millendo Therapeutics Inc the US-based biopharmaceutical company has acquired Alizé Pharma SAS, the France-based developer of biopharmaceutical drugs

BiomX Ltd the Israel-based developer of microbiome-based therapeutics to treat cancer has acquired Rodnix Ltd, the Israel-based biotechnology company