BOSTON – Deal flow in the US life sciences sector remained at near historical levels in 2021, with senior executives pointing to improving the Research & Development (R&D) pipeline and diversifying product portfolios as the main drivers behind the deal making, according to Seizing Opportunity: The Post-Pandemic Future of Life Sciences M&A 2022, new research conducted by Mintz and Mergermarket.
The findings, based on the responses from over 100 senior executives in the US at life sciences companies, showed the majority of respondents on the buyer side sought to improve or add to their R&D pipeline as the main rationale behind their M&A deals. Meanwhile, on the seller side, diversifying portfolios was the key factor in executing the deals.
Deal flow in 2021 was up by 30% compared to 2020, with 1,028 transactions completed, and more than half of those executed in the first six months of 2021. The value of the deals in 2021 totaled $301 billion, marking a 43% increase compared to 2020 and coming in as the second highest year on record since 2015. The second quarter was particularly strong, with $126 billion in deals penned and buoyed by five of the year’s largest deals.
“Working alongside Mergermarket to conduct this research into the life sciences deal market has been an important step forward in understanding what has driven both buyers and sellers to pursue deals in 2021,” says Mintz Member and Life Sciences Co-Chair, Bill Whelan. “What we’re seeing is that venture and private equity firms stand ready to finance acquisitions in the face of a slowdown in available funding from equity capital markets. And the recent downturn in valuations in the sector will continue to lead to attractive acquisition opportunities.”
Private Equity (PE) was a main driver behind deal activity in life sciences in 2021, as healthcare investments moved up the agenda.
According to Prequin, PE firms were sitting on a record $1.32 trillion of dry powder as of September 2021. And PE dominated some of the biggest deals last year, including the sale of a majority stake in Medline to a consortium including The Carlyle Group, Hellman & Friedman, Blackstone Group, Abu Dhabi Investment Authority, and GIC Private for $34 billion.
The next 18 months could be marked by a renewed focus on antitrust enforcement having a negative impact on the market, the continued cooling off of the Special Purpose Acquisition Company (SPAC) market, and the increasing desire to form partnerships instead of traditional M&A to grow business, according to respondents.
“Partnerships, collaborations and development deals have always been, and will continue to be, a valuable tool for life sciences companies to advance their products and programs in ways that they could not have independently. The same is true for M&A transactions. This year’s M&A report shows significant current and projected future activity in M&A deals,” says Mintz Member Joshua Fox.
A copy of the report can be found here.
Mintz, a leading life sciences law firm, represents therapeutics, vaccine, medical device and systems, research tools and diagnostics companies, as well as investment banks, venture capital firms, PE firms and other investors. Our work for these clients encompasses transactional, health care regulatory, intellectual property, litigation, employment, real estate and other matters. We are embedded in the global life sciences ecosystem and provide industry leaders with practical solutions to business-critical challenges, helping them achieve their strategic and business goals.
- $22B+ in transactions handled in 2021 for industry clients, including public offerings, joint ventures, licensing and complex collaborations, mergers and acquisitions, divestitures, distribution deals, and private financings
- Advise on the complete spectrum of FDA regulations, from clinical trials through product launch and beyond, including product approvals, labeling, and supply and distribution agreements
- Prosecute patents to issuance (more than 30 patent team members have biology or chemistry PhDs), navigate trademarks through the USPTO and health regulatory bodies, and defend patent, trade secret and trademark rights in trial courts and at the USPTO
- Successful track record of helping life sciences clients avoid — and, when necessary, resolve —securities class actions, governmental investigations, and disputes with collaboration/licensing partners
To learn more about our life sciences practice, please visit www.mintz.com.