2017 was not a big year for global healthcare M&A deals thanks to uncertainty in the wake of Brexit, the US presidential election and pending US tax reforms. Though deal volume in the healthcare sector overall, was moderately active as far as mergers and acquisitions (M&A) were concerned, in the biotech and pharma space it was at the lowest levels in many years and only a fraction of what was seen in the previous years. According to analyst reports, the total volume and value of healthcare industry M&A fell nearly 20% in 2017. The actual number of pharma/biotech M&A transaction announcement tracked by The Pharma Letter for full-year 2017 was just 101, compared with 130 in 2016 and 166 in 2015, which was a record year. However, contradicting the trend, M&A activity in the medtech space rose 50% in 2017, driven by therapeutic device companies, helping to lift the value of aggregate M&A to more than $200 billion.
The healthcare sector saw 20 deals with a transaction value of more than $2.4 billion in 2017, an S&P Global Market Intelligence analysis found. Johnson & Johnson's $29.85 billion takeover of Actelion Ltd. was the largest deal announced during the year. The second-biggest deal to be signed in the year was U.S. medical equipment supplier Becton Dickinson’s $25.79 billion acquisition of its peer C. R. Bard Inc. In the biotech space, one of the biggest deals sealed last year was the US$11.9 billion acquisition of biotech firm Kite Pharma by Gilead Science.
"Globally, M&A activity in the lifesciences sector was subdued with a decrease in volume (c.30%)," said Mr. Shankar Sathyanath, Director, M&A and Capital Advisory, KPMG in Singapore. "The number of deals in 2017 decreased from that in 2016 in the pharmaceuticals, medical devices and biotech segments by 50%, 20% and 20% respectively. Key drivers for the decline were high valuations, pressure in drug pricing, regulatory interventions in key markets, ongoing integration of businesses acquired in previous years and tax reforms in the US."
Mirroring the global trend, 2017 was a moderate year for healthcare M&A in Asia Pacific as well, with about USD $30 billion in deals inked last year. Though fewer than previous years, APAC healthcare sector saw some big deals coming out of China and smaller deals from other regions. Generally, buyers had a stronger preference for smaller deals 75% of deals valued below US$100m. The region, excluding Japan, recorded 254 M&A transactions for the healthcare sector in 2017, accounting for 17% of the total number of deals completed globally during the year.
Speaking about APAC M&A deals in 2017, Mr Sriharsha Sarkar, Principal, Consulting services, IQVIA, Asia Pacific, said, "We saw some big ticket deals out of China as well as a good number of smaller deals across Asia Pac. There was a good mix of private equity and corporate deals last year, with the largest coming from India, China and Australia. In biopharma, Chinese private equity flexed its muscles through large foreign investments. In October, we saw the GL Capital-lead consortium takeover of SciClone Pharmaceutical, a specialty small-molecule company, for about USD$600 million. Chinese, Indian and Australian biopharmas also had a busy year. Fosun Group (China) acquired a 74% stake in Hyderabad-based Gland Pharma at USD$1.1 billion; Sunpower Group (China) paid USD$820 million for Dundreon, Valeant’s oncology business in June; while Lupin, Sun Pharma and Zydus Cadilla (all India-based companies) acquired U.S. and/or Canadian companies. CSL (Australia) expanded through acquisitions in Chinese and U.S. companies.
In healthcare provision, private hospitals continued to attract interest in India and in Southeast Asia, notably in Thailand, Indonesia and Singapore, where Ping An Ventures paid USD$120 million for a stake in Fullerton Healthcare Corporation. There also was a lot of interest in the newer medtech and digital sectors, which saw substantial investment. The initial public offerings of BGI Genomics and WuxiNext CODE, cutting-edge diagnostics providers, both raised in excess of USD$200 million. Indian digital start-ups Click2Clinic (Telehealth) and Curefit (mobile fitness) both raised capital for multiple acquisitions. Overall, there is an appetite to invest across the sector, from biopharma through to healthcare provision and ...
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