As 2018 drew to an end a notable lack of merger and acquisition activity among biopharma companies was probably one of the biggest grumbles heard about the sector. Those complaints would be hard to make now, midway through 2019. Read the full report at: https://www.evaluate.com/2019HalfYearReview
The first half of the year delivered two mega-mergers – Bristol-Myers Squibb’s $74bn swoop on Celgene and Abbvie’s $63bn takeout of Allergan – that set up 2019 as a record M&A year. Still, the huge sum of dollars committed to biopharma M&A masks a substantial slowdown in the number of these transactions being announced.
The medtech sector finds itself in a similar situation, with the takeovers closed so far this year worth more than the whole of 2018 – but with far fewer deals in the first half of 2019 versus the same period last year.
This is also being seen in the drug licensing deal market, which saw a big drop in the second quarter of 2019. This trend can be partly explained by easy access to financing – with other fundraising options on the table, smaller drug developers are not as beholden to deep-pocketed partners to push promising projects forwards.
This is supported by the data on biotech IPOs and venture financing. Demand for new biotech issues from equity investors showed no sign of diminishing over the first quarter. And in the venture world, the boom of 2018 might be over but the private space is still flush with cash.
As for medtech, the trend towards fewer, bigger deals is more prevalent than ever. The year kicked off spectacularly with Verily’s $1bn funding round, the largest the medtech sector has ever seen, and twice the size of the biggest-ever VC deal for a biotech.
This is not the only measure by which the medtech sector has surpassed biopharma. On the stock markets, listed medtechs in each size bracket outperformed their biopharma peers, with increases in share prices steeper, and the falls fewer and less precipitous. Medtech has long held a reputation as a safe if unglamorous sector in which to invest, and while it has seemed pretty safe so far this year, it has been anything but dull.
The regulatory space also contains few areas of concerns, and though the US could see a slight downtick in the number of novel drug approvals this year, this seems unlikely to signal a serious tightening in the regulatory climate.
Still, the spectre of drug price controls in the US remains a topic of concern for investors, and the share price performance of some of biopharma’s bigger beasts is far from impressive. These pockets of pessimism are hard to square with areas of huge exuberance – and huge valuations – in some of the more innovative and high-risk biopharma spaces. As the remainder of 2019 unfolds, perhaps the haves and have-nots will diverge even further.
Read the full report at: https://www.evaluate.com/2019HalfYearReview.