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Life Sciences And Biotech M&A During Covid-19

Posted on September 24, 2020 By

The COVID-19 pandemic has created an urgent demand for testing, treatments and a vaccine from life sciences and biotech companies. It has also changed the deal-making landscape in this sector. Advances in genetic sequencing have led to the development of new immunotherapies and approaches to medicine that has lowered risk and boosted M&A value and volume.

Over the past five years, biotechnology M&A activity has generated hundreds of completed deals and hundreds of billions of dollars in aggregate value. Leveraged buyouts accounted for one fifth of all acquisitions completed in three of the past four years. The compound annual growth rate of the biotech market is 7.4 percent, on pace to reach $727.1 billion by 2025. There are currently upward of 100 experimental COVID-19 treatments and vaccines in development, including 11 being studied in clinical trials.

The life sciences sector is the key to a solution for COVID-19, from testing improvements to vaccine candidates. In April, Moderna Therapeutics was given $500 million from the U.S. Department of Health and Human Services to accelerate development of its mRNA vaccine. Over the past ten years, public and private sector researchers across biotech have collaborated to greatly reduce the lag time between genetic sequencing of a virus and running human trials. With academia partnering with governments to speed up development, it is expected to be positive for the long-term strength of the sector.

 

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Cautious Optimism

Recent deal-making trends in life sciences are seeing increased scrutiny amid the race to develop treatments and a vaccine, as there is a level of caution to be expected with unproven drugs and uncertain cash flows. At the same time, the rise of immune-oncology coupled with detailed biological profiles at the molecular level has driven transactions in this space and M&A activity is looking to pick up even more. With existing drug patents are poised to expire, big life sciences companies are emerging as the most active buyers of new biotech platforms. And as competition increases, so does deal-making capital, especially for mega deals of several billions of dollars.

The COVID-19 situation has disrupted progress on experimental therapies and hundreds of clinical studies. The majority of these effects appear to be more prevalent in global markets versus U.S. companies. There is an increasing awareness of the ramifications of these disruptions, boosting the both public and private capital markets’ perception of the importance of life sciences.

Venture Capital Funding

The last decade has seen growth in venture capital investment in biotech and now many companies are scaling up to take on COVD-19 solutions such as vaccines and antibody treatments. Historically, vaccination development specialists have not garnered the same level of venture investor interest as their biotech peers. But this trend is shifting as the more promising platforms mature. Last year, venture capital aggregate in the antiviral field reached $3.4 billion, and since 2014, funding overall has never dropped below $2 billion annually. The first quarter of 2020 maintained that trend with more than $1 billion in venture investment. Biotechnology leads the number of life science venture capital and private equity deals so far in 2020, with a 32 percent share, followed by 18 percent for drug discovery, 11 percent for diagnostic equipment, 10 percent for therapeutic devices, 8 percent for surgical devices, and 6 percent for pharmaceuticals.

Contact Us

At Benchmark International, our award-winning team of M&A experts would love to hear from you and discuss how we can partner wit you to grow your business or sell your company for maximum value. Please reach out us at your convenience.

Schedule A Call

 

Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkIntl.com

Europe: Michael Lawrie at +44 (0) 161 359 4400 / Enquiries@BenchmarkIntl.com

Africa: Anthony McCardle at +27 21 300 2055 / McCardle@BenchmarkIntl.com 

ABOUT BENCHMARK INTERNATIONAL

Benchmark International’s global offices provide business owners in the middle market and lower middle market with creative, value-maximizing solutions for growing and exiting their businesses. To date, Benchmark International has handled engagements in excess of $6B across various industries worldwide. With decades of global M&A experience, Benchmark International’s deal teams, working from offices across the world, have assisted hundreds of owners with achieving their personal objectives and ensuring the continued growth of their businesses.

Website: http://www.benchmarkintl.com
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