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Analysis: Healthcare m&a to jump 80% in 2018

After a subdued 2017, healthcare mergers & acquisitions are expected to jump more than 80% this year in Asia Pacific to US$55.1 billion, according to global law firm Baker McKenzie.

Uncertainty in the wake of Brexit, the US presidential election and pending US tax reform cooled healthcare m&a activity in 2017. In 2018, however, Baker McKenzie is forecasting that current buoyant market conditions and clarity about the US’s new corporate tax rate will lead to a rebound in deal activity, causing global healthcare m&a to rise to US$418 billion, up 50% from US$277 billion last year.

In Asia Pacific, a major driver of m&a transactions continues to be big pharma buying manufacturing sites in lower cost jurisdictions like Vietnam and India. Pharma companies are also acquiring local companies for their distribution networks in emerging markets like China to gain access to the growing middle class that now has disposable income to spend on healthcare.

The total value of IPOs in the healthcare sector rose to US$15.7 billion in 2017, boosted by Chinese drug r&d company WuXi Biologics’ debut on the Hong Kong Stock Exchange in June, which raised more than US$580 million. In 2018, it forecasts healthcare IPOs to become even more active, rising to US$22.3 billion globally.

“We’re seeing a lot of biotechs get to the point where they need more capital for R&D and they’re debating whether to raise capital through an IPO or just sell the business now to take advantage of all-time high valuations,” said Tom Rice, a Baker McKenzie securities partner based in New York. “As a result, we’ve seen a resurgence over the last year or so of dual-track IPO sale processes seeking to maximise value.”

Healthtech companies are also likely to pursue IPOs to raise capital for R&D and to manufacture and open up new distribution channels for their products.

“The healthcare IPO market is beginning to gain surer footing as IPO valuations become more competitive with m&a,” said Ashok Lalwani, head of Baker McKenzie’s international capital markets practice in Asia Pacific. “As IPO valuations rise, we should start to see more of a trend towards companies using IPOs as an exit route as opposed to a trade sale.”

Following a peak in deal activity in 2018, the Baker McKenzie’s Global Transactions Forecast, developed in association with Oxford Economics, forecasts that healthcare m&a and IPO transactions will decline in 2019 in line with a larger, worldwide trend of cooling deal activity in developed markets. “As interest rates rise, global trade and investment growth slows, and equity prices correct, we forecast healthcare m&a to drop modestly to US$414 billion in 2019, and further to US$368 billion in 2020,” it said.

After reaching a five-year high of US$22.3 billion in 2018, IPOs in the healthcare sector are expected to drop slightly to US$21.4 billion in 2019 before declining further to US$17.7 billion in 2020.

Posted on: 11/01/2018 UTC+08:00


News

Beijing-based healthcare service platform Miaoshou Doctor has completed a ¥1.5 billion (US$232 million) Series F round of financing.
Chinese digital technology company, Xisoft Technology, which focuses on hospital operation management, has raised ¥100 million ($15.65 million) in Series A+ financing.
Hearing health company Olive Union has closed a $7M Series B round led by Beyond Next Ventures, Bonds Investment Groups and Japan Policy Finance Corporation.
Long Hill Capital, a venture capital firm in China, has closed on more than $300 million for its third fund on 15 March.
Eluminex Biosciences, an ophthalmic biotechnology company has completed a $50 million Series A financing co-led by Lilly Asia Ventures, GL Ventures (venture capital arm of Hillhouse Capital), and Quan Capital.
TVM Capital Healthcare, a global private equity and growth capital firm focused on emerging markets, has announced two team additions today.
In partnership with VeChain and DNV GL, Renji Hospital, a hospital in China affiliated with the Shanghai Jiaotong University School of Medicine, has launched the world's first blockchain-enabled intelligent tumour treatment centre.
Hong Kong-based BuyHive, a new global sourcing start-up that connects buyers with trusted verified overseas suppliers, has launched a PPE programme to help US companies optimise their post-Covid supply chains.



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Imagine a world in which you can consult with your doctor via video. She asks for a blood sample, which can be collected and analysed from a device in your home. After that is diagnosed, the prescription is automatically sent to the pharmacy and Uber then picks it up. The time from diagnosis to drugs at your home is only 60 minutes.
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