Healthcare companies raised record amounts in 2017
Paris/Munich — Biotech companies were sought-after takeover targets in the past year: With a 54% premium on the share price one month before the takeover announcement, biotech companies achieved the highest takeover premiums worldwide in 2017 — clearly above the five-year average of 45%. That’s according to an analysis by investment bank Bryan, Garnier & Co.
The 1040 global M&A transactions that took place in the healthcare sector in the first nine months of 2017 were considered: 132 acquisitions of biotech companies, 219 of pharmaceutical companies and 689 in the medical technology sector. With a comparatively low 21 percent premium on the respective stock market price one month before the takeover plans were announced, pharmaceutical companies were 33 percentage points cheaper to buy than biotech companies. Buyers also paid significant price premiums of 44 percent for medical technology companies.
“While there were few large deals in 2017 and acquisitions such as Actelion and Kite were exceptions, there were a lot of smaller transactions and biotech companies in particular are becoming increasingly expensive,” emphasized Falk Müller-Veerse, Managing Partner of Bryan Garnier in Germany. This is not surprising, as biotech companies are increasingly receiving approvals for drug candidates that represent a therapeutic breakthrough. “And these are exactly the kind of products that the big pharma companies need for their own pipelines.”
Compared to previous years, healthcare companies raised record amounts worldwide in 2017: After just nine months, the volume of equity raised (private placements), at $9 billion, exceeded the levels of 2016 ($8.1 billion) and 2015 ($6.1 billion). Equity capital markets activities also increased significantly: In Europe, the volume of public equity (equity raised from the public) rose to EUR 1.5 billion in the first nine months (2016: EUR 860 million); this almost returned to the level of 2015 (EUR 1.8 billion) in the first three quarters.
Increasing M&A activity expected
Bryan Garnier expects M&A activity to continue to increase in 2018, not least in view of the increasing concentration of large pharmaceutical companies on a few strategic business areas. Added to this, he said, is the trend toward digitization of healthcare, notwithstanding the looming threat of cyber-attacks, for which the healthcare sector has limited preparedness.
Bryan Garnier’s analysts expect the tax reform in the U.S.A. to lead to anincreasing propensity to buy, especially on the part ofAmerican companies. In addition, new forms of therapy promise new growth opportunities: Immuno-oncology is currently playing a major role here, and numerous new study results are expected in this area in 2018. In addition, companies pursuing the new transformative therapy approaches such as mRNA, CAR‑T and microbiome will be particularly attractive in the future; the approximately 11 billion acquisition of CAR‑T cell specialist Kite Pharma by Gilead is a good example of this. Among the successful companies in the field of mRNA is the German company BioNTech, which already has well-known industrial partners such as Sanofi, Bayer and Genentech.
“Given the good market environment and attractive valuations on the capital market, IPOs are also becoming more interesting again for many healthcare companies as the ultimate way to raise capital” emphasized Dr. Nicholas Hanser, who manages the German-speaking capital markets business for Bryan, Garnier & Co from Munich.
About Bryan Garnier & C0
Bryan, Garnier & Co, founded in 1996 in Paris and London, is an investment bank focused on European growth companies with offices in London, Paris, Munich and New York. As an independent “full service” investment bank, it offers comprehensive financing advice and support along the entire life cycle of its clients — from initial financing rounds to a potential sale or IPO with subsequent follow-up financing. The range of services includes equity analysis, equity sales and trading, private and public capital raising, and M&A services for growth companies and their investors. The focus is on key growth sectors of the economy such as technology (TMT) and healthcare, but also smart industries & energy, brand and consumer goods, and business services. Bryan Garnier is a registered broker and licensed with the FCA in Europe and FINRA in the US. The company is a partner of the London Stock Exchange and Euronext.