Healthcare companies raised record amounts in 2017

1. Janu­ary 2018

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.

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