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January 22, 2019
2018 was another good year for M&A in Healthcare. Find below a summary of the main trends and numbers published to date:
The Main Trends of 2018 :
Spurred on by tax relief, US companies used newly retained profits for acquisitions
The US/ China Trade War slowed M&A transactions between the two countries
This means that China is more than ever focused on “in-country” Innovations
It also meant more China M&A activity in Europe and the Middle East
Come Strategic Companies created venture funds to invest in startups
New partnerships between MedTech and “traditional” Tech were formed to keep an eye on Innovation – especially in Digital Health solutions
Strategy drives both acquisitions and divestitures for Portfolio Optimization
PE Firms continue to look for the “right” acquisitions more than ever (there is significant dry powder available) and expand outside of the US
Regulatory requirements in the EU are being implemented which is shifting the focus to the US market first as point of entry for commercialization
Digital Health continues to be a driving force for future change; implementation continues to be a challenge
Low Tech MedTech is not to be forgotten for success in everyday solutions
Diabetes and Oncology are top of conversations for acquisitions
Personalized Medicine is continuing to move forward
Unexpected M&A Transactions are still happening (CVS and Aetna for examples)
Amazon made it clear that it is now in the healthcare business by announcing that it was acquiring PillPack in June
In 2018, Amazon also formed a healthcare venture with Berkshire Hathaway and JPMorgan
Apple launches the first “healthcare” FDA approved watch furthering its move into Digital Health
2018 By the Numbers :
For the first time, venture-backed device M&A Exits total upfront payments eclipsed all other sectors, reaching $3.5B.
Boston Scientific bought seven venture-backed companies, propelling device sector upfront payments to a six-year high median of $190M.
Seven transactions announced in 2018 involved sellers with net revenue over $1 Billion in the US
At $190M, 2018 had the largest median upfront device payment since 2013 and a healthy 4.3x multiple on capital invested.
Device IPOs doubled over 2017, marking a five-year high for median pre-money valuation and dollars raised.
Device De Novo 510(k) pathway deals had very successful exits with median upfront and total deal values far exceeding those of traditional 510(k) and PMA deals.
2018 Healthcare Investments surpass 2017 by 50%
2018 was a banner year for biopharma IPO and M&A exits, hitting a record total deal value of $49B.
Biopharma IPOs reached a five-year high in pre-money valuations and dollars raised, and private M&A posted a 5x median upfront multiple and a median time to exit of just over three years.
A record 18 $1B+ venture-backed biopharma IPOs and M&A deals were completed in 2018.
Oncology remains the Number one investment and exit segment in BioPharma M&A, acquiring seven venture-backed companies in 2018.
Source: Silicon Valley Bank - Trends in HealthCare M&A and Exits 2019
Source: EY Report: Pulse on the Industry 2018,Silicon Valley Bank: Trends in HealthCare Investments and exits, 2019 Biospace: Mergers and Acquisitions, Becker: Becker’s Healthcare and CIO Report
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