Deal Capsule Transactions in Life Sciences November 2021
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Life Sciences M&A activity continues its steady trend exceeding in Q3 2021 already the previous full year levels. Biotech and medical devices subsectors show the highest activity. Slightly declining valuations have fueled M&A activity yet growing investor skepticism and macro economic outlooks might change the confidence level going forward.
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CHRISTIAN KLINGBEIL | PARTNER, KPMG IN GERMANY
HIGHLIGHTS — Continuous momentum in biotech and medical devices & diagnostics subsectors drove life sciences M&A activity in Q1-Q3 2021. — Focus of M&A activities was primarily on nutrition and healthcare, digitalization, robotic surgeries and novel therapeutics.
Trends in Life Sciences M&A 4.000
597 467
3.000 2.000 1.000
Y-o-Y
2,449
296
Volume
Value
+34%
+94% 326
285
265
222
2,530
2,611
2,832
2,768
2016
2017
2018
2019
168 3,161
2,367
3,166
0 2015
Number of Announced Deals
2020 Q1-Q3 2020 Deal Value in US$ bn.
Q1-Q3 2021
Subsector public EBITDA multiples(a) Pharmaceuticals
— Valuations declined slightly in Q3 2021 following growing investor skepticism partly in anticipation of rising interest rates. Time will tell whether this is only a temporary effect or a trend reversal.
Biotech 28.7x
14.7x
14.1x
Q2 2021
Q3 2021
Q2 2021
Medical devices & diagnostics 24.8x
Q3 2021
19.4x
Q2 2021
17.9x
Q3 2021
Deal Thermometer Q1-Q3 2021 — KPMG’s Deal Thermometer indicates a conducive deal environment for M&A activity in the life sciences sector. — Slight increase in deal appetite coupled with lower levels of debt shape the current deal environment.
DEAL APPETITE (Forward P/E ratio)
HOT
DEAL CAPACITY (Net Debt/EBITDA)
MODERATE 21.5
30 Sep 2021 30 Sep 2022
Note: Source:
0.8x
21.8 (b)
COOL
0.4x
30 Sep 2021 30 Sep 2022
(c)
(a) Refers to 90% quantile at respective quarter-end (b) Forward P/E ratio: net profit expected for 2022 to market cap in 2021 (c) Deal capacity: expected net debt to EBITDA in 2022 Thomson One, Capital IQ, KPMG Germany Analysis
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