Deal Capsule Transactions in Life Sciences August 2021
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Life Sciences M&A activity remains strong being on an all-time high in H1 2021. While this trend is reflected across all subsectors, the major driving forces - dry powder, low interest rates, digitalization and digital health, innovative therapies and the sector’s key role in developing a Covid19 vaccine – had a varying M&A stimulus across the subsectors.
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CHRISTIAN KLINGBEIL | PARTNER, KPMG IN GERMANY
HIGHLIGHTS — H1 2021 deal activity remains strong mainly driven by biotech and medical devices & diagnostics. Pharmaceuticals also picked up. — Yet, the M&A focus shifted from pharmaceuticals to biotech, which came to surface latest since the outbreak of Covid19 and was amplified over the last quarters.
Trends in Life Sciences M&A 4.000
Y-o-Y Volume
597 467
3.000 265
2.000
222
Value
+42%
296
+192%
285
211 72
1.000 2,449
2,530
2,611
2,832
2,768
2016 2017 2018 Number of Announced Deals
2019
3,361
1,399
1,981
0 2015
2020 H1 2020 Deal Value in US$ bn.
H1 2021
Subsector public EBITDA multiples(a) Pharmaceuticals
— Valuations further increased due to growing investor demand and abundance of liquidity and low interest rates. Only time will tell whether sellers’ high price expectations may cause investors to become more cautious.
Biotech
13.3x
14.7x
Q1 2021
Q2 2021
Medical devices & diagnostics
25.9x
28.7x
Q1 2021
Q2 2021
18.8x
Q1 2021
19.4x
Q2 2021
Deal Thermometer H1 2021 — KPMG’s Deal Thermometer signals a strong environment for M&A activity in the life sciences sector. — Deal appetite has increased and financing positions improved due to lower indebtedness.
DEAL APPETITE (Forward P/E ratio)
HOT
DEAL CAPACITY (Net Debt/EBITDA)
MODERATE 21.1
30 Jun 2021 30 Jun 2022
Note: Source:
0.7x
22.2 (b)
COOL
0.4x
30 Jun 2021 30 Jun 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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