Deal Capsule Transactions in Life Sciences February 2022
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With a confident rebound in the beginning of 2021, Life Sciences M&A activity slowed down in Q4 2021 due to the emergence of the Omicron variant of Covid19. Moderated valuations, portfolio optimization via bolt-on acquisitions and divestments of non-core business segments are expected to drive the M&A landscape going forward.
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CHRISTIAN KLINGBEIL | PARTNER, KPMG IN GERMANY
HIGHLIGHTS — Life sciences’ M&A activity grew to another record high in terms of deal volume in 2021 marked by steady growth in the biotech and medical devices & diagnostics subsectors. — Deal value likewise rose significantly led by biotech accounting for seven of the top ten life sciences deals - despite having highest valuations amongst all the sub-sectors.
Trends in Life Sciences M&A
Y-o-Y Volume Value +34%
4.000
597
467
3.000 2.000 1.000
2,449
296
265
222
2,530
2,611
2,832
2016
2017
2018
285
+42% 406
2,768
3,161
4,223
2019
2020
2021
0 2015
Number of Announced Deals
Deal Value in US$ bn.
Subsector public EBITDA multiples(a) — Valuations continued to normalise in Q4 2021 for all the subsectors except biotech, due to heightened uncertainty on account of the resurgence of the corona virus and expected increase in interest rates by central banks.
Biotech
Pharmaceuticals 24.8x
14.1x
Medical devices & diagnostics 25.5x
13.8x
Q3 2021
Q4 2021
Q3 2021
Q4 2021
17.9x
Q3 2021
17.5x
Q4 2021
Deal Thermometer 2021 — KPMG’s Deal Thermometer indicates a favorable environment for deal activities in the life sciences sector.
DEAL APPETITE (Forward P/E ratio)
HOT
DEAL CAPACITY (Net Debt/EBITDA)
MODERATE 22.3
31 Dec 2021 31 Dec 2022
Note: Source:
0.8x
21.8 (b)
COOL
0.4x
31 Dec 2021 31 Dec 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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