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Healthcare M&A gets a booster shot from COVID crisis

Healthcare M&A in the US is back. But, this time, the factors behind the comeback look a whole lot different. In pre-pandemic 2019, US dealmaking in the space peaked at almost US$450 billion. At the time, Big Pharma was aggressively consolidating portfolios and feeding its drug development pipeline.

That's no longer the case. Since the arrival of COVID-19, attention has shifted towards more urgent matters. Specifically, acquirers are leaning heavily into clinical research for the swift approval of vaccines and other therapies; manufacturing capabilities for high-scale production; and ensuring hospitals and clinics are properly stocked with meds and equipment.

This shift in attention is motivating deal flow once again. US healthcare M&A has reached US$297 billion year-to-date, already dwarfing the whole of 2020 and second only to the country's white hot tech M&A scene.

Mega medical mergers

Several megadeals this year illustrate this change in tune. PE giants Hellman & Friedman, Carlyle and Blackstone clubbed together in June to pay US$30 billion for a majority stake in Medline, a family-owned manufacturer and distributor of medical supplies.

Two other megadeals involved contract research organizations, which help manage clinical trials such as for the COVID-19 vaccines. One of those was PPD, which agreed to sell to Thermo Fisher for US$17.4 billion in April, and the other was PRA Health Sciences, bought by pharma outsourcer ICON for US$12 billion.

Other major deals included Baxter’s acquisition of medical equipment company Hill-Rom for almost US$12 billion and Danaher’s US$9.6 billion acquisition of Aldevron, a manufacturer of plasmid DNA, mRNA and proteins used in vaccines and gene therapies.

Going viral

And everything points to more deals to come. Even drug-pipeline-building deals bear the hallmarks of the current health crisis. When Pfizer acquired US-based Amplyx Pharmaceuticals in April for an undisclosed sum, it gained Fosmanogepix, which if approved will be the first new class of antifungal treatment in 20 years. (Amplyx also has a novel anti-viral treatment in the works.)

While Fosmanogepix, the company's prized asset, is used to treat drug-resistant fungi in patients with compromised immune systems, rather than coronaviruses, it falls under the broader umbrella of ‘anti-infectives’.

Speaking on the deal at the time, Pfizer Hospital global president Angela Lukin said: “The COVID-19 pandemic has been a stark reminder of the devastating impact of infectious diseases, highlighting the continuous need for new anti-infective therapies to treat both emerging and difficult to treat bacterial, viral and fungal infections.”

Whatever course the pandemic takes, it is leaving a lasting impression on the healthcare M&A market.

Medical deals on the horizon

Mergermarket has identified the following healthcare companies that either are in play or could be attractive targets in the foreseeable future.