Second, life sciences firms will benefit from using technology, such as mRNA, that aids development and testing components.įinally, capital was directed last year toward miniaturizing, automating, and digitally integrating workflows in the lab setting, primarily through growth-equity investments. We expect three themes to stand out.įirst, diagnostics providers will continue to expand as hospitals and other care facilities increasingly outsource testing services, and as direct-to-consumer testing ramps up. Looking ahead, risks will vary widely for life sciences investments. Key deals in 2021 included Carlyle’s acquisition of Unchained labs, a life sciences tool company and provider of biotechnology solutions, from Novo Holdings for $435 million Altaris’s purchase of a majority stake in Solesis, specializing in biomaterials for life sciences companies and the acquisition by Adelis Equity Partners of Nordic Biosite, a distributor of diagnostic and life sciences products. Lab equipment raises its profileĪs drug development and research advances, lab equipment has become more attractive for investors. For example, PerkinElmer, which focuses on diagnostics, research, and industrial testing, bought BioLegend, a provider of antibodies and reagents for research, for $5.25 billion. Another example is ArchiMed’s investment in 42 Life Sciences, a developer and producer of reagents for immunohistochemistry, which is part of the Zyto Group.Ĭorporate buyers continue to pursue acquisitions as they complement their therapeutic portfolios, which should continue to provide meaningful exit opportunities for sponsor-backed companies. This logic underpins Vitruvian Capital’s investment in MaxCyte, which offers electroporation technology. Sponsors are finding value in early growth investments where the company is a clear leader in a growing market. Life sciences R&D companies historically appealed more to corporate buyers, but now private equity firms have started to find pockets of opportunity. Specialty diagnostics firms also stepped up their investments, such as ArchiMed’s acquisition of Zyto Group, a fully integrated cancer diagnostic test and equipment provider for clinical pathology labs. In Asia, notable activity included Catterton Management’s $181 million investment in the Japanese company PHC Holdings. The Cerba and EQT partnership already started playing out its strategy by announcing the add-on acquisition of Viroclinics–DDL. Two notable European deals were the EQT acquisition of Cerba HealthCare, a European lab and diagnostics provider, for $5.3 billion (an exit opportunity for Partners Group), and the Goldman Sachs, OMERS Infrastructure, and AXA purchase of Amedes Holding, a German-based operator of diagnostic laboratories. In this context, private equity firms have targeted clinical diagnostic providers. Covid-19 testing has provided significant cash flows while testing volumes fluctuated as vaccinations rose, waves of Covid-19 variants are likely to require further interventions from these operators. The appeal of diagnosticsĭiagnostic labs have proven to be reliable long-term investments, and in 2021 investors showed great interest in lab consolidators, particularly in Europe and Asia-Pacific, as well as companies that specialize in earlier disease detection. They’ve primarily targeted tools and technologies used for therapeutic research and diagnostics. Traditionally, life sciences assets have been most attractive for corporate buyers, but as the industry evolved to focus more on treatment and detection of infectious diseases, private equity investors have been able to get their foot in the door. Indeed, there was so much life sciences activity that this year’s report breaks out the sector for the first time. Disclosed deal value soared to $11.1 billion from $2.4 billion. The number of deals nearly doubled to 34 in 2021 from 18 the prior year, with most of the growth in Asia-Pacific and Europe (see Figures 1 and 2). What a year for deals in the life sciences tools sector, for both buyouts and corporate mergers and acquisitions. Healthcare IT surged as the digital transformation accelerated across sectors. For the first time, this report breaks out life sciences tools, which drew more, and more varied, investments, in 2021. Medtech volume and value soared after the largest deal in healthcare buyout history. Healthcare payers had the slowest growth in deal volume, due to the limited number of available assets. Biopharma volumes also rose, but unlike last year, trailed providers. Every healthcare sector rose in deal volume and value in 2021, with the provider sector taking the top spot in both categories.
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