A flurry of deal and M&A activity in the med-tech industry during the first quarter of 2020 has not translated into high financials, as many of the transactions are not disclosing terms.
While the COVID-19 pandemic rages on, business development activities appear to be slumping in recent weeks, leaving the early part of the year significantly down from prior quarters.
A total of 75 med-tech M&As occurred during the first quarter, with a value of $1.58 billion, a huge drop of 90% or more from the $15.8 billion and $26.1 billion seen during the first quarters of 2019 and 2018, respectively. Volume-wise, 2020 did better than the same period during each of the two prior years, which had 65 and 26 completed M&As that were tracked by BioWorld. The first quarter of 2020 was more in line with the M&A volume observed in the prior three quarters of 2019.
Likewise, there were more deals (licensings, collaborations and joint ventures) in the first quarter of 2020 vs. the first quarters of each of the prior two years: 290 for 2020, 225 for 2019 and 96 for 2018. But despite the higher volume, very few deals disclosed financial terms. The quarter recorded deals valued at only $251.14 million, a drop of 88% compared with the $2.15 billion recorded during the same quarter in 2019, and down by 26% from the $341.5 million logged in 2018.
While it was the best quarter of the last nine in terms of volume, it was the worst in terms of disclosed value during that time.
Seven M&As during the quarter stand out as reported values are all $95 million or more. Anika Therapeutics Inc., of Bedford, Mass., completed two acquisitions in the second quarter, one for Sarasota, Fla.-based Parcus Medical LLC for $95 million in January and the other for Franklin, Mass.-based Arthrosurface Inc. for $100 million in February. San Francisco-based Invitae Corp.'s March acquisition of the Belgian company Diploid also was worth $95 million. For $97 million, U.K.-based Halma plc acquired Alachua, Fla.-based Novabone Products LLC in January. Sonoco Corp., of Hartsville, S.C., bought Huntley, Ill.-based Thermoform Engineered Quality LLC and its subsidiary Plastique Holdings Ltd. for $187 million in January, and Somerset, N.J.-based Catalent Inc. acquired Masthercell, of Webster, Texas, and Gosselies, Belgium, for $315 million in February. The top M&A for the quarter was Orangeburg, N.Y.-based Laborie Medical Technologies Inc.’s purchase of Clinical Innovations LLC, of Salt Lake City, for $525 million in February.
Of the 290 deals, only nine had disclosed financial terms, with the largest being The Gateway Group's $174 million agreement with Nanox Imaging Ltd., of Neve Ilan, Israel, to distribute Nanox's Nanox.ARC units in New Zealand, Norway and Australia. All other deals with disclosed terms were valued at less than $20 million, including Shandong Forward Medical Group Co. Ltd.’s $19.64 million purchase of 90,000 medical isolation gowns, 100,000 disposable protective coveralls, 18 Philips CT machines, 500 noninvasive ventilators, 15 digital radiography systems and 55 digital laryngoscopes, all to address the COVID-19 pandemic, from Chongqing Guanzan Technology Co. Ltd., a subsidiary of New York-based BOQI International Medical Inc.
Breaking down the quarter by month indicated that January had the highest deal volume at 117 deals, but March had the highest value at $194.64 million. There were 85 deals in February valued at $25.11 million. The January deals brought in $31.39 million, and there were 88 deals in March. Of those deals in March, nearly a third – or 26 total – were dedicated to contributing to the COVID-19 pandemic efforts, mostly providing diagnostic tests or telemedicine capabilities.
In terms of M&As, January had the highest volume at 33, while February had the highest value at $987.9 million. There were 25 M&As in February and 17 in March. The January M&As brought in $472.67 million, while the March ones recorded $114.56 million.
One large pending M&A, just announced in March, is Waltham, Mass.-based Thermo Fisher Scientific Inc.’s offer to buy Qiagen NV, of Venlo, Netherlands, for $11.5 billion. It is not likely to improve the 2020 overall med-tech M&A landscape, however, as the transaction is not expected to be completed until the first half of 2021.