Med-tech mergers and acquisitions are at their highest level in four years and have already beat the full year of 2020, primarily due to a multibillion-dollar whopper completed in April. The number of industry partnerships also tower over prior years, with digital health efforts covering about 40% of the volume. Looking only at this year, the second quarter (Q2) of 2021 performed better than the first quarter (Q1) in terms of both M&As and deals.
The number of med-tech IPOs completed in the first half of 2021 is nearly as many as last year’s full year, and amounts raised through venture capital rounds in just six months are only about $100 million shy of record funds raised in all of 2020.
The largest med-tech M&As so far in 2021 have bumped the year’s value well above this point last year, although none come close to the October merger of Teladoc Health Inc. and Livongo Health Inc. for $18.5 billion. Still, 2021 appears on track to exceed 2020’s $38 billion M&A total, with 227 completed M&As already valued at $25 billion, 66% of 2020’s full-year amount.
The amount of money raised by medical technology companies in 2021 has dropped by about 26% in comparison with the same timeframe last year, although amounts from IPOs and venture capital rounds have more than doubled. By this point in 2020, $31.48 billion was raised through 282 transactions, while 2021 has so far brought in $23.3 billion through 311 financings, a 10% higher volume.
Digital health and diagnostic efforts continue to dominate med-tech deal-making so far in 2021, while activity focused on medical devices has dropped over the last few years. COVID-19 partnerships also have fallen since last year. Digital health accounts for 43%, the largest portion, of deals this year. About 239 deals are targeting this space, including pandemic efforts. Diagnostic efforts represent about 19%, or 103, of the total deals.
In just one quarter, 14 med-tech companies overall, nearly half the number in 2020, debuted on public markets around the world, and venture capital (VC) financings for the industry have hit a five-year record. The IPOs raised a total of $3.7 billion, a more than 15-fold increase from last year’s first quarter, whereas 107 VC rounds brought in 77% more, or $4.1 billion, in the first quarter (Q1) of 2021.
While strong financial markets could create merger and acquisition headwinds for med tech, the volume of both M&As and deals are rising above each of the prior three years, indicating a growing industry interest that is not always clear in the financials.
Med-tech M&A continued an upward trend through March, with 30% more completed in 2021 compared with this point last year. Deals, including collaborations, licensings and joint ventures, are up by 13%, although the value of those deals are trailing 2020 by 39%.
While the new year has recorded a similar number of completed med-tech deals and M&As in comparison with the early months of 2020, the projected values of those transactions are up by 78% and 418%, respectively. Through this week, BioWorld has tracked 204 deals worth $144.65 million, and 62 M&As completed and valued at $12.8 billion, for the first months of 2021.
Following a $59.7 billion record-breaking year, med-tech financings in 2021 have already raised 56% more than the amount recorded during the pre-pandemic early weeks of 2020.
