Patent expirations, a shrinking IPO window and reduced capital availability amidst higher interest rates are just a few of the challenges faced by the biotech industry in the post-pandemic era, although the mid- to long-term industry outlook is still favorable. The 33rd edition of Ernst & Young’s Beyond Borders report describes these obstacles and more faced by biotech, as well as advice for companies for traversing “a complex path forward.”
Ernst & Young’s (EY) annual Pulse of the Industry report offers plenty of reasons for optimism within med tech as the impact of the pandemic recedes, while identifying several key areas that will require continued focus for the sector’s long-term success.
The Ernst & Young Pulse of the Industry 2021 report outlined several ways med-tech companies can benefit from fundamental changes in business wrought by the pandemic to build a stronger foundation for the future. While the need for more agile supply chains and the drive to measure social and environmental impact as well as financial metrics have affected all economic sectors, COVID-19 transformed the med-tech industry in specific ways that could have long-lasting impact.
Ernst and Young’s (EY) annual Pulse of the Industry report released today provided proof of med tech’s strong rebound from the disruption of the pandemic. Research and development investment soared, deal activity hit new highs, venture capital poured $9.1 billion into the sector, IPOs doubled, and more than 9 out of 10 of commercial leaders reported increased revenues.
While the first quarter may be a little slow as the winter COVID-19 surge continues to disrupt business, expect high capital reserves in med tech and life sciences to make 2021 a year for brisk deal activity, according to the 2021 Ernst & Young (EY) M&A Firepower report. In 2020, industry M&A activity fell to the lowest levels since 2014, but the multinational audit and consulting firm found that the industry now has record levels of deal capacity that it is poised to use to accelerate growth coming out of the pandemic.
COVID-19 has prompted dramatic rethinking of supply chains, health care delivery, regulations, and collaboration that are likely to permanently restructure the med-tech industry, according to industry leaders speaking at a panel during the Advanced Medical Technology Association’s (Advamed) Virtual Medtech Conference on Oct. 6. In addition, the significant increase in debt and strong fundamentals position the industry for a burst of M&A activity.