Covid-19 Surges, Vaccines Drive Pharma, Device Deal Growth

Dec. 24, 2020, 10:40 AM

Mergers and acquisitions in the pharmaceutical and medical device sectors remained strong in November in light of surging coronavirus infections and the rollout of vaccines that require specialized storage supplies, attorneys and analysts say.

Life sciences and pharma deals topped the list of health-care transactions with 29, as well as the year-to-date list with 337. There were 23 transactions involving medical devices and supplies.

Pharma deals keep rising “as the race to immunize the planet continues while, at the same time, variants of the virus are discovered putting additional pressure on these companies to stay one step ahead,” Anjana Patel, a member of Epstein Becker Green in its Newark office, said.

The Covid-dominated year hasn’t stopped health-care deals from increasing, with a total of 1,714 deals through November. November was the fourth busiest month for transactions in 2020, and deal volume should keep up through the end of the year, according to Larry Kocot, principal and national leader of KPMG’s Center for Healthcare Regulatory Insight in Washington.

Growing optimism as vaccination rates increase and the economy rebounds “could set healthcare investment up for a strong 2021 as the country prepares to move beyond the pandemic,” Kocot said.

KPMG in Washington and FocalPoint Partners of Chicago prepared the curated year-to-date list and the list of select November transactions for Bloomberg Law.

Active Sectors

Large deals in the pharmaceutical sector sector remained consistent and included Bristol Myers Squibb’s acquisition of MyoKardia for $13.1 billion and Merck’s announcement that it will acquire VelosBio for $2.75 billion, Patel said.

Transactions in the medical device sector are also expected to climb in part due to Covid-19 vaccines like the one by Pfizer Inc. and BioNTech, Patel said, which must be stored in ultra-cold freezers.

Physician practices and services was one of the most active sectors, with 24 deals announced or completed in November and 183 year-to-date, Gary Herschman, a member of Epstein Becker Green in its Newark office, said.

“Notably, half of the deals consisted of primary care and urgent care practices,” Herschman said. “We expect this surge to continue even faster in 2021.”

Hospital and health system transactions were in the single digits in November (9) and totaled only 99 year-to-date, “which is unsurprising given the continued focus on management of the pandemic,” Herschman said.

Penn State Health’s Nov. 1 acquisition of Holy Spirit Health System, previously part of the large health-care system Geisinger, “is an example of a continuing trend of large health care systems, like Geisinger, reevaluating their portfolio of acute care assets and deciding to focus efforts on a select number of strategic geographies,” Hector Torres, managing director and co-head of health care investment banking at FocalPoint Partners in Chicago, said.

Bloomberg Law’s Health Care Transactions Editorial Committee contributed guidance for this report. Members include Gary W. Herschman, of Epstein, Becker & Green PC, Newark, N.J. (gherschman@ebglaw.com); Anjana D. Patel, of Epstein Becker & Green PC, Newark, N.J. (adpatel@ebglaw.com); Zachary S. Taylor, of Epstein Becker & Green PC, Newark, N.J. (ztaylor@ebglaw.com); Larry Kocot, of KPMG, Washington (lkocot@kpmg.com); Carol Streicher, of KPMG, Chicago (cstreicher@kpmg.com); Ross White, of KPMG, Washington, D.C. (rosswhite@kpmg.com); Hector M. Torres, of FocalPoint Partners, Chicago (htorres@focalpointllc.com); Aaron Newman, of FocalPoint Partners, Chicago (anewman@focalpointllc.com); Ryan DeBlaey, of FocalPoint Partners, Los Angeles (rdeblaey@focalpointllc.com); and Michael Stotz, of FocalPoint Partners, Chicago (mstotz@focalpointllc.com).

To contact the reporter on this story: Sara Hansard in Washington at shansard@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com; Alexis Kramer at akramer@bloomberglaw.com

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