While some sectors of the medical device industry have done well during the pandemic, others have been adversely affected. Either way, mergers and acquisitions have been on their radar, according to a recent report from EY.
“Overall, according to the results of the latest EY Global Capital Confidence Barometer, there is broad agreement from executives that the pandemic will reshape global economies, with 66 percent saying they expect COVID-19 to have a severe impact. However, they are less aligned about local implications, where 61 percent anticipate only a minor impact,” says Peter Behner, EY global life sciences transactions leader, in a commentary about the report. He adds that 52 percent of life sciences executives are bracing for a longer period of slower global economic activity extending into 2021, whereas only 19 percent expect a sector recession in the near term.
The EY report finds that “the emergence of COVID-19 is reiterating the need to assess potential targets more broadly in terms of resilience. It is also impacting valuations.” According to the report, the result could be an acceleration of dealmaking as companies look to acquire competitors to protect and reposition beyond the crisis.
“Some life sciences companies will turn to M&A to enact some of these changes. Fifty-eight percent say they plan to actively pursue M&A in the next 12 months,” he says. “Of these, more than three-quarters say that their planned M&A activity will include bolton acquisitions or dealmaking for transitional capabilities.”
So, How Has M&A Fared in 2020?
According to market research firm GlobalData, in Q2 2020, the United States held a 79.05 percent share of the global medical device industry M&A deal value, which totaled $2.25 billion. The U.S. M&A deals were worth $1.78 billion. The value marked a decrease of 7.9 percent over the previous quarter and a drop of 71.3 percent when compared with the last four-quarter average of $6.19 billion.
In terms of deal activity, the United States recorded 48 deals during Q2 2020, marking a drop of 15.8 percent over the previous quarter and a drop of 11.1 percent over the last four-quarter average.
The combined value of the top five medical device M&A deals stood at $1.75 billion. Accounting for 98.6 percent of the overall value during Q2, these five deals were:
InVitae’s $1.4 billion acquisition of ArcherDx.
The $200 million asset transaction with CareZone by Walmart.
LeMaitre Vascular’s $90 million acquisition of Artegraft.
The $31 million acquisition of UrSure by OraSure Technologies.
My Next Health’s asset transaction for $30 million.
Editor and Director of Medical Content
To download a copy of EY’s report, visit here .