In a recent insight, we looked at how cybersecurity has been a sector that has bucked the M&A downturn caused by COVID-19. Following an initial dip in March, the sector’s increased relevance and its recent history of producing disruptive young companies drove dealmaking during the crisis in a trend that looks set to continue.
In many ways, medtech resembles the cybersecurity sector. They are both sectors with a mix of big, established companies and disruptive SMEs, they are at the forefront of cutting-edge technology and they all have direct relevance to life during COVID-19. What’s more, these are booming sectors that attract considerable investment from every angle, including public funding, private investment and grants.
An initial downturn
Unlike cybersecurity, however, medtech M&A suffered significantly during the initial wave of COVID-19. According to PwC, the total value of medtech takeovers tracked during the first half of the year was under $2 billion and deal volumes fell 15 per cent.
Of course, medtech is a word referring to a hugely diverse industry and there were some anomalies within subsectors. Deal volumes in biotechnology for instance increased by close to a quarter, but overall, the trend across the first half of the year was downward.
During the first half of the year, issues such as supply chain problems, a lower availability of capital, regulatory and political uncertainty and, of course, the impact of COVID-19 saw M&A drop off. Overall, many firms, whether buyers, sellers or target acquisitions, were likely more focused on crisis management, rather than M&A.
Dealmaking bounces back
Since August, however, there has been a significant upturn in medtech and life sciences M&A, with the medtech sector seeing several large deals since August, such as Teladoc’s $18.5 billion acquisition of digital health firm Livongo.
To put this turnaround in context: PwC tracked $35 billion in deals across the pharma, biotech, medical device, diagnostic and related sectors in the first 6 months of the year. In the second half of the year, this figure was surpassed in just seven weeks.
Overall, it seems that there are several factors that are driving a wave of M&A in medtech and that, in the coming months, this is only likely to get bigger. With this in mind, we’ll examine some of the contributors to what looks set to be a strong, sustained period of dealmaking.
Big players dip into war chests
The aforementioned Teladoc acquisition of Livongo was one of a slew of big deals in the medtech sector that kicked off the second half of the year, suggesting that the industry’s bigger operators were ready to flex their acquisitive muscles.
Designs, supplies, installs and maintains air conditioning systems for commercial and domestic clients. Air conditioning systems are provided by leading manufacturers including Daikin, Mitsubishi, Toshiba, Fujitsu, Panasonic and Hitachi.
The comprehensive service offering includes structural timber work, roofing, first- and second-fix carpentry and bespoke joinery. Benefits from a network of prestigious subcontractors.
Undertakes residential, commercial and industrial roofing projects, predominantly working with clients based across South East England. Services offered include, but are not limited to, slating and tiling, reinforced bituminous membranes, liquid coa...
Sign up to receive our acquisition alert emails to get your FREE guide
Business Sale Report is your complete solution to finding great acquisition opportunities.
Join today to receive:
All this and much more, including the latest M&A news and exclusive resources