Home » Insights » What moves the healthcare market: M&A transactions in 2020 and outlook for 2021
This year, too, we would like to provide a selective review of deals from the past year and an outlook on the most important influencing factors.
The legislator decided to tighten the Foreign Trade and Payments Ordinance (AWV), not least because of the shortages of respirators, protective clothing, etc. that occurred as a result of the Corona crisis. Among other things, this provides for a reporting threshold of 10% and a ban on the enforcement of transactions subject to reporting requirements, which is punishable by law. In addition to the health sector, this is also intended to protect particularly critical areas from the access of unpopular investors – admittedly, it also makes international start-up financing and deals with financial investors more difficult. The EU Parliament has in turn used the Corona situation as an opportunity to postpone the planned introduction of the EU MDR by one year; it is now to come into force on 26 May 2021. However, the bottleneck of notified bodies – further exacerbated by Brexit – still does not seem to have been satisfactorily reduced and many audits could not be carried out during the lockdowns either. A further postponement of deadlines seems inevitable. Page 2/4 Speaking of Brexit: The United Kingdom has now left the EU on 1 January 2021. From this date onwards, products from EU manufacturers must also comply with the independent standards of the corresponding UK medicinal product or medical device approval regulations.
Basically, the race for the Covid-19 vaccine was the predominant topic. In order to finance the enormous R&D efforts, the individual companies, among them for the German market CureVac, BioNTech and IDT, successfully closed large financing rounds via capital measures, such as the admission of additional shareholders or IPOs on Nasdaq. In addition, it has become apparent that innovative strategic alliances (e.g. BioNTech/Pfizer, CureVac/Bayer) are on an equal footing with classic M&A transactions and are developing enormous momentum.
The German pharmaceutical giant Bayer acquired the US company Asklepios BioPharmaceutical, thus expanding its product range in cell and gene therapy in exchange for an upfront payment of USD 2 billion and further possible success-based milestone payments of up to USD 2 billion.
Shortly before Christmas, the American cannabis providers Tilray and Aphria announced their merger: with a market value of around USD 3.9 billion (€ 3.1 billion), a combined turnover of around USD 685 million (€ 562 million) and a combined workforce of 2500 as things stand, this will create the world’s largest cannabis company.
The Zur Rose Group (including DocMorris) continues to consolidate in the online pharmacy market: it acquired Apotal, one of the larger German mail-order companies (€157m revenue in 2019) and is also positioning itself for the coming e-prescription with the acquisition of telemedicine provider TeleClinic.
Not least due to the expected digitalisation in the pharmaceutical sector and the increased global activities of Amazon Pharmacy (including Health Navigator), we expect further deals. We hear from the market that Advent will sell the Dutch pharmacy chain Mediq to another PE investor.
The hospital sector, like all other industry segments,was heavily occupied operationally with the effects of the Covid crisis, in particular the provision of intensive care capacities. Nevertheless, the successful completion of the public takeover of Rhön-Klinikum by Asklepios Kliniken has led to further market concentration. Asklepios has thus clearly caught up with the market leader Fresenius Helios and has also decided the longstanding stalemate among the shareholders of Rhön-Klinikum in its favour.
There is also continued movement in the market for outpatient radiology: Despite a difficult market environment, Meine Radiologie has found a new owner in Triton Partners (is already the majority shareholder of Diagnostikum Berlin). We assume that this market segment will also continue to consolidate. Page 3/4 In the first quarter NASDAQ-listed Masimo acquired TNI Medical, a ventilator manufacturer based in Würzburg, from a group of private and institutional VC investors.
Previously privately held Swiss company Straub Medical, which manufactures medical devices for the treatment of arterial and venous disease, was acquired by Becton Dickinson (BD) in H1.
In August 2020, Siemens Healthineers announced it would acquire Varian Medical Systems for a purchase price of approximately $16.4 billion.
CompuGroup Medical struck several times in 2020: At the beginning of the year, the listed software company from Koblenz acquired the Italian H&S Qualità nel Software as well as German and Spanish assets of the hospital IT provider Cerner (the latter for a purchase price of 3x EV/S and 17x EV/EBITDA). A few months later, eMDs, a US provider of medical billing services, was acquired for just over €200m with similar valuation multiples.
Compugroup’s Italian competitor Dedalus acquired the healthcare IT business of Agfa Healthcare (Orbis) in the DACH region, France and Brazil for almost € 1 billion in the first half of the year.
2020 and the handling of the Covid crisis have again clearly shown us how important a functioning healthcare system and constant innovative strength are for a society. In addition to the accelerated development of new vaccines, antiviral face masks and curative medicines and medical devices, the speed of digitalisation in the health care system has also increased through measures.
However, the economic follow-up costs of the crisis will also lead to less overall public as well as private funding to finance these services. Consequently, we expect that prophylactic and curative therapies as well as all means of increasing efficiency in the healthcare system will also become more important for investors in the long term. These are primarily the following areas:
Magnus Höfer studied business administration at the Vienna University of Economics and Business Administration and at the University of Illinois. He has been a partner at Steinbeis M&A since 2019 and is responsible for the areas of pharmaceuticals, medtech and digital health, having previously worked for many years as a managing director at GEHE, Kwizda and UTA, among others. In addition, Mr Höfer serves as a board member of the Financial Experts Association and on the supervisory board or is involved as a business angel in promising start-ups.
Christoph Osterbrink holds a degree in business administration and studied at the universities of Marburg and Gießen. He has been a partner at Steinbeis M&A since 2010 with a focus on healthcare. From 2013 to 2019, he was also Interim Head of Corporate Finance at a leading hospital operator. In addition to his work at Steinbeis M&A, Mr Osterbrink is a founding partner at Steinbeis Consulting Centre Impact Investing, a consulting firm for sustainable, social and environmental impact-oriented companies in emerging and developing countries.
Steinbeis M&A offers clients a comprehensive and professional range of consulting and services in the areas of mergers & acquisitions, buy-and-build, strategy and capital advisory across all sectors. Clients are in particular medium-sized entrepreneurs, companies and groups of companies in Germany and abroad, but also international groups that want to establish themselves in the medium-sized market. There are currently 17 partners at Steinbeis M&A, who have completed well over 100 successful transactions in recent years. Steinbeis M&A is a company of the Steinbeis Group (www.steinbeis.de), one of the leading service providers for consulting and technology transfer in Europe.
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