2021 LS&HC Horizons - Flipbook - Page 36
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Hogan Lovells
Transactions
Life sciences mergers and acquisitions
2020 was a year like no other, and certainly
this was true in the M&A world as well. After
a record year in 2019, life sciences deals came
to a virtual halt in Q2 2020 due to COVID-19.
Biopharma companies had to pivot in real time
to focusing on conducting clinical trials and
maintaining the integrity of their supply chains
during a pandemic, among other hurdles posed
by this very challenging environment. Further,
there was uncertainty all around, which is never
a good thing for deal making.
However, after a brief hiatus in Q2 2020, the
M&A and broader transactional market had a
nice comeback in the second half of the year.
Deal makers adapted to the world of virtual due
diligence and negotiations and deals progressed
largely as before, even in the face of uncertainties
around the U.S. presidential election and high
valuations of many biopharma targets. We saw a
trend towards greater volume of smaller “bolton” acquisitions and partnering deals versus big
pharma “mega” mergers.
One area of deal making that proceeded
with only a minimal pause was financing for
biopharma companies. In 2020, this market was
strong across the board, from venture financing
to IPOs and follow-on offerings. From an M&A
perspective, access to capital helps seed new
companies that later become targets and
enables buyers to finance their transactions.
However, it can create challenges for buyers
of pre-revenue targets in that remaining
independent, even for companies with high
cash burn, is a real alternative.
Going forward, early indications point to a
robust life sciences M&A and partnering
market in 2021. While valuations remain
high, healthy balance sheets and continued
availability of financing should provide buyers
with necessary capital for deals. Many of the
drivers for transacting – including access to
new products and technologies, rationalizing
and filling revenue gaps across products lines,
and venture-backed start-ups looking for an exit
– are very much in play. Of course, the pandemic
continues to remain a significant risk factor,
as does uncertainty around what is likely to
be a tighter regulatory environment under a
new administration.
Adam Golden
Partner, New York
adam.golden@hoganlovells.com
