Biotechnology Raises $12.6B from Private Equity, Venture Capital in H1 2020

Biotechnology Raises $12.6B from Private Equity, Venture Capital in H1 2020

Biotechnology secured nearly $12.60 billion in funding during the first half of 2020, up from $7.28 billion for the year-ago period, leading the healthcare industry in investment activity from private equity and venture capital firms. According to an analysis by S&P Global Market Intelligence, the biotechnology sector either announced or concluded 342 deals globally as of June 30, comprising mergers and acquisitions and private placements, where the main investor was either a venture capitalist, a hedge fund manager or a private equity company.

The Blackstone Group leads the list with an agreement to give up to $2 billion to Alnylam Pharmaceuticals Inc., to fund the company’s RNA-based medications both on the market and in late stages of development.

That deal was followed by Sana Biotechnology Inc.’s $700 million private placement involving Arch Venture Partners LP, Flagship Pioneering and Canada Pension Plan Investment Board, and Invitae Corp.’s $475 million share placement deal supported by its existing investors like Farallon Capital Management LLC and Driehaus Capital Management LLC.

In a report published in May, Goldman Sachs indicated the recent shift can be attributed to an uptick in interest in biotech companies eying COVID-19 vaccines, including Gilead Sciences Inc., Moderna Inc., Sorrento Therapeutics, Inc. among others. 

The healthcare industry stands at the fourth position in terms of the number of transactions signed with firms dealing in private equity, venture capital or hedge fund management. The aggregate transaction value for healthcare deals in the first half of 2020 was $31.62 billion based on 1,232 deals tracked by S&P Global Market Intelligence.

PwC analysts said in a mid-year pharmaceutical and life sciences report that private equity deals can be expected to rise in the second half of the year.

“Private equity has remained largely quiet during the first half of 2020, but still has significant dry-powder to deploy,” PwC said in the July 23 report. “While we may not see many examples of private equity completing megadeals, we expect opportunistic buyers to leap back into M&A during the second half of the year, especially as buyers’ and sellers’ pricing expectations around valuations begin to align.”

Despite 4.2 million coronavirus cases in the U.S. as of July 27, North American investment deals totaled 3,575 across sectors — the highest per region globally. However, Bain & Co. noted in March that uncertainty around the U.S. presidential elections in November would likely push a high number of deals to the first half of the year in North America.

In the Asia-Pacific region, privately held Chinese device maker MGI Tech Co. Ltd. secured $1 billion in investment through the biggest private placement in the healthcare industry this year, led by IDG Capital Partners, Spain’s Beka Asset Management SGIIC S.A and CITIC Securities Co. Ltd.

Japanese medical services company NichiiGakkan Co., Ltd. is under a buyout deal with Bain Capital Pvt. Equity LP, in a transaction worth approximately $1.5 billion. Moreover, Indian pharmaceutical company Piramal Pharmaceutical Development Services Pvt. Ltd announced a $490 million private placement with Carlyle Group Inc.

Europe saw 3,023 investment deals across sectors following the Brexit conclusion in January, with French healthcare facilities provider Groupe Emera SA announcing its $668.3 million acquisition by private investment firms Naxicap Partners and Ardian earlier that month. British company Rosemont Pharmaceuticals Ltd. also entered a $200.3 million acquisition deal with London-based Inflexion Pvt. Equity Partners LLP.