M&A deal value in healthcare, pharma hits record high in first half of 2022

India’s healthcare and pharmaceutical sector saw hectic deal activity with the value of merger and acquisitions (M&As) in the first six months of this calendar year scaling a record high and crossing the total deal value of $3.35 billion in 2021.

M&A deal value in the sector touched $4.32 billion during January to June, compared to $2.02 billion in the same period last year, according to VCCEdge, the data and intelligence platform of VCCircle. In the second half of last year, M&A deal value came in at $1.33 billion.

The number of M&A deals during the period also rose to 53 from 47 each in the first and second half of last year.

The record M&A deal value in the sector was largely due to Biocon Biologics’s definitive agreement to buy Viatris Inc.’s global biosimilar portfolio for $3.34 billion in February. The deal received the nod from the Competition Commission of India (CCI) last month. Biocon Biologics, a unit of Biocon Ltd, is backed by Abu Dhabi’s state entity ADQ and private equity firms such as True North and Tata Capital.

In another big-ticket M&A deal in the space during the period, drugmaker Mankind Pharma Ltd agree to buy Panacea Biotec’s formulation business in India and Nepal for $249 million.

Ramesh Kannan, partner at healthcare-focused private equity firm Somerset Indus Capital Partners, noted that there is a very clear direction towards aggregation, consolidation and bigger deal sizes in the healthcare and pharmaceuticals space in India.

“The deal momentum will continue as more foreign companies which are interested in strategic transactions are coming,” said Kannan. However, valuation will be a challenge, he added.

Private equity dealmaking in the healthcare and pharmaceuticals sector also remained quite robust as deal value shot up to $2.96 billion in the first six months of this year from $2.75 billion during July-December 2021. However, deal value was lower than $3.31 billion in the same period last year.

Private equity deal volume also fell in the first half of this year to 83 from 98 in July-December and 85 in January-June of 2021. This was still higher than 71 registered in the first half of 2020.

Private equity deal value during the period was primarily bolstered by two big-ticket transactions in the healthtech segment. The first was Bain Capital’s agreement to invest in Citius Tech for $960 million. In another major private equity deal in the healthtech space, Biofourmis snagged $300 million as part of its Series D funding round led by private equity firm General Atlantic.