M&A trading activity in the Pharma sector rose 17% in the first half of 2020, according to data compiled by Compraracciones.
For many, this seems like a positive change given the economic impact of the pandemic. However, the rise in drug industry trading may not be a surprise to some. It is also worth noting that transactions being made are less bold than those that have been completed in the past few years.
A total of 41 transactions were made during H1 2020, but the total transaction value for the second quarter ($3.3 billion) was the lowest quarterly since the first quarter of 2018.
Similarly, PWC reported that Pharma Subsector had a 56% decline in trading value between late 2019 and H1 2020. For the Pharma, Biotech and the Medical Devices sector as a whole (PLS), trading values fell 87.2% compared to the same period.
Top Pharma Deal H1 2020, PWC Data, Compraracciones Graphics
These numbers may seem dramatic, but comparisons are only amplified when looked at year-over-year. In the first half of 2019, Pharma Subsector’s total transaction value was $100.1 billion. In contrast, Compraracciones reported a total of $7.7 billion in pharmasector transactions, down more than 92% from the previous year.
Similarly, the combined M&A transaction value of Pharma and Life Sciences fell from $272.9 billion to $35 billion. During the same period, the number of transactions fell from 119 to 99, with 129 transactions in H2 2019.
According to S&P Global, the healthcare industry began with 13 transactions starting in late 2020, worth more than $1 billion.
Speaking about the decline in trading volume and value in the pharmasector, the Compraracciones report added:
“On the other hand, based on reports from global data, it started with a downtrend in the first quarter 2020, from $151.2 billion to $129.9 billion from February to March. Another study from S&P Global shows that the decline was carried into the second quarter 2020, with a 35% decline in trading volume. Similarly, the total transaction value fell 40%, the highest decline since 2015.”
“Comparing H1 2020 and H2 2019, the merger market showed that total trading volumes sank 32% from 10,155 contracts to 6,938. During the same period, the trading value rose 53%.”
