Biotechnology has spearheaded the healthcare industry in investment action from private equity and venture capital during the first half of 2020, raising close to $12.60 billion in funding, a 73% increase, up from $7.28 billion for the H1 period last year. Investment in pharmaceutical companies in H1 is estimated at $4.55 billion, making pharma the second-largest investment sector so far this year.
As of June 30, the biotech sector has either announced or finalised 342 deals globally, 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, according to an analysis by S&P Global Market Intelligence.
At the top of the list of biotechnology investments in H1 this year is American private equity firm The Blackstone Group Inc. The firm struck an agreement for a capital injection of up to $2 billion into Alnylam Pharmaceuticals Inc., to fund the company’s a robust pipeline of innovative RNAi-based medicines both on the market and in late stages of development.
That magnitude of investment 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.
The recent shift can be attributed to the increased in interest in biotech companies like Gilead Sciences, Moderna, Sorrento Therapeutics, Novavax and Inovio Pharmaceuticals and others who are developing COVID-19 vaccines, Goldman Sachs reported in May.
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 2020.
“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.”
At the moment of writing the U.S. has more than 4.8 million confirmed coronavirus cases. Nevertheless, North American investment deals totalled 3,575 across sectors — the highest per region globally. Bain & Co. noted back in March that the uncertainty around the U.S. presidential elections in November is likely to push a high number of deals to the first half of the year.