2023 has been a year of the expected and surprises. In an article recently published in Biospectrum Asia, Ben McLaughlin and Andrew Martin of our M&A and Life Sciences Practice Groups discuss the key trends and developments in 2023, including the following:
- Large-scale divestiture deals grew 30% year-on-year. Following high growth over the pandemic, some companies have separated out their noncore divisions. Others have divested their off-patent portfolios, and we have players in the distribution chain looking to snap these up, as well private equity funds looking at pharma carve-outs as they build up their operational due diligence skills.
- Funding drought. Macroeconomic headwinds, stock market volatility and spiking interest rates have made it difficult for companies to source funding. The APAC IPO market has been extremely quiet. Moreover, private equity sponsors have been looking at continuation funds as they try to find the right time to run the exit process. With expensive and hard to secure bank debt, we are seeing a rise in private credit as an alternative financing mechanism both from specialist providers but also as an additional product line from some sponsors.
- Vietnam, India and Indonesia as deal hot spots. There have been pockets of deal activity in Vietnam and India and a lot of interest in Indonesia. However, good assets at the right price are still challenging to find.
- Takeover opportunities. With falling stock prices, there has been an increase in tender offers for publicly traded biotechs by strategics. Many biotechs have sought advice on the steps to take if they receive an unsolicited takeover offer. Those companies are also looking to enter into collaboration or licensing deals, partly as a takeover defense.
- More deployment of artificial intelligence. R&D for a new drug is notoriously time-consuming (sometimes taking up to 12 years) and expensive (circa USD 6 billion). Companies are increasingly using AI to analyze data on disease pathology to shortcut the identification of the most promising new drugs, and also in other fields such as pathology and diagnostic imaging.