New analysis by global law firm Baker McKenzie shows a record year for Biotech led to a 2% increase in capital raised from healthcare IPOs in 2016 despite a 39% decline in the volume of listings.
Capital raised reached USD 17 billion, largely driven by a 45% increase in proceeds from Biotechnology companies, against a backdrop of political and regulatory uncertainty and poor economic performance of key markets.
Biotechnology, which includes Healthtech listings, continues to dominate the sector in terms of value, accounting for 45% of total capital raised with USD 8.16 billion from 27 deals. In volume terms Pharmaceutical companies were most active with 44 listings, although this represents close to a 50% decline on volume of deals in 2014 and 2015.
The emergence of Healthtech IPOs continues to gain momentum, with eight listings in 2016 raising USD 2.4 billion. Notable deals included Samsung Biologics, a world leader in biologics development and manufacturing, which listed on the Korea Exchange in November, raising a total of USD 2 billion. ConvaTec, a global medical products and technology company, raised USD 2 billion on the London Stock exchange. This listing was the largest European healthcare company to float in London since 1993 and among the top ten largest healthcare IPOs globally.
Ben McLaughlin, Global Chair of Baker McKenzie's Healthcare group, said
While healthcare IPOs volume slowed in 2016, the sector outperformed in a poor year for IPOs generally. Biotech companies had a record year, building on year-on-year growth. Healthtech companies seeking additional capital to commercialise their technologies globally and fund further research and development, are becoming more active as the potential for personalised healthcare attracts interest and investment.
Despite questions over the potential impact of Brexit, the London Stock exchange (including AIM) knocked Nasdaq off the top spot as venue for most capital raised with US$ 4 billion from six healthcare listings. Nasdaq continues to be most active exchange for volume with 39 listings raising USD 2.4 billion. The Hong Kong Stock Exchange (including HK Gem) saw 8 healthcare companies raising a total of USD 2 billion. Of this total two were cross-border China based private hospital groups, raising a total of USD 257 million, with both companies being domiciled in China.
There was a marked decline in cross-border healthcare listings in line with the overall market, with 15 listings raising USD 1.6 billion, down from USD 4.8 billion in 2015. The number of cross-border listings from pharmaceutical companies, traditionally the most active segment, fell from 21 in 2015 to 3 in 2016. Exchanges in North America continue to attract the largest number of cross-border listings of companies seeking higher valuations from large and well informed investor bases.
Koen Vanhaerents, Global Chair of Baker McKenzie's Capital Markets group, said
"Healthcare was very much in the spotlight in 2016, with deals stifled by the threat of US government intervention on drug pricing and controls, increased financial risks and the presidential election, causing the industry to see a 39% decrease in listings. The outlook has now changed, and threats of regulatory intervention receded in the final quarter, which may set the scene for a further rise in biotech IPOs in 2017.
Healthcare companies based in the UK, South Korea and Hong Kong raised most capital from IPOs in 2016. UK based companies raised the most capital in 2016, with US$ 4 billion from six deals.
South Korean companies raised the 2nd largest amount of capital in 2016, with a total of USD 4 billion, up by over 1000% in 2015. Seven Hong Kong based companies raised USD 2 billion. One of which was a cross-border listing; Hutchison China MediTech Ltd, a manufacturer of cancer and arthritis drugs, listed on the Nasdaq stock exchange in March, raising a total of USD 110 million.
US based healthcare companies continue to lead in the number of companies listing, with 37 deals in 2016, a sharp decline from the 63 listings in 2015.