Medtech merger and acquisition deal announcements slowed in the first half of 2019, but the industry got a boost from Verily’s $1 billion round of funding — the largest ever for a medtech firm.
The Verily round was twice the size of the biggest-ever VC deal for a biotech company, according to the Vantage Half-Year Review for 2019 by Evaluate Ltd., which also covered the biotech and pharmaceutical industries. Publicly traded medtech companies in each size bracket outperformed their biopharma peers, with increases in share prices steeper, and the falls fewer and less precipitous, the report said.
“Medtech has long held a reputation as a safe if unglamorous sector in which to invest, and while it has seemed pretty safe so far this year, it has been anything but dull,” it added.
Medtech takeovers closed so far this year were worth more than those from the whole of 2018 – but with far fewer deals in the first half of 2019 versus the same period last year. Only eight medtech companies went public during the first half of the year, collectively raising $1.3 billion, Venture financing continued to provide a ready source of cash. Medtech financing exceeded $2 billion in the first quarter for the third year in a row, although the $1 billion raised in Q2 is lower than in prior years.
The Dow Jones U.S. Medical Equipment Index was up 20% at the end of Q2, with other major medtech indices also up by double-digit percentages — a healthy recovery from 2018’s performance, the report said.
“We’re seeing strong interest in biopharma and medtech companies from public and private investors, though certain areas are benefitting more than others,” said report author Amy Brown in a news release. “This likely affects the volume of acquisition and licensing deals. Barring a dramatic decline on the financial markets, it’s hard to see this trend shifting, although the potential for new drug pricing policy could make investors more jittery in the coming months.”
