Healthcare sector sees record M&A in 2022 first half

It looks like the healthcare sector in India is on a roll, at least if you go by the M&A that has happened in the first half of 2022. The first half of calendar year 2022 ending June has seen record mergers and acquisition deals to the tune of $4.32 billion. On a yoy comparison, this is more than double the value of mergers and acquisitions seen in the first half of 2021. In fact, the total value of healthcare mergers and acquisitions deals done in the first half of 2022 is more than the value deals done in the whole of 2021 worth $3.35 billion.

The first half of 2022 this year saw a total of 53 M&A deals in the healthcare sector. In contrast, the total number of M&M deals in the full year 2021 were just 47. So it is not just the volumes but even the value of deals have been higher on a yoy basis. One can say there is an element of bias in these numbers because nearly $3.34 billion was accounted for by just one deal. We are referred to the February 2022 deal in which Biocon Biologics signed a definitive agreement to the global biosimilars portfolio of Viatris Inc of the US.

Now, the Biocon Biologics – Viatris deal has also been approved by the Competition Commission of India (CCI). The CCI normally evaluates if the deal has the potential to create a monopolistic situation in the industry due to just a handful of players dominating the space. Biocon Biologics, the bio-similars unit of Biocon Ltd, has the backing of ADQ, a state owned private equity fund of the Government of Abu Dhabi. In addition, Biocon Biologics also as the financial backing of private equity firms like True North and Tata Capital.

The second big deal that happened in the first half of 2022 was the takeover of Panacea Biotec’s  formulations business by Mankind Pharma for a consideration of $249 million. This refers to the business of Panacea Biotec in India and Nepal. Mankind Pharma is also planning an IPO and is well know in the market for its Manforce condom brand. It looks like a clear trend towards aggregation and consolidation was taking over the Indian healthcare industry, which is a good trend as it is likely to be value accretive for the industry at large.

Private equity dealmaking was quite robust in the healthcare sector at $2.96 billion in the first half of the calendar year 2022. There were two major private deals in the first half of the year. The first was Bain Capital agreeing to invest in Citius Tech for a total consideration of $960 million. The second major private equity deal in the healthtech space was a private equity funding of $300 million for Biofourmis. This was part of the Series D funding round led by private equity firm General Atlantic. Overall, the trend favours restructuring in healthcare space in India in a big way and institutional participation is growing.