Healthcare

Sector specialists who deliver maximum value

 

 

Key healthcare market themes:

1

Medical Services Activity Up

Low interest rates, higher deal leverage multiples, cash on private equity and strategic balance sheets allowed for continued consolidation in the medical services sub-sector. This has been further driven by greater demand for, amongst other things, non-invasive surgeries.

2

MDR – Medical Device Regulation for CE marking

In May 2017 the MDR was published and will be mandatory from May 2020 onwards. Slowly, more and more potential impacts are coming to light. For instance, several products, and even some software, that had previously not been classified as a medical product will be classified as such. Extensive clinical data will be required, not only for new products, but also for the re-certification of proven products. Overall, quality management and regulatory affair (QM/RA) costs will noticeably increase resulting in a higher barrier to entry in favour of established oligopolists.

3

Shortfall in QM/RA Capacities Expected

Due to the MDR, notified bodies themselves need to recertify. Smaller institutions might not be able to comply. Therefore, we expect a consolidation wave in the sector. Over the next few years, both corporates and notified bodies will need more QM/RA capacities leading to a shortage in that area.

4

Cyber attacks

Some of the industry’s most established companies, including Merck, Beiersdorf and the British NHS, were subject to the WannaCry ransomware attack this summer. Many healthcare institutions have taken to implementing some more sophisticated IT systems, as well as adhering to more stringent digital housekeeping. At the end of August 2017, the FDA announced that approximately 500,000 implantable cardiac pacemakers require a firmware update to address cybersecurity vulnerabilities. One lesson learned is that healthcare products with digital components require special quality management attention in general and even post market introduction to remain secure.

5

US Big Dealmaking Declines

Companies have been shying away from large takeovers following President Donald Trump’s failure to move ahead with overhauling the American tax code. This is coupled with European uncertainty around Britain’s extraction from the European Union.

International M&A trends & market analysis

The following healthcare sector market data and commentary are produced by our market research team and global healthcare sector specialists as part of our semi-annual all sectors global report. The data is organised into all healthcare businesses valued over $5m, or “All Market”, and healthcare businesses valued in the range $5m to $150m, or the “Lower-Mid Market”.

Historic valuation trends:
The following chart shows international healthcare sector business valuations over time, based on semi-annual averaged transactional data:

healthcare sector tev ebitda.jpg

 

Regional valuation variation:
The following chart shows international healthcare sector business valuations by region, based on listed company multiples as at mid August 2017:

healthcare regional tev ebitda.jpg

 

Sub-sector valuation variation:
The following chart shows international healthcare sector business valuations by sub-sector, based on listed company multiples as at mid August 2017:

healthcare sub-sector tev ebitda.jpg

 

For further information as to how these valuations and statistics are computed, and their impact on your transaction, please contact us.