Flourishing trade activity in life science industry

Feb 22, 2021 NEWS

The life science industry has had a handful of business trades in the year’s first month and a half. There’s a high level of activity, industry sources tell MedWatch.

This article was first published by MedWatch.com

In the last two months or so, business trade activity has flourished in the life science industry with a series of Danish companies getting new ownership.

Gorrissen Federspiel Partner and Chairman of the Board Niels Bang reports that things are busy in the life science business area. He highlights that the high level of activity from the second half-year of 2020 has carried over into the new year.

“We had a somewhat slow start to 2020, then the lockdown came with people generally holding their breaths, but then in life science, we had a decent amount of activity, and fall was extremely busy. From late summer all the way until new year and well into 2021,” says Bang. Niels Bang has a lot of experience with investments and exits in the life science area.

His views are shared with Christian S. Johansen, partner and current Nordic and Danish Life Sciences leader at EY Consuting. He states that the current activity level is “certainly above average.”

“The M&A (mergers & acquisitions, -ed.) market is really up and running. No doubt about it,” says Johansen.

Global interest

This year’s business trades include life science consultancy Alfanordic, which was acquired by consulting engineering company Niras in January. Likewise, medtech firm Simonsen & Weel was sold to global giant Diploma in the first month of the year.

In end-January, the two Cortex Technology executives Steffen Vogel and Christian Thomsen further opted to sell 60 percent of the firm to the capital fund Growth-Invest, and the big spender in measuring equipment and services Ellab acquired engineering consultancy PEC in early February.

In three of the listed deals, Danish consultancy Schrøder Translink played a role in collaboration with its global network Translink Corporate Finance, and senior partner in the former Henrik Schrøder confirms that a lot of activity is taking place.

Schrøder reasons that this, for example, owes to the fact that Danish life science companies garner a lot of attention globally.

“Danish companies are generally known for their high level of competence, which garners interest from global companies. Both in buying into firms, but also in gaining access to some of these competences,” says Schrøder.

He points towards the fact that massive investments from Danish companies Novo Nordisk and Japanese Fujifilm have also boosted global interest in Danish advisories, for example.

“Subcontractors for such projects have plenty to work on for the next many years. This also led specifically to a large interest in Alfanordic, from Danish as well as global companies,” he emphasizes.

Patent expiries

At EY, Johansen holds that a series of approaching patent expires in many major companies has also played a part in the activity increase.

“The business as such has the challenge in terms of profit that before long, patents for many of the products will expire,” he says and elaborates:

“Patent expiries don’t disappear due to Covid-19. They still happen, so companies are forced to navigate in this landscape and still explore opportunities to supplement their own portfolio with new products and technologies.”

Johansen further believes that the amount of risk-willing capital is a contributory factor. He highlights the number of stock listings in the life science area as a primary indicator.

“I think we’re seeing stock listings like never before,” he says and mentions listings such as Evaxion Biotech and Galecto Biotech, which – just like Orphazyme – have been out to fetch more capital.

Schrøder from Translink also highlights the size of the market capital as a factor.

“The demand for and prices of companies are generally boosted by the colossal money supply,” he says.

Ongoing activity in the Life Science trades

Schrøder, Johansen and Bank are in overall agreement that the current activity will keep going.

“I see no reason why it shouldn’t,” says Schrøder, and Johansen corroborates:

“We can expect that the number of trades will keep the same levels, and probably increase a little bit. This is what I expect,” says Johansen.

Gorrissen Federspiel’s Bang is more reticent about predicting future developments in coming months:

“It’s really hard to say, but I think the first half-year will be busy. I don’t think there’s any way around this, regardless of what happens. It’s hard to say what the second half-year is going to look like. But we have no reason to be pessimistic, the way things are looking right now,” says Bang.

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