The pharmaceutical and healthcare sector reported 47 deals worth $409 million, a 67 percent decrease in deal values in the January-March 2024 period, compared with the same period a year ago.
Nonetheless, there was a 12 percent rise in deal volumes, with 47 deals recorded this quarter, compared to 42 in the three-month period of 2023.
M&A activity witnessed a decline in value by 73 percent -- at $283 million --- from the previous quarter. Volume declined by 54 percent, with just 11 deals in this quarter, compared to 24 in the immediate preceding quarter (October-December 2023).
Top M&A deals
The top two M&A (mergers & acquisitions) deals accounted for around 80 percent of the overall M&A values for January-March 2024.
While the one between Eric Lifesciences and Biocon Biologics Ltd (insulin, oncology and critical care portfolios) was worth $150 million, the other, between Eris Lifesciences and Swiss Parenterals, was worth $77 million.
“Q1 2024 marked a period of careful manoeuvring amidst global economic headwinds. While overall deal activity within the sector declined, we believe investor interest will continue in biosimilars, and API (active pharmaceutical ingredient) segments in the life sciences sector, and we may see consolidation in the hospitals segment,” said Bhanu Prakash Kalmath SJ, Partner and Healthcare Services Industry Leader, Grant Thornton (GT) Bharat, in a report.
“Both were driven by strong demand in the domestic market and the aspiration of the domestic players to expand their presence in the regulated markets,” he added.
The report emphasised the significance of the Eris Lifesciences-Biocon Biologics deal, particularly in the insulin, oncology, and critical care segments, alongside the deal with Swiss Parenterals, indicating growth prospects within India's injectable market, including vaccines.
PE activity shows contrasting trend
Private equity (PE) activity showed a contrasting trend, with volumes increasing by 16 percent from the previous quarter while values experienced a 90 percent decline due to the absence of major transactions and shifts in investor sentiment, influenced by macroeconomic factors.
The most notable PE investments were aimed at expanding market presence and enhancing technological infrastructure, with the largest deal being Stic Investment and Lightbox's $25 million investment in Zippin Pharma Pvt Ltd - Zeno Health.
Despite the overall decline, some noteworthy PE deals were observed in the health tech and wellness sectors, particularly in preventive care segment, suggesting growth opportunities in these areas and highlighting investor interest in healthcare-related fields.
IPOs, QIPs rise
The January-March 2024 quarter also saw a resurgence in initial public offerings (IPOs) and qualified institutional placements (QIPs), including the listings of Entero Healthcare and MediAssist Healthcare.
Four IPOs, totalling $466 million, represented a doubling in volumes and a 3.9x surge in values, compared to Q3FY24. Conversely, QIP activity remained subdued, with only one deal valued at $58 million, consistent with the muted activity of the preceding quarter.
“Looking forward, with the anticipation of a stable government post-elections and the potential for further market stability, we remain optimistic about the sector's trajectory, foreseeing a path paved with growth and strategic collaborations,” Kalmath added.
Also read | Elections 2024: What kind of healthcare do the party manifestos promise?
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
