Although deal volume in September (213) dipped a little from the Summer, announced and closed deals through the first three quarters of 2021 (2,156) now already exceeds the total deal volume for all of 2020 (1,936).
At current pace, deal volume for 2021 will easily exceed 2,750—and likely will traverse the 3,000 deal mark due to the extensive volume of transactions underway which are targeted to close before the end of the year due to various reasons, including uncertainty in future tax rates based on ongoing discussions in Congress, and also the desire to capture current frothy valuations in the market.
With regard to the top two sectors, life science and pharmaceuticals has already reached nearly 400 deals to-date (and is expected to surpass 500 by years end), while health-care IT and software already has exceeded 320 deals and is expected to end the year with around 450 deals.
Economic headwinds (e. g. continuing supply chain challenges, higher inflation and employment shortages), as well as continuing uncertainty over whether Congress can pass an infrastructure bill or a Democratic-driven reconciliation bill, could be tempering enthusiasm for health-care investment; however, we expect the deal market to continue to be robust in the fourth quarter, despite the economic and political headwinds.
Life Science & Pharmaceuticals
Life science and pharmaceutical had the highest volume of announced or closed deals in September (47) and averaged 49 deals over the past three months, the most active quarter this year. A continuing strong pipeline along with recent announcements about the additional Covid-19 therapeutics, including oral antivirals and vaccine boosters, will likely carry this momentum through the end of the year. On the other hand, investors will undoubtedly be watching to see what type of prescription drug price control measures may emerge from current discussions among congressional Democrats.
Health-Care IT and Software
Health-care IT, with nearly 30 deals in September, is on pace to have the second most announced or closed deals of any sector this year. As the pandemic continues to take its course through the coming months, consumer demand will likely remain high for innovative remote care options and new innovative IT tools, creating a new hybrid care delivery system that meets both pre-pandemic and pandemic consumer needs.
Medical Device and Supplies
The medical device and supply sector also is close to 300 transactions thus far in 2021, and due to various factors, including continued demand pertaining to the distribution and administration of Covid-19 vaccines, could reach the 400 mark by the end of the year.
Physician Practices & Services
The physician practices and services sector saw 36 deals closed or announced in September, finishing Q3 with 79 total transactions. Interest in the sector persists and because numerous physician groups have deals in process that plan to close by year end, we anticipate this sector exceeding 400 deals this year.
Women’s health enjoyed another active month with five deals in total, highlighted by multiple acquisitions by Webster Equity Partners following the firm’s entrance into the space with the acquisitions of California-based Santa Monica Fertility in late 2019 and Ohio-based Reproductive Gynecology & Infertility in August 2021. The firm continued to increase its geographic reach in September, adding Virginia-based Dominion Fertility and Illinois-based Institute for Human Reproduction.
Eye care transaction activity remains robust as well, with nine transactions closed or announced during the month. Retina Consultants of America and US Eye were the most active acquirers, each completing two deals during the month. Texas-based Retina Consultants of America continued its string of acquisitions in 2021, adding practices in New York and …….