At Sidley’s Healthcare Investment Conference on 12 September, speakers analysed the flow of capital across the global life sciences and healthcare ecosystem in panels discussing collaborative deals, sources of funding, the regulatory scrutiny of deals, and women’s health.
Ten key takeaways from the conference were:
- Artificial intelligence (AI). When assessing deals, consider whether AI will disrupt or create opportunities for the target. Some private equity sponsors are building internal AI teams to support portfolio companies. AI is an integral part of innovation, and applying it has the potential to create a significant capability jump in the life sciences sector.
- Insights from Moderna. The UK has a basis for a vibrant life sciences ecosystem, and there is opportunity for greater U.S.-UK collaboration across the industry, according to keynote speaker Noubar Afeyan, the founder of Flagship Pioneering and co-founder and chairman of Moderna.
- Collaborations. Successful collaborations are those that focus on the science first. These are often cultivated over a number of years.
- Mergers. Merger control issues are increasingly prevalent and are typically suspensory and mandatory in pharma deals. Dealmakers should undertake an upfront assessment of the applicability of the U.S. Foreign Direct Investment Regulation – and other relevant national legislation – and take the time to plan accordingly.
- Deal flow. There is increasing optimism from investors about flattening interest rates and reassurance that the deal pipeline is full of quality assets. There is reasonable confidence in increased deal volume in Q4 2023 / Q1 2024.
- Women’s health. This is an area which has historically been chronically underfunded and around which there is a remarkable lack of awareness. The focus is now on developing an innovation ecosystem and on supporting late-stage investment, which can only be achieved through a unified vision.
- Biotechs. We are in an environment where investors are starting to expect more from biotech companies. Clinical data is key for biotechs, and these companies also need reasonable valuations, a focus on strong capitalisation, and clear value inflexion points. Meaningful and valuable data continues to be rewarded.
- Reverse mergers. A number of listed biotech companies – particularly those listed in the U.S. – are currently reverse merger candidates. There is an expectation that the market will continue to see a number of reverse mergers; however, these are challenging, so they are rarely a first option.
- Innovation. There have been remarkable advances over the last decade in basic science and translational medicine which have delivered considerable opportunities for those looking for the right financial and human capital to unlock potential and future value. The market is increasingly discerning and selective, but continues to place big bets on the most promising teams focused on science and innovation.
- Capital. Connecting the right capital with the right teams and platforms remains both a challenge and an opportunity in an increasingly global and complex system. This requires new ways of thinking from those who deploy capital on behalf of their shareholders and investors, in order to structure allocation that delivers outcomes, impact, and sustainable returns.
This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.