Global Healthcare Private Equity Report

Biopharma: Healthcare Private Equity Scores a Record Year in Deal Value

Large buyouts in the first half of 2022 overcome the second-half slowdown.

By Matt Sullivan, Anshul Rana, Christoph Schlegel, Nirad Jain, Kara Murphy, Franz-Robert Klingan, Dmitry Podpolny, Alex Boulton, and Vikram Kapur

First published on abril 10, 2023
min read


At a Glance Following a strong first half, biopharma deal activity slowed in the second half of 2022, driven by macroeconomic factors and a mismatch in valuation expectations. Despite the slowdown in volume, deal value logged a record year, with private equity investors focusing buyout and add-on activity on pharma services. Private equity continues to shoulder “molecule risk” with growth-stage/crossover pharma, raising dedicated life sciences funds. As valuation expectations rebalance, we expect deal activity to recover, but the timing is uncertain. This article is part of Bain's 2023 Global Healthcare Private Equity and M&A Report. EXPLORE THE REPORT Sector trends overview Nearly every healthcare sector saw reduced buyout activity in 2022 compared with 2021. Notably, biopharma activity in North America stood out as the only sector where deal volume increased for any geography, mostly due to first-half activity. Private equity deal activity for European biopharma and related services assets was robust as well. Deal activity in Asia-Pacific for biopharma and medtech saw significant drops in 2022, mostly due to a pullback in activity in China. For the most part, healthcare deal activity concentration by geography and by sector was consistent with recent trends. Biopharma deal activity got off to a strong start in 2022 coming off record highs in 2021, but buyouts declined significantly in the back half as the overall deal market slowed (see Figure 1). The first half of the year saw several large deals, particularly in Europe, where total disclosed buyout value surged to a record $18.3 billion for the year from $11.4 billion in 2021. Some of the largest European deals in biopharma and related services during the period were club deals. In the first quarter, Permira partnered with Abu Dhabi Investment Authority, Ampersand Capital Partners, and existing shareholders—the Marcucci family—to acquire Kedrion, which produces and distributes blood plasma-derived therapeutic products, for $2.5 billion. The investors merged Kedrion with BPL to create a global company for medicinal products derived from plasma. In the second quarter, EQT and Mubadala acquired Envirotainer, a provider of temperature-controlled air cargo containers—including –70°C containers for next-generation therapies—for $3 billion. Figure 1 Apart from a slowdown in biopharma deal volume in Asia-Pacific, activity by sector and by geography was consistent with recent trends But deal activity came to a crawl in the latter half of the year as the biotech public market sell-off and other macroeconomic pressures came to bear. While sellers insisted on the high valuations seen in early 2022, buyers were made wary by the combination of tightened credit market conditions, concerns around biotech funding and its impact on services demand, and anticipation of near-term declines in valuations. In Asia-Pacific, activity in China was significantly lower, resulting in a sharp decline of regional transactions. While global biopharma deal volume declined to 104 in 2022 from 147 the prior year, disclosed deal value hit a record high at $35.1 billion, up from $32.9 billion in 2021, with at least 10 deals over $1 billion in the sector. Pharma services still strong Pharma services continued to be an area of high investor interest as a way to gain exposure to attractive pharma end markets without taking on scientific/pipeline risk. There was deal activity across the pharma value chain including in contract research organizations (CROs), contract development and manufacturing organizations (CDMOs), and commercialization services. CROs continued to pique the interest of investors. New Mountain Capital bought Emmes for $800 million, which was an exit for Behrman Capital. Niche CROs were also met with attention, as highlighted by Great Point Partners’ investment in biometrics-focused CRO Ephicacy and Essex Woodlands Management’s acquisition of TherapeuticsMD, which develops products aimed at women’s healthcare, with a therapeutic focus in family planning, reproductive health, and menopause management. Another notable deal around clinical stage services was Advarra, a provider of institutional review board (IRB) and other services for sponsors, CROs, and clinical trial sites, which traded hands from Genstar to Blackstone and CPP Investments in a deal valued at $5 billion, the largest healthcare buyout of the year. Investors continued to gravitate toward CDMOs, with an interest in specialized and scaled assets. Astorg won the bid for CordenPharma, known for its lipid technologies used in mRNA vaccines, at $2.6 billion. This focus on owning scale companies was also evident with PharmaZell. Bridgepoint acquired PharmaZell back in 2020, and in 2022 launched Axplora from the merger of PharmaZell with Novasep. The scale provides Axplora the opportunity to support biopharma customers across the entire drug life cycle. Further along the value chain, activity in commercialization services across traditional marketing/communications, market intelligence, and real-world data continued apace. At the start of the year, Novo Holdings acquired Medical Knowledge Group, an analytics-driven drug medical communication and marketing platform, for a reported $1.2 billion from Court Square Capital Partners and Aisling Capital. Warburg Pincus and Mubadala carved out Informa’s Pharma Intelligence business (rebranded as Citeline) for $2.6 billion, later merging it with WCAS- and HG Capital-owned Norstella to provide end-to-end market intelligence solutions for clients. Frazier Healthcare Partners acquired Apollo Intelligence, a real-time data and insights company helping with early disease identification. Lastly, another notable investment in the space was Astorg’s acquisition of OPEN Health Communications, a market access, medical communications, and health economics and outcomes research services provider from Amulet Capital Partners. Going forward, we expect to see more deals for software/services companies supporting clinical trials. The space is large and growing quickly, accelerated by clinical trial decentralization. Additionally, it is complex, and there are more than 15 discrete product markets, with each product market having its own set of buying dynamics and different competitive sets. This creates significant opportunities for disruptive offerings and investment for financial investors in both best-in-breed product companies, and in multiproduct platforms. Recent examples of best-in-breed product company deals include Thoma Bravo’s acquisition of Greenphire, a global leader in financial life-cycle management software for clinical trials, and Goldman Sachs’s investment in 4G Clinical, a cutting-edge randomization and trial supply management company. Several multiproduct platforms received investments and/or underwent recapitalizations over the past few years, including Signant Health (backed by Genstar) and WCG (backed by Arsenal Capital Partners, Leonard Green & Partners, and Novo Holdings). While deal activity was limited in the space in 2022 outside of Blackstone and CPP Investments’ acquisition of Advarra, we expect much more activity in 2023. Growth of specialized vehicles for pharma product investments The traditional private equity model tends to avoid pipeline risk associated with biopharma. Funds that do participate directly in pharma products typically pursue safer bets, such as investments in commercial stage platforms or in companies that make over-the-counter (OTC) products and generic medications. Examples of these kinds of deals from 2022 include TPG’s acquisitions of iNova Pharmaceuticals (valued at $1.4 billion) and DOC Generici, and Goldman Sachs’s acquisition of Netherlands-based Norgine. However, in recent years a limited set of private equity investors have created or acquired specialized funds to invest in innovative pharma products through early-stage growth investments, crossover funding, and royalty deals. Blackstone’s acquisition of Clarus to create Blackstone Life Sciences and Bain Capital’s formation of Bain Capital Life Sciences are two examples of such funds. This trend continued in 2022 with notable private equity investors moving into life sciences both organically and through acquisition. The Carlyle Group acquired Abingworth and created a dedicated operating company, Launch Therapeutics, to create a life sciences investing platform. EQT completed its acquisition of LSP and launched it under a new name, EQT Life Sciences. TPG launched its Life Sciences Innovation Fund, J.P. Morgan launched a new life sciences private capital team, and Goldman Sachs raised a new $9.7 billion fund that counts life sciences as part of its mandate. These life sciences funds vary in their investment strategies as well as value-creation strategies but create a growing pool of private capital accessible to biopharma as an alternative to public markets. Long-term bullish outlook but near-term uncertainty We expect biopharma to continue to interest investors in 2023 as the underlying drivers of unmet need and innovation remain strong. However, the uncertainties that hampered deal activity in the second half of 2022 will persist for some time. Meanwhile, macro factors in tandem with uncertainty around late-stage biotech funding may go on throttling deal activity until there is a reset of valuation expectations. Read the Next Chapter Providers: Healthcare Private Equity Narrows Its Deal Focus Read our 2023 Global Healthcare Private Equity and M&A Report Download the PDF EXPLORE THE REPORT

At a Glance

Following a strong first half, biopharma deal activity slowed in the second half of 2022, driven by macroeconomic factors and a mismatch in valuation expectations.
Despite the slowdown in volume, deal value logged a record year, with private equity investors focusing buyout and add-on activity on pharma services.
Private equity continues to shoulder “molecule risk” with growth-stage/crossover pharma, raising dedicated life sciences funds.
As valuation expectations rebalance, we expect deal activity to recover, but the timing is uncertain.

Sector trends overview

Nearly every healthcare sector saw reduced buyout activity in 2022 compared with 2021. Notably, biopharma activity in North America stood out as the only sector where deal volume increased for any geography, mostly due to first-half activity. Private equity deal activity for European biopharma and related services assets was robust as well. Deal activity in Asia-Pacific for biopharma and medtech saw significant drops in 2022, mostly due to a pullback in activity in China. For the most part, healthcare deal activity concentration by geography and by sector was consistent with recent trends.

Biopharma deal activity got off to a strong start in 2022 coming off record highs in 2021, but buyouts declined significantly in the back half as the overall deal market slowed (see Figure 1). The first half of the year saw several large deals, particularly in Europe, where total disclosed buyout value surged to a record $18.3 billion for the year from $11.4 billion in 2021. Some of the largest European deals in biopharma and related services during the period were club deals. In the first quarter, Permira partnered with Abu Dhabi Investment Authority, Ampersand Capital Partners, and existing shareholders—the Marcucci family—to acquire Kedrion, which produces and distributes blood plasma-derived therapeutic products, for $2.5 billion. The investors merged Kedrion with BPL to create a global company for medicinal products derived from plasma. In the second quarter, EQT and Mubadala acquired Envirotainer, a provider of temperature-controlled air cargo containers—including –70°C containers for next-generation therapies—for $3 billion.

Apart from a slowdown in biopharma deal volume in Asia-Pacific, activity by sector and by geography was consistent with recent trends

But deal activity came to a crawl in the latter half of the year as the biotech public market sell-off and other macroeconomic pressures came to bear. While sellers insisted on the high valuations seen in early 2022, buyers were made wary by the combination of tightened credit market conditions, concerns around biotech funding and its impact on services demand, and anticipation of near-term declines in valuations. In Asia-Pacific, activity in China was significantly lower, resulting in a sharp decline of regional transactions. While global biopharma deal volume declined to 104 in 2022 from 147 the prior year, disclosed deal value hit a record high at $35.1 billion, up from $32.9 billion in 2021, with at least 10 deals over $1 billion in the sector.

Pharma services still strong

Pharma services continued to be an area of high investor interest as a way to gain exposure to attractive pharma end markets without taking on scientific/pipeline risk. There was deal activity across the pharma value chain including in contract research organizations (CROs), contract development and manufacturing organizations (CDMOs), and commercialization services.

CROs continued to pique the interest of investors. New Mountain Capital bought Emmes for $800 million, which was an exit for Behrman Capital. Niche CROs were also met with attention, as highlighted by Great Point Partners’ investment in biometrics-focused CRO Ephicacy and Essex Woodlands Management’s acquisition of TherapeuticsMD, which develops products aimed at women’s healthcare, with a therapeutic focus in family planning, reproductive health, and menopause management. Another notable deal around clinical stage services was Advarra, a provider of institutional review board (IRB) and other services for sponsors, CROs, and clinical trial sites, which traded hands from Genstar to Blackstone and CPP Investments in a deal valued at $5 billion, the largest healthcare buyout of the year.

Investors continued to gravitate toward CDMOs, with an interest in specialized and scaled assets. Astorg won the bid for CordenPharma, known for its lipid technologies used in mRNA vaccines, at $2.6 billion. This focus on owning scale companies was also evident with PharmaZell. Bridgepoint acquired PharmaZell back in 2020, and in 2022 launched Axplora from the merger of PharmaZell with Novasep. The scale provides Axplora the opportunity to support biopharma customers across the entire drug life cycle.

Further along the value chain, activity in commercialization services across traditional marketing/communications, market intelligence, and real-world data continued apace. At the start of the year, Novo Holdings acquired Medical Knowledge Group, an analytics-driven drug medical communication and marketing platform, for a reported $1.2 billion from Court Square Capital Partners and Aisling Capital. Warburg Pincus and Mubadala carved out Informa’s Pharma Intelligence business (rebranded as Citeline) for $2.6 billion, later merging it with WCAS- and HG Capital-owned Norstella to provide end-to-end market intelligence solutions for clients. Frazier Healthcare Partners acquired Apollo Intelligence, a real-time data and insights company helping with early disease identification. Lastly, another notable investment in the space was Astorg’s acquisition of OPEN Health Communications, a market access, medical communications, and health economics and outcomes research services provider from Amulet Capital Partners.

Going forward, we expect to see more deals for software/services companies supporting clinical trials. The space is large and growing quickly, accelerated by clinical trial decentralization. Additionally, it is complex, and there are more than 15 discrete product markets, with each product market having its own set of buying dynamics and different competitive sets. This creates significant opportunities for disruptive offerings and investment for financial investors in both best-in-breed product companies, and in multiproduct platforms. Recent examples of best-in-breed product company deals include Thoma Bravo’s acquisition of Greenphire, a global leader in financial life-cycle management software for clinical trials, and Goldman Sachs’s investment in 4G Clinical, a cutting-edge randomization and trial supply management company. Several multiproduct platforms received investments and/or underwent recapitalizations over the past few years, including Signant Health (backed by Genstar) and WCG (backed by Arsenal Capital Partners, Leonard Green & Partners, and Novo Holdings). While deal activity was limited in the space in 2022 outside of Blackstone and CPP Investments’ acquisition of Advarra, we expect much more activity in 2023.

Growth of specialized vehicles for pharma product investments

The traditional private equity model tends to avoid pipeline risk associated with biopharma. Funds that do participate directly in pharma products typically pursue safer bets, such as investments in commercial stage platforms or in companies that make over-the-counter (OTC) products and generic medications. Examples of these kinds of deals from 2022 include TPG’s acquisitions of iNova Pharmaceuticals (valued at $1.4 billion) and DOC Generici, and Goldman Sachs’s acquisition of Netherlands-based Norgine.

However, in recent years a limited set of private equity investors have created or acquired specialized funds to invest in innovative pharma products through early-stage growth investments, crossover funding, and royalty deals. Blackstone’s acquisition of Clarus to create Blackstone Life Sciences and Bain Capital’s formation of Bain Capital Life Sciences are two examples of such funds. This trend continued in 2022 with notable private equity investors moving into life sciences both organically and through acquisition. The Carlyle Group acquired Abingworth and created a dedicated operating company, Launch Therapeutics, to create a life sciences investing platform. EQT completed its acquisition of LSP and launched it under a new name, EQT Life Sciences. TPG launched its Life Sciences Innovation Fund, J.P. Morgan launched a new life sciences private capital team, and Goldman Sachs raised a new $9.7 billion fund that counts life sciences as part of its mandate. These life sciences funds vary in their investment strategies as well as value-creation strategies but create a growing pool of private capital accessible to biopharma as an alternative to public markets.

Long-term bullish outlook but near-term uncertainty

We expect biopharma to continue to interest investors in 2023 as the underlying drivers of unmet need and innovation remain strong. However, the uncertainties that hampered deal activity in the second half of 2022 will persist for some time. Meanwhile, macro factors in tandem with uncertainty around late-stage biotech funding may go on throttling deal activity until there is a reset of valuation expectations.

Read the Next Chapter

Providers: Healthcare Private Equity Narrows Its Deal Focus