Gary W. Herschman, Anjana D. Patel, and Timothy (Tim) C. McHale,  Health Care Mergers and Acquisitions attorneys, in the firm’s Newark office, co-authored an article in Bloomberg Law, titled “Health-Care Deals Open 2022 at Slower Pace than Last Year.”  

Following is an excerpt (see below to download the full version in PDF format):

After a hot start to the year on the heels of a booming end to 2021, the volume of announced and closed deals in the health-care and life science markets has notched a little lower in the first quarter of the 2022 (634), down around 10% from the same period in 2021 (723).

The slowdown in deal activity across the industry during the first quarter of 2022 could be due to several reasons.

First, it could reflect a breather from the unprecedented hefty deal volume at the end of 2021 and into January.

Second, it could also be due to economic headwinds, including the highest inflation rate in over 40 years, looming interest rate increases not seen in more than 20 years, labor shortages, and world-wide supply chain issues, along with additional uncertainty driven by the continuing Russian invasion of Ukraine (with no end in sight).

Third, the recent extension of the Covid-19 public health emergency declaration and an uptick in Covid-19 case rates, driven by the rapid spread of the BA.2 and BA.2.12.1 variants, suggest that the pandemic may not be ending as quickly as some investors and the American public may have hoped.

Life Science and Pharmaceuticals

Despite the minor slowdown in the overall health-care deal market this quarter, life science and pharmaceutical deal volume continues to be relatively strong, leading the industry with 39 announced/closed deals in March, the highest deal volume across the health-care industry in the first quarter (120) and roughly on par with deal volume in Q1 2021 (125 deals).

Although the life sciences and pharmaceuticals sector is not immune to economic and market headwinds, the sector continues to show remarkable resiliency in terms of deal volumes. A robust pipeline and continued focus on life sciences innovation and investment in next-generation pharmaceutical therapies, along with an abundance of “dry powder” for investment could continue to drive strong deal volume in life science companies, despite the economic challenges impacting other segments of the industry.

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