Mergers and Acquisitions in Dermatology: Q1 2023 Market Performance

by Jun 20, 2023Analysis, M&A

The M&A landscape in the dermatology sector illustrates an enticing market that attracts ongoing investment. Analyzing the data from the past three years reveals a consistent level of activity, suggesting mergers and acquisitions in dermatology are seeing stability and growth within the sector. Investors interested in the healthcare industry can explore strategic investments in the dermatology market, offering promising opportunities and potential returns. Several key factors contribute to this positive outlook, including the increasing prevalence of skin diseases such as acne, psoriasis, atopic dermatitis, eczema, rosacea, fungal infections, and skin cancer, which in turn drive the demand for dermatological products. Additionally, private organizations have provided funding for developing pharmaceutical products in this field, while research and development activities have increased to advance dermatological technologies. These factors collectively propel the revenue growth of the dermatology market.

M&A Dermatologic

In 2021, there were 13 M&A transactions in the field of dermatology, with a combined value of $600 million. Despite the relatively modest value of these deals, the number of transactions highlights an active market. In the subsequent year, deals decreased to 7, but the total M&A value significantly rose to $2.1 billion. As of the first quarter of 2023, only one dermatologic deal has been recorded, amounting to $800 million. Although the number of deals remains low compared to the previous 2 years, the substantial M&A value indicates that investors continue to have confidence in the dermatology market.

M&A Dermatologic. Total M&A Upfront Cash & Equity - Dermatologic

While the number of deals indicates an active market, the relatively low cash value suggests that these transactions were relatively small. In 2022, the total M&A cash value also dropped to $300 million, indicating a decline in the size of the deals compared to the previous year. However, Q1 2023 saw only 1 dermatologic M&A deal for $600 million.

  

Dermatology vs Other Therapy Areas

The cancer therapy field is the dominant area in M&A activity as it is in partnerships, with 291 deals recorded from 2018 to the first quarter of 2023. The substantial cash value of $265.1 billion indicates a high level of investor confidence in this therapy area. Neurologic therapies also garner significant attention in terms of M&A, with 178 deals being recorded for a the total M&A cash value of $152.1 billion. Ophthalmic therapies account for 75 M&A deals, with a total cash value of $100.6 billion to underscore the significance placed on ocular health and treatments related to vision in the market.

M&A - Top Therapy Areas. Total M&A Cash & Eq., Top Tx Areas - 2018-2023 YTD

Dermatology M&A ranks fourth with a recorded 58 deals since 2018. The total M&A value amounts to $84.6 billion, with $81.0 billion in total cash value. The cardiovascular therapy area experienced 100 M&A deals, totaling $60.4 billion. A cash value of $55.5 billion demonstrates continued interest in cardiovascular treatments, including heart diseases and related conditions.

Considering all therapy areas, there have been 702 M&A deals recorded from 2018 to the first quarter of 2023. The cumulative M&A value reached $706.0 billion over this period, including contingents, and $654.4 billion in cash value. While cancer and neurologic therapies dominate the market, there are still opportunities in ophthalmology, dermatology, and cardiovascular treatments.

 

Dermatology M&A Deal
    • In January 2023, Sun Pharmaceutical Industries, an Indian drugmaker, announced plans to acquire Concert Pharmaceuticals for $576 million. The acquisition will grant Sun Pharma access to an experimental hair loss drug that could soon be submitted for U.S. approval. Concert Pharmaceuticals, a Massachusetts-based biotech company, was facing financial constraints and intended to seek U.S. approval for the drug in the first half of 2023. Sun Pharma will pay $8 per share, a 16% premium, and Concert investors may receive an additional $3.50 per share through a contingent value right (CVR) if the drug achieves certain milestones.
    • In January 2023, Indian pharmaceutical company Eris Lifesciences Ltd (ERIS.NS) announced its plans to acquire a selection of dermatology brands from Glenmark Pharmaceuticals Ltd (GLEN.NS) for a total of 3.4 billion rupees ($41.63 million). This strategic acquisition aims to strengthen Eris’ position in the anti-fungal and anti-psoriasis segments of the market. The deal, facilitated by Eris’ specialized dermatology unit, involves the purchase of nine specific brands, including Onabet, Halobate, Sorvate, and Demelan, which will apply to both the Indian and Nepalese markets.

 

Implications For Investors
    1. Market Potential: Consistent M&A activity in dermatology indicates investor interest and growth opportunities in the sector.
    2. Strategic Partnerships: Significant M&A values highlight companies’ focus on strategic partnerships for market positioning and accessing new technologies.
    3. Market Stability: Despite fluctuations, the dermatologic M&A market has shown resilience, providing long-term growth potential.
    4. Market Dynamics: Smaller-scale deals present niche opportunities that more significant transactions may overlook.
    5. Due Diligence: Thorough evaluation is crucial for assessing the strategic rationale and growth potential of companies involved in dermatologic M&A.
    6. Future Outlook: Stabilization in deal size indicates a balanced M&A landscape. Monitor trends and emerging opportunities in partnerships and treatments.

 

Conclusion

In conclusion, the dermatologic M&A market demonstrates a consistent activity level, attracting investor interest and indicating potential growth opportunities. The significant M&A values reflect companies’ strategic focus within the sector, seeking partnerships for market expansion and technological advancements. Despite fluctuations in deal numbers, the market has shown stability, instilling confidence in long-term growth prospects. Looking ahead, the stabilization observed in 2023 suggests a balanced M&A landscape.

 

21,598

Licensing Deals

22,217

Funding Rounds

4,216

M&A

35,278

Company Profiles

5,897

Other Deals

27,588

Drug Sales Figures

All of this by stage, disease indication, modality, target...

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