Life Science & Biotechnology
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Fundamentals
Size Analysis: In the current quarter, transaction activity demonstrates a noteworthy increase, with the total transaction volume rising to $115 billion, signifying a substantial 60% increase when compared to the preceding quarter. This increase in transaction values marks a continuation of the upward trajectory observed from Q1 2022 until Q1 2023. Concurrently, the industry's market capitalization experienced a rise to $2.8 trillion, aligning with the downward trends observed a year ago.
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Public Market Dynamics: The industry has consistently trailed the SPY Index. A smoothing trend with narrowing gaps has emerged, particularly in these recent periods, mainly due to the improvement in the bottom 20 companies' performance, which have sustained modest, yet consistent growth over the last three quarters. Meanwhile, the top 20 companies in the industry demonstrated a slight outperformance relative to the SPY. The gross margin has remained stable, and operating expenses exhibit a clear decline, however, net income rebounded strongly, and continues to demonstrate volatility throughout all quarters.
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Transaction Trends: The quarter concluded with a total of 1,024 transactions, representing a increase from the previous quarter. The majority of these transactions were observed in the Biotech sector, followed by life sciences. Notably, there was a higher number of public offerings compared to private placements, with both types of transactions concentrated mostly in the North American market.
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Dispersion Insights: North American markets have played a predominant role in contributing to overall industry revenue. Of the 119 M&A transactions in the quarter, a significant portion occurred in North America, followed by Europe. However, it's worth mentioning that overall M&A activity experienced a slowdown during the quarter.
Methodology
We screened CapitalIQ using its industry classification and Business Description. Transactions were filtered by announced date within the last 3 years. Companies were filtered by having a public company type. The main industry selected was "Healthcare". CapitalIQ subsectors "Biotechnology", and "Life Sciences Tools and Services" were used to screen the database. The keywords "dispensar*", "cannabi*", "marijuana", "hemp" and "psychedeli*" were excluded to screen the database. CapitalIQ subsectors "Biotechnology", and "Life Sciences Tools and Services" were used as categories. Our sectors were defined by keywords from the CapitalIQ market intelligent industry classification.
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