In our last blog post, we introduced a framework to assess the impact of COVID-19 on life sciences transaction activity. We noted that, in general, transaction volume declines following recessions and market uncertainty, but there’s evidence to suggest total deal value in these cases has been less affected vs. volume, with significant larger deals observed during prior down periods. In this post, we aim to further analyze these trends and assess how they can help inform the life sciences deal-making landscape today.


In assessing these trends, we aim not to predict the future of COVID-19’s impact but to better understand the realm of possibilities based on precedent. Many factors lead to downturns and recoveries; however, we believe that historical data can still provide meaningful insight on implications for COVID-era deal-making.


We define life sciences transaction activity across three verticals:

  • Financing: Private (venture capital, for example) and public funding (initial public offering, follow-on public offering)
  • M&A: “Merger of equals” and acquisitions
  • Alliances: Licensing, co-development and co-promotion agreements

Though fewer in volume, M&A deals tend to dominate total life sciences deal value. According to BioMedtracker, in 2019, 114 M&A transactions totaled $268 billion, compared to 421 alliance deals totaling $144 billion and 572 financing deals totaling $59 billion.


The impact of the current pandemic on deal-making is driven by a unique convergence of a public health and economic crisis. While the pandemic is first and foremost a public health crisis, it has a direct and meaningful impact on the global economy. Prior recent infectious disease crises (SARS, MERS, etc.) were comparatively more localized, limiting the scale and scope of their influence on transaction activity. Given these characteristics, our assessment in this post will focus specifically on the 2001 and 2008 economic crises and how patterns from these recessions may inform the current direction of the life sciences industry, with an understanding that these have a limitation in explanatory power versus a global pandemic.

We first evaluated the total volume and value of global life sciences mergers, acquisitions and alliances in the past 20 years. In the 2001 and 2008 recessions, there was a steep decline in deal volume. However, from 2008 to 2009, there was an increase in overall deal value, potentially indicating the opportunity for fewer but larger transactions. Meanwhile, the volume of deals stayed relatively constant from 2008 until 2014, illustrating the lasting impact of the 2008 financial crisis. The 2008 subprime mortgage crisis had a more lasting impact compared to the 2001 financial crisis, taking several years to rebound back to the average transaction value pre-recession.

Though both overall volume and non-mega-deal value generally decline during a recession, there can be a handful of mega deals following each recession. These “outlier” deals occur either during or directly following recessions, potentially fueled in part by targets trading below highs (the case in Pfizer-Wyeth).  


Outside of such outliers, it’s possible that during crises, most sizable deals are put on hold or delayed for strategic (such as policy uncertainty), financial (capital freezes) or operational (unclear plans for personnel) reasons. In our previous discussion, we noted evidence for similar pauses today, including disruptions in the Pfizer and Mylan merger, and potential delays in the AbbVie and Allergan merger. The current pandemic adds more drivers of potential delays, such as limitations in ability to conduct due diligence (virtually) or comply with shareholder meeting requirements in country of incorporation.

Since the start of the pandemic and in the month or so since equity markets crashed, there has been some surge in deal activity. One hundred and eighteen R&D deals were announced in April 2020, roughly half of which (65) were therapies and vaccines related to the novel coronavirus and COVID-19. Unlike in prior recessions caused primarily by economic phenomena, the pandemic in the current environment drove a higher degree of deal-making at the initial stages. As COVID-related deals start to wane, it’s possible that these trends may not be sustained. We will continue to monitor transaction activity and assess the extent to which this may be ongoing vs. a one-time event.

Total funding value generally declined during the prior two recessions, with varying timelines on returning to pre-crisis funding levels. The biotech industry has generally demonstrated relative resilience compared to other industries on equity markets, outperforming the S&P 500 index in both the 2001 and 2008 recessions—though this has not made it fully immune as it relates to funding. Both private and public funding were affected in each crisis.


During the periods of 2001 to 2002 and 2008 to 2009, companies were more likely to forgo their IPOs when there was significant uncertainty or market volatility. However, average IPO sizes in the time immediately following the crises spiked, albeit with a much smaller number of deals.

Early data during the current pandemic suggests a trend consistent with the above, where IPOs that have made it to market have seen strong performance. Since the WHO declared the pandemic on March 11, there have been multiple life sciences IPOs. The first three companies going public appear to be performing strong on both a pre- and post-money basis, with stock prices as of the time of this writing (May 27, 2020) above the starting price, although the life sciences industry as a whole has demonstrated strong performance in April of 2020.


Zentalis Pharmaceuticals

  • IPO date: April 3, 2020
  • IPO value: $165 million
  • Starting share price: $18
  • Current (May 27 close) share price: $42

Keros Therapeutics

  • IPO date: April 7, 2020
  • IPO value: $196 million
  • Starting share price: $16
  • Current (May 27 close) share price: $28

Oric Pharmaceuticals

  • IPO date: April 24, 2020
  • IPO value: $120 million
  • Starting share price: $16
  • Current (May 27 close) share price: $27

For private markets, early signals have shown reason for optimism. Data through March suggests Q1 2020 was the largest quarter ever for biopharma venture funding.  

Over the coming weeks, we will continue to monitor life sciences deal-making and funding activity to investigate the broader impact of COVID-19 on the transaction landscape across a range of potential scenarios:

  • Overall transactions are slowed until the virus is contained, at which point trends may revert back to those experienced before the beginning of the crisis
  • A temporary freeze is put into effect as underlying factors are sufficient to keep the market afloat but with some degree of stagnation
  • A downturn in deal-making activity is triggered, from which an extended period is required for the industry to rebound

Our next post will highlight factors that may strengthen the cases outlined above and highlight how companies may need to plan around each amid the uncertainty of the life sciences industry in the foreseeable future.