More healthcare companies go public in 2020 than prior 5 years

More healthcare companies went public during 2020 than they did in the past five years as the COVID-19 pandemic increased investor demand for promising companies in the sector.

According to data compiled by S&P Global Market Intelligence, a total of 263 healthcare companies went public during the year — up from 180 in 2019 and the highest number since at least 2015. Gross proceeds from IPO activity also more than doubled year over year to $43.46 billion in 2020.

IPO activity in the healthcare sector remained robust during the closing months of 2020, with companies raising $13.75 billion during the last quarter. More companies also went public during the 2020 fourth quarter when compared to the same periods of the past five years.

San Diego-based Maravai LifeSciences Holdings Inc.'s IPO was the largest for the fourth quarter of 2020, with the life sciences company raising about $1.86 billion in proceeds. Ohio-based life sciences company Sotera Health Co. had the second-biggest IPO during the period and raised $1.23 billion.

Meanwhile, Biotechnology companies RemeGen Co. Ltd. and Everest Medicines Ltd and life sciences company AbCellera Biologics Inc. all fetched over $500 million from their IPOs in the closing months of 2020.

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Among the 17 largest IPOs for the fourth quarter tracked by Market Intelligence, eight companies that went public during the period operate in the biotechnology space, with Princeton, N.J.-based Certara Inc. being the only one from the healthcare technology industry. Chinese companies were also prominently featured on the list, with some nine companies going public during the year, including JHBP (CY) Holdings Ltd., JW (Cayman) Therapeutics Co. Ltd. and Frontier Biotechnologies Inc.

"I think investors in Asia recognize [biotech] is a vital industry for the future," Brad Loncar, a biotech investor and CEO of Loncar Investments, told Market Intelligence. Healthcare listings in Hong Kong, which is the largest market in Asia and the second-largest in the world for biotech IPOs, could be over 30 in 2021, Irene Chu, Hong Kong-based partner and head of new economy and life sciences at consultancy KPMG China, told Market Intelligence.

Goldman Sachs & Co. LLC and Goldman Sachs (Asia) LLC, which are part of Goldman Sachs Group Inc., acted as underwriters on the majority of the top-ranking healthcare IPOs in North America and Asia, respectively, during the fourth quarter of 2020. New York-based Credit Suisse Securities (USA) LLC and Jefferies LLC served as underwriting banks for IPOs by four companies each in North America. Among the Asian IPOs, JPMorgan Chase & Co.'s J.P. Morgan Securities PLC and J.P. Morgan Securities (Asia Pacific) Ltd. were underwriters for three offerings each.

A quarterly report by EY tracked 1,363 IPOs during 2020 worldwide, up 19% over 2019, while proceeds from the offerings totaled $268 billion, a year-over-year increase of 29%. Following the technology and industrials sectors, healthcare took the third spot in terms of IPOs, with 235 offerings totaling $50.4 billion in value.

The uptick in healthcare IPOs is expected to continue in 2021 as certain temporary consumer and workforce shifts turn permanent and governments provide budgetary resources to COVID-19-related healthcare activities, according to EY.