Healthcare SPACs face 2022 hurdles; Biopharma set for Q4'21 revenue rise

Competition for targets, a tougher stance from regulators and uneven performance are likely to create an uneasy environment for healthcare special purpose acquisition companies in 2022.

SPACs, also known as blank-check companies, allow an operating company to list on the public market through a reverse merger. A total of 107 SPACs that listed parts of the healthcare industry as their intended target went public in 2021, according to S&P Global Market Intelligence data. Deal volume picked up in the last four months of the year, with 23 IPOs in November and December.

That uptick in volume means more competition for healthcare companies that are mature enough to go public. The blank-check companies formed in the second half of 2021 have less firepower than those formed earlier, with only $8.93 billion of the $23.09 billion raised by healthcare SPACs in 2021 generated in the last six months of the year as the U.S. Securities and Exchange Commission pushed for greater regulation of SPACs. Of the SPACs formed from July, 15 listed potential targets in the pharmaceuticals, life sciences or biotechnology sectors, while seven cited healthcare technology or medical technology companies.

"There's a finite number of high-quality targets," Amanda Rose, a partner at law firm Fenwick & West LLP who advises life sciences and technology companies, told Market Intelligence. "We're going to see that market for targets become more competitive."

Healthcare SPACs face hurdles in 2022 as competition, regulation increases

Chart of the week

Biopharma set for YOY revenue rise in Q4'21 as biotechs shake off uncertainty

Many of the world's largest pharmaceutical and biotechnology companies are expected to see fourth-quarter 2021 earnings decline sequentially, but most will still see year-over-year gains.

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J&J execs signal 'aggressive' M&A push ahead of consumer health spinoff

Johnson & Johnson will look for deal-making opportunities to bolster its pharmaceutical and medical device businesses as the company prepares to spin off its consumer health segment, executives said.

J&J's strong cash position means the company can afford to be "more aggressive" in acquiring early-stage companies as well as larger deals, new CEO Joaquin Duato said on a Jan. 25 earnings call.

HCA expects labor pressures to ease in 2022 as omicron dampens Q4'21 admissions

HCA Healthcare Inc. executives anticipate revenue growth in 2022 as COVID-19 cases level off and labor costs normalize.

Hospitals typically see a seasonal boost to patient numbers in the fourth quarter, but CEO Samuel Hazen said this had been dampened in 2021 by the "ramping down and ramping up" of the delta and omicron COVID-19 variants, respectively.

Biogen's $2.3B biosimilar JV sale quiets takeover rumors, reaps future M&A cash

Biogen Inc.'s $2.3 billion sale to Samsung Biologics Co. Ltd. of its equity stake in their biosimilar joint venture has deterred speculation that the struggling neuroscience company could be the target of an acquisition, analysts said.

The controversial approval and hobbled launch of Biogen's Alzheimer's disease drug Aduhelm led to a turbulent stock price and unsubstantiated reports that the company could be the subject of a full buyout, including a prevailing rumor at the end of 2021 that Samsung could be the buyer.

In other news

Philips diversifies transport, wants visibility from suppliers

Koninklijke Philips NV, a maker of consumer and professional medical devices, reported a 5.6% year-over-year fall in fourth-quarter 2021 revenue that came in 0.4% better than analyst expectations, based on data from S&P Capital IQ.

Panjiva data associated with the company shows seaborne imports fell 2.9%, while inventories increased 18.3% in the same period.

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