Healthcare deal-making in 2020 has picked up after a mostly stagnant first half, with gene sequencing specialist Illumina Inc. confirming Sept. 21 its interest in buying liquid-biopsy maker GRAIL Inc. for $8 billion.

This merger, the fourth-largest deal of the year, would reunite Illumina with the company it had spun out in 2015. Grail, which has no liquid biopsies yet on the market and expects to launch its cancer test Galleri in 2021, earlier in September applied for a Nasdaq IPO to raise $100 million.

As a private spinout, Grail raised about $2 billion to develop Galleri.

The market for cancer tests like Galleri is expected to reach $75 billion by 2035, Illumina CEO Francis DeSouza said on a Sept. 21 M&A call. Without Grail, DeSouza said Illumina's total addressable market is only $15 billion.

"From a clinical perspective, we're in the very early stages of penetrating some of the markets ... like oncology therapy selection and genetic disease testing," DeSouza said. "Genetic disease tests were less than 1% penetrated, so I am comfortable that, over a multiyear period, you should be seeing double-digit growth from [Illumina's] core business and that the acquisition of Grail is intended to accelerate that even further."

Folding Grail back into Illumina's bottom line comes at a cost — extrapolating Grail's 2020 operating expenses at about $270 million, Illumina CFO Sam Samad said on the call that the number is likely to increase.

"As we look forward, obviously, that number is going to grow because we're going to be ramping and launching product," Samad said. "We're going to be accelerating the commercialization effort and building out a sales force. And there's going to be continuing R&D as well."

2020 healthcare M&A on the rise

The Sept. 13 acquisition of Immunomedics Inc. by Gilead Sciences Inc. set a new bar in 2020 as the largest M&A deal of the year with a transaction value just under $20 billion.

Of the 15 largest deals of the year — those over $1 billion — eight have been announced in August and September alone, according to S&P Global Market Intelligence data.

The COVID-19 pandemic coincided with a sharp decline in deals in the first half of the year, but experts have said the trends leading to a prediction of continued M&A before the health crisis emerged will continue to spark deals for the remainder of 2020.