Benelux's biotech and pharma buyouts market in rude health

Six private-equity-backed buyout transactions took place in the Benelux biotech and pharma sectors in 2017, the same number as 2012-2016 combined. Belgium-based Alter Pharma, Serb and Oystershell, and Netherlands-headquartered Mercachem-Syncom all received private equity backing for the first time, while Belgian company Syplhar and Dutch business Viroclinics Biosciences were acquired in SBO deals.

Biotech and pharma are generally less correlated with economic trends and therefore very attractive to private equity investors targeting non-cyclical companies. With some uncertainty about the length of time interest rates will remain low and the economy stable, non-cyclical assets are looking increasingly attractive.

When asked if the six investments signify a renewed interested from private equity in the sector, The Riverside Company partner Karsten Langer says: "Recent activity is part of a trend towards greater interest in the pharma sector, capitalising on the regional strengths and the recent success of buyouts of companies, such as Belgian firms Omega Pharma, sold to trade in 2014, and Vemedia, bought in 2016. I expect this interest to continue."

In terms of differentiating factors between the sector in the Benelux compared with other European geographies, Langer points out that the region, particularly Belgium, has always been a strong pharma market. It was originally led by homegrown champions such as Solvay, UCB and Janssen Pharmaceutica, but equally hosts a strong presence among international pharma companies including GSK, Bristol Myers, Merck and Eli Lilly. "These all provide critical mass and training ground for regional 'cluster strength' in pharma," says Langer. "In addition, several strong research universities, such as Gent and Leuven, provide a vibrant pharma research and spin-off community."

Quick off the mark
The Flemish authorities stress that Belgium boasts the fastest clinical trials approval procedure in Europe, coupled with supportive national and regional authorities. It also offers access to a range of tax and R&D incentives and financing options for life sciences and biotech companies. Belgium is the second-most-active European country in terms of the number of biotech trials per capita, according to the regional bodies.

Gilde Healthcare managing partner Jasper van Gorp says the management teams and workforces in the sector are "highly skilled, international and with multilingual skills", making them particularly good assets.

The biotech and pharma VC market is also particularly advanced in the Benelux, which is creating buyout opportunities for private equity. Gilde's Pieter van der Meer, who focuses on venture and growth investments for the firm, says: "The region has a proven record of startups and small-cap companies that have progressed into successful companies, including Ablynx, Acerta, ArgenX, Decima, Galapagos, ProSensa and ProQr."

Recent activity is part of a trend towards greater interest in the pharma sector, capitalising on the regional strengths and the success of buyouts" – Karsten Langer, The Riverside Company

Deals within the space have accounted for around 13% of all early-stage and expansion investments in Benelux since January 2013, according to Unquote Data. The percentage is in stark contrast with figures of the other bigger European private equity markets – during the same period, the sector represented 11% of VC investments in DACH, 7% in the UK and Ireland, and 8% in France and the Nordics.

Gilde's van der Meer says that Benelux-born companies had always needed to have a global outlook owing to their relatively small local market, and a strong link has been created with companies based in the US. Moreover, he says that "the presence of Amsterdam-based health technology conglomerate Royal Philips has had a long-term impact on the market, its spin-outs having turned into successful medtech companies".

With a long-term approach of nurturing and expanding biotech and pharma companies, it is perhaps not surprising that the region's businesses have received growing attention from fund managers. Indeed, as van der Meer points out, the Benelux case presents a sophisticated and highly competitive market.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Benelux
• Investments
• Healthcare
• Top story
• Belgium
• Netherlands
• Gilde Buy Out Partners
• Riverside