Annual review 2017

GLOBAL
HEALTHCARE
Annual Review of the key 2017 demographic and
political drivers and financial activity within the
pharmaceutical, medtech and biotech sectors
www.artcapman.com
ARTERIAL ANNUAL REVIEW
2018
SEPTEMBER

2
GLOBAL HEALTHCARE
Arterial 2017 Annual Review
Inside this report
Letter from Arterial ................................................................................................ 3
About Arterial Capital Management ..................................................................... 5
2017 – The Year at A Glance: ................................................................................. 6
Key Drivers of Healthcare..................................................................................... 10
Industry Trends..................................................................................................... 14
Global Macro-Economic Picture ........................................................................... 14
Pharma & MedTech Deals by Value...................................................................... 16
Pharma & MedTech Deals by Number and Size.................................................... 18
Pharma & MedTech Deals by Product Category................................................... 19
Pharma & MedTech Deals by Type of Deal (Trade vs Private Equity)................... 21
Pharma & MedTech Deals by Target Region......................................................... 23
Geographical Focus: UK........................................................................................ 26
Geographical Focus: North America..................................................................... 30
Geographical Focus: Continental Europe ............................................................. 34
Geographical Focus: Rest of the World................................................................ 38
Conclusion ............................................................................................................ 43

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Letter from Arterial
Welcome to Arterial’s Annual Review of Global Healthcare.
2017 has been a strong year for Arterial with significant growth across Europe. Our
primary growth driver has come from family offices and institutional pension funds
seeking opportunities for alpha.
Both family offices and pension trustees continued to increase their exposure to
Healthcare, albeit with a general criticism at the lack of overall available sector
analysis in respect of unlisted investment opportunities. Whilst there was some
limited sell-off within biotech, exposure to private equity and healthcare generally
increased.
Arterial’s scientific, origination and investee teams have been strengthened with
international appointments from Roche, GAM, JP Morgan and Morgan Stanley.
In terms of global life science, 2017 saw high, though again slightly slowing activity
across Pharmaceutical and Medical Technology (“Pharma & MedTech”) deal-
making, with the fifth-highest and third-highest number of deals on record
respectively. The industry represented just over 6% of value and just under 5% of
the count, of all deals worldwide. The trendlines for both of these are clearly
upwards and they continue the trend of the past 20 years. With a rising middle class
and eagerness across governmental and the insurance sectors to cut costs, we see
no sign of this trend abating. Moreover, this is an international trend for both
Pharma & MedTech.
The year saw a continuation of the shift away from the recent-year bias towards
the Drugs/Pharma category, and moderately less concentration of deal activity in
North America. Private Equity had a very active year of involvement in the sector,
with its highest total of deals ever by value and a modest rise in the number of deals
(albeit of a relatively low level in 2016).
Some critical drivers of deals are likely to be enduring and potentially accelerating:
loss of revenue for Big Pharma due to patent expiries and generic competition,
increasing pricing pressure and declining R&D productivity. We see these as
propelling still-higher appetite in coming years for fresh, innovative products and
Intellectual Property from small Pharma & MedTech companies.
As these powerful trends of higher Pharma & MedTech deal numbers and deal
value continue to rise, Family Offices, Private Wealth and Pension Fund Managers
increasingly continue to view the sector as a core investment holding with direct
participation leading the way for equity returns over funds. The opportunity cost of
not participating is clearly rising, as 2016 shows.
A combination of the trends mentioned above and strong organic growth drivers
(population growth, change in age distribution and change in the prevalence of
chronic and communicable diseases, rising resources available to finance the
provision of healthcare, relentless increases in the cost of healthcare goods and
Arterial experienced
significant organic growth
Key appointments made from
Roche, GAM, JP Morgan and
Morgan Stanley.
2017 saw fifth-highest on
record deal value and third-
highest numbers…
…with a further shift away
from Drugs/Pharma and
North American targets and
more Private Equity action …
…and strong and rising
appetite is set to stay for
small Pharma & MedTech
with innovative products.
...as the deal trends and
relentless organic growth
themes combine to present a
compelling opportunity.
Pharma & MedTech should be
seen as a core sector for
investment…

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GLOBAL HEALTHCARE
services and regulatory pressures) means that Pharma & MedTech presents one of
the most compelling investment areas in the market today.
There is of course a lot of information to digest in our report, but whether you are
a Family Office or pension fund manager seeking alpha, the subject matter is
compelling. Healthcare is an incredibly exciting sector, and whilst there are of
course risks, with such risks come amazing opportunities.
It is a sector that cannot be ignored.
We hope you enjoy reading this report and should you have any feedback for future
editions or you wish to meet with our team do let us know.
Yours sincerely,
Arterial Capital Management
Arterial

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GLOBAL HEALTHCARE
About Arterial Capital Management
Arterial Capital Management is a private equity firm focused exclusively on the global
life science sector. We specialise in providing equity funding for typically early-mid
stage biotech, medtech and pharmaceutical companies and capitalising upon the
opportunities that offers. Investor monies are originated from Family Offices, and
Pension Fund Managers and Trustees.
Our approach is to partner with well-researched, innovative projects, with proven
management teams, recognised trial data, strong Intellectual Property libraries and
a demonstrable opportunity for significant commercial upside. We target investee
firms with a culture of strong corporate governance, a willingness to build a scalable
global business, a desire to work with and embrace a team effort towards
commercial success and the potential to return 5-20 times our gross investment for
investors.
The individual members of the Arterial team reserve the right to invest up to 20%
of each project on the same terms as other investors, and our focus is on a reward
for success with a 20% carried interest on returns.
Of course, the bedrock of the Arterial business is our world-class team who are
committed to the long-term success of Arterial and our loyal investors.
The Arterial team have, during their careers, operated at the very pinnacle of the
life science, industrial and investment banking sector. Our team has a proven,
publicly verifiable history of leadership and achievement, clearly demonstrated
with a track record which has seen them successfully take approaching one
hundred Pharma and MedTech projects to market during their careers. In addition
to their outstanding commercial success, our team’s public work to date includes
advising European and US Governments, and sitting on The Medicines and
Healthcare Products Regulatory Agency (MHRA), Federal Drug Agency (FDA).
Our professional advisory clients and their supporting investor base are immensely
loyal. Investors typically build a portfolio across multiple projects and fully accept
the risks inherent within life science, but also seek to enjoy and benefit from the
potentially immense commercial and social rewards. Our professional advisors are
able to access Arterial’s life science opportunities through European and
International investment vehicles and pension funds, all of which are regulated (EU
passported), FACTA and OECD CRS compliant.
If you are reading our annual healthcare report for the first time, then you may wish
to consider the opportunities available for your firm and your clients. Whether you
are a Family Office in Monaco, a wealth Manager in London, a Pension Trustee in
Zurich or a Law Firm in Moscow or Singapore speak with us. The Arterial team offer
professional advisers, innovative, highly researched deal flow with the real
opportunity to advance medical science, support social well-being and benefit from
potentially immense financial upside when an investee project is successful.

6
GLOBAL HEALTHCARE
2017 – The Year at a Glance:
 2017 saw a further deceleration in deal value for Pharma & MedTech
deals, although it was still comparatively good, with the fifth-highest deal
value on record1
and a slight increase in the number of deals, against a
backdrop of a slightly accelerating global economy. This in part reflected
the difficult comparison with extraordinarily strong deal value levels in
2014 and 2015. Pharma & MedTech deal activity cooled as a proportion of
that of all sectors combined and represented 6% of all-sector deals by
value, compared to 8% in 2016 and 11% in 2015.
 North America2
fell significantly again as a proportion of total deal value to
56% of the global total, which was below its long-term average of 62%,
reflecting in part both the high year in 2015, with no less than 80% of
global deal value there in that year, which featured certain very large
deals.
 Drugs & Pharma remained the largest category of deals by value with 56%
of the global total, although significantly less so than in the 2013 to 2016
period, reflecting the absence of several very large deals in those years
and it slipped slightly as a proportion of the total number of deals at 34%.
 Private Equity was involved in a significantly higher amount of deal value
in 2016, reversing a sustained lull from 2012 to 2015; it was involved in
14% of total deals by value, though 10% of deals by number.
 UK Pharma & MedTech deals3
fell significantly in value terms in 2017, with
the number of UK deals similarly dropping markedly. Products was the
leading category of deal target, with 50% of the total by deal value, albeit
only 18% by deal number, leaving Drugs & Pharma displaced as the largest
category for the first time since 2013.
 Private Equity was involved in more than 1 out of 7 UK Pharma & MedTech
deals in 2017, which reflected a rebound back towards its historical
average of just under 1 in 5, and which better fitted with its rising trend in
the UK over time and to Private Equity’s relatively high involvement in the
UK Pharma & MedTech market relative to other regions globally.
1
Since Dealogic’s records began in 1995.
2
Referring to the domicile of the target company.
3
Ditto.

7
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Major Themes for Innovation in
Pharma & MedTech
Digital Healthcare / Remote Monitoring
Digital healthcare encompasses the ever-expanding capabilities to link databases
containing subject-level medical information. A common challenge is to integrate
all medical information into a single source so that the medical record is
immediately available wherever medical care is sought. This could include the
results of all physical exams, all past and present medications, medical procedures
and surgeries, as well as family history.
In time, this will further include lifestyle assessments from sensors, which collect
data on daily activities such as exercise and diet, as well as physiological metrics
such as cardiac function, glucose levels and stress, in real time. A challenge to this
are the regulations in place regarding the privacy of medical information, but the
opportunity and advantages for all such information to be immediately available to
deliver the most efficient medical care far outweighs the negatives. Business
opportunities abound for bringing together relevant, meaningful, and standardized
information.
Collection and Commercialisation of Data
“Big Data” comprises the volume, velocity and variety of data captured
automatically, collected and stored. Data collection needs to occur in a unified,
standardised and structured way in order to maximise the usability of these data –
this may be via mobile or wearable devices worn regularly or continuously, or via
more static sensors in a domestic or clinical environment.
The intelligent processing, integration and analysis of these data enables improved
quality of treatment (via earlier intervention, reduced risk of adverse reactions,
better understanding of causation and reduced risk of medical errors), improved
disease prevention, improved patient safety, improved prediction of demographic
patterns of disease and reduced cost.
One significant application of this has been the development of Google Flu, which
has become adept at accurately predicting increases in influenza hospital
admissions, 7-10 days earlier than the US Center for Disease Control and Prevention
(CDC).
A plethora of emerging mobile apps enable both doctors and patients to track
behaviour conditions and on-going health, thereby potentially assisting with
behavioural-health therapies. McKinsey & Co. have estimated that the sharing and
integration of big data will reduce US healthcare costs alone by at least $300 billion,
potentially as much as $450bn based on existing technology and predictions. Two-
thirds of this sum is estimated to be delivered by way of reduced US healthcare
expenditure
A common challenge is to
integrate all medical
information into a single
source.
Sensors can be used to collect
real time lifestyle and
physiological data.
Volume, velocity and variety
are key aspects of “Big data”.
Intelligent use of this data can
enhance quality of medical
understanding and response.
One example is Google Flu’s
superior predictive ability.
Mobile apps enable tracking
of conditions and health.

8
GLOBAL HEALTHCARE
Big Data can be combined with advances in Artificial Intelligence, an emerging field,
which builds on the ability to process data in more efficient manners. This could be
in the identification of individuals at high risk of developing disease,
recommendation of preventive measures, or the simplification of how disease is
detected. Artificial Intelligence includes machine learning from national databases
to identify public health trends, as well as means to evaluate the genetic disposition
in support of personalized medicine. This leads to the need to collect data in a
unified and standardized manner. As computing power increases, the ability to
collect more and process data will become less expensive and will become more
efficient with advances in storage and retrieval.
These two fields, Big Data and Artificial Intelligence, offer considerable potential for
commercialisation of anonymised data and analytical findings drawn from it, as it
holds the potential to accelerate the pace of patient treatment and drug discovery.
At present big data is being commercialised primarily by way of various
collaborative agreements. Recent deals have included Onduo (diabetes
management) and Medtronic’s suite of partnerships in diabetes with the
technology company Qualcomm, the diabetes data company Glooko, and
UnitedHealthcare.
With such new technology comes a new generation of considerations – privacy,
data integrity and of course, ethics. Nonetheless the trend for big data
opportunities is likely to steepen, with a greater overlap between life science and
emergent tech businesses being inevitable.
Personalised Medicine / Early Diagnostics
Personalised medicine has arisen in an era of scientific research whereby significant
improvements in technologies to sequence DNA and decreasing costs, have led to
an increased understanding of our genetic make-up. It is possible to understand
many potential disease pathologies from a person’s DNA, particularly when genetic
mutations are inherited and are therefore part of an individual’s germline.
However, cancer develops when mutations within the DNA code are acquired
throughout a person’s lifetime producing a unique tumour DNA profile. In some
cases, these mutated genes lead to the generation of proteins that are responsible
for driving the progression of malignancies and therefore represent drug targets.
This forms the basis of personalised medicine, whereby drugs can be selected that
are specific to an individual patient’s disease. Hence, improved patient outcomes,
decreasing adverse reactions and efficient use of expensive therapeutics will be
facilitated.
Personalised medicine accounted for $94 billion of sales in 2015 although this is
predicted to rise to $179 billion by 20224
. A landmark decision by the FDA in 2017
4
https://www.rathbones.com/knowledge-and-insight/personalised-medicine-coming-
soon-clinic-near-you
A key development is
combining Big Data with
Artificial Intelligence.
This offers potential
acceleration of treatment.
Collaborative agreements
offer the main path to
commercialisation at present.
The advance of Big Data
raised serious ethical issues.
Personalised medicine has
evolved from DNA sequencing
technologies.
Cancerous mutations in DNA
produce a unique DNA profile
that can be used for
idiosyncratic targeting.

9
GLOBAL HEALTHCARE
saw the approval of Merck’s Keytruda for the treatment of cancer based on the
genetic make-up of the tumour rather than its site of development or origin5
.
Undoubtedly, this will pave the way for many more drug approvals in the coming
year, as clinical trials are designed to recruit patients based on the genetics of their
tumour rather than its location within the body.
In a similar vein, DNA sequencing provides a route towards early diagnosis. In
general, diseases are easier to treat the earlier they are diagnosed specifically with
regards to cancers. In addition, therapy is 2-4 times less expensive for patients that
receive an earlier diagnosis6
. Early diagnosis of cancer enables surgical intervention
and therapy prior to metastasis, at which point disseminated disease is more
difficult to treat. As such, there has been an increased effort in the development of
early diagnostic tests whether that be screening blood or other bodily fluids for
signs of cancer, or enhanced imaging. In the former case, tumour cells and/or their
DNA, shed into bodily fluids, can be detected by amplifying tumour-specific genes.
In this manner, blood, bone marrow, sputum and urine can all be checked for signs
of cancer before any physical symptoms present. These so-called liquid biopsies
may in the future also be used to monitor the progression of a person’s cancer and
predict how it may respond to different therapies.
It has been predicted that early diagnosis of cancers will result in cost savings of at
least $36 billion annually7
. Inevitably, 2018 will see a rise in companies developing
these technologies alongside other personalised medicine approaches.
Whilst the level of 2017 M&A activity in the thematic areas above remained
modest, with much investment being conducted by large Pharma & MedTech or IT
companies, we expect to see these become a significant area for transactions in
coming years.
5
https://www.fda.gov/newsevents/newsroom/pressannouncements/ucm560167.htm
6
http://www.who.int/mediacentre/news/releases/2017/early-cancer-costs/en/
7
Kakushadze et al., (2017) Data 2, 30; doi:10.3390/data2030030
DNA sequencing allows
earlier diagnosis and lower-
cost of therapy.
Personalised medicine was a
$94bn revenue business in
2015, which is expected to
rise to $179bn in 2022.
For example, early diagnosis
of cancer may save $36bn
p.a..
Although 2017 M&A in the
areas above was modest, we
expect it to grow significantly.

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GLOBAL HEALTHCARE
Key Drivers of Healthcare
As a prelude to themes that characterised 2017, we discuss here certain major long-
term drivers of healthcare spending, which played a key role in underpinning
revenue growth for the Pharma & MedTech industry worldwide in 2017 and which
are likely to continue to drive growth in coming years and decades.
Demographic change is one core driver. It comprises a higher global population
(with a global increase of 1.0 billion people, or 16%, expected by 20308
), rising
longevity (in 2030, 16% of the world’s population is expected to be 60 or more years
old, compared with 13% in 20179
) and lifestyle change (towards less active, more
sedentary occupations), coupled with economic growth, a rising proportion of the
middle class and changing social expectations for healthcare.
One cardinal trend in demographics is the anticipated rise of the elderly as a
proportion of global population. The percentage aged 60 or over overtook the
percentage aged less than 5 circa 2000 and it is forecast to overtake the percentage
aged less than 10 by 2030, the percentage aged less than 15 by 2055 and the
percentage aged less than 20 by 208010
. This is mainly due to a combination of
declining fertility rates, mainly in developing countries and increasing longevity
worldwide.
Chart 1: Young Children and Older People as a Percentage of the Global Population: 1950-
2050
Source: United Nations, World Population Prospects: The 2010 Revision
8
United Nations, World Population Prospects: 2017 Revision, available at
https://esa.un.org/unpd/wpp/
9
Ditto.
10
Ditto.
0
5
10
15
20
1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060
Age <5 Age 65+
Long-term drivers of
healthcare spending are set to
play a key role in Pharma and
Medtech revenue growth
The world’s population is
expected to rise by 13% by
2030
Those aged 60 or over are
expected to outnumber those
aged less than 10 by 2030
%
%
%
%

11
GLOBAL HEALTHCARE
Four important, non-communicable diseases are significant drivers of increased
healthcare spending. First, we consider dementia. The causation of most forms of
this disease (of which the most common variant is Alzheimer’s Disease) is unknown
and its diagnosis is not easy (particularly in its early stages), hence estimates of its
prevalence worldwide are subject to relatively high inaccuracy. It has been
estimated that its prevalence doubles every five years after the age of 65. In 2015,
it was estimated that 47m people worldwide (or 1% of the global population) had a
form of dementia, which is expected to nearly double every 20 years to 75m in 2030
and 132m in 2050 with a worldwide cost of $818bn in 201511
.
Chart 2: The Growth of Numbers of People with Dementia in High and Middle & Low
income Countries
Source: Alzheimer’s disease International, World Alzheimer Report, 2010
Second, we look at cancer. The World Health Organization (“WHO”) describes
cancer as the second leading cause of death globally, with 9m deaths in 201512
.
Cancer is a broad term for a large group of diseases that affect many parts of the
body and which result in the rapid multiplication of abnormal cells that can then
spread to other body organs in a process known as metastasis. The WHO estimates
that its worldwide cost was $1.2trn in 2010 and it expects the number of new cases
to increase by around 70% over the next two decades13
.
11
Alzheimer’s Disease International, World Alzheimer Report 2015, available at
https://www.alz.co.uk/research/WorldAlzheimerReport2015.pdf
12
World Health Organization, Cancer Factsheet Updated February 2017, available at
http://www.who.int/mediacentre/factsheets/fs297/en/
13
Ditto
Dementia affects 1% of the
world’s population and it is
expected to double every two
decades
Cancer is the second-largest
cause of death worldwide,
with cases expected to rise by
~70% over the next 2 decades
0
20
40
60
80
100
120
1 2 3 4 5
Number of people with dementia (millions)
Low and middle income
Countries
High income Countries
2010 2020 2030 2040 2050

12
GLOBAL HEALTHCARE
Chart 3: The three most common cancers in males and females
Source: Cancer Research UK
Note: Percentages of all Cancer Cases Excluding Non-Melanoma Skin Cancer (C00-C97 excl. C44), UK, 2014
Third, we turn to diabetes. Diabetes mellitus is a chronic disease that arises when
the body is unable to produce sufficient, or any, of the hormone insulin in order to
enable glucose to enter the cells where it is converted into energy. Insufficient or
negligible insulin production leads to high blood glucose concentrations, known as
hyperglycaemia, which gives rise to diabetes. Hyperglycaemia causes painful,
expensive and dangerous complications to ensure that can involve damage to the
eyes, kidneys, legs, heart, peripheral nerves, soft tissue, and skin, which may in turn
require amputation. According to the International Diabetes Federation14
(“IDF”),
on a global scale, 387 million people of 20-79 years of age, or 8.3% of the population
currently suffer from diabetes and the IDF forecasts that this will rise at a 2.0%
Compound Annual Growth Rate (“CAGR”) to 592 million in 2035. Of the 387 million
diabetics globally, 46.3%, or 179 million people, have diabetes but are currently
undiagnosed and are thus progressing toward complications unaware.
Chart 4: Geographical distribution of Current Diabetes Sufferers
Source: International Diabetes Federation
14
International Diabetes Federation. IDF Diabetes Atlas, 6th Edition, Brussels, Belgium:
International Diabetes Federation, 2013. http://www.idf.org/diabetesatlas and 2014
Update at http://www.idf.org/diabetesatlas/update-2014
All
other
cancers
47%
Prostate
26%
Lung
14%
Bowel
13%
Male incidence
180,836 cases
UK 2014
36%
19%6%
10%
10%
13%
6%
Western Pacific
South-East Asia
South and Central
America
North America &
Caribbean
Middle East & North
Africa
Europe
Africa
Diabetes affects 8% of the
global population
All other
cancers
47%
Breast
31%
Lung
12%
Bowel
10%
Female Incidence
176,024 cases
UK 2014

13
GLOBAL HEALTHCARE
Fourth and final, we briefly examine cardiovascular disease, which is a broad term
for a range of disorders of the heart and blood vessels, including coronary heart
disease and stroke. This group of diseases have been identified by the WHO as the
top global cause of death, with 18m such events in 201515
, of which three-quarters
occur in economically disadvantaged countries. Cardiovascular disease is forecast
to account for more than 23m deaths worldwide by 201316
.
Chart 5: Highest Cardiovascular Disease Death Rates
Source: National Health Organization, National Center for Health Statistics and National Heart, Lung and Blood
Institute
Note: Represents a look at the top 10 countries with the highest death rates for heart disease, stroke and high blood
pressure per 100,000 men and women, ages 35 to 74
15
World Health Organization, Noncommunicable Diseases Factsheet Updated January
2015, available at http://www.who.int/mediacentre/factsheets/fs355/en/
16
American Heart Association, Heart Disease, Stroke and Research Statistics At A Glance,
available at http://www.heart.org/idc/groups/ahamah-
public/@wcm/@sop/@smd/documents/downloadable/ucm_480086.pdf
1173
1067
657
524
359
347
347
305
261
235
466
454
312
218
209
205
142
139
137
117
Russian Federation
Ukraine
Romania
Hungary
Cuba
Brazil
Czech Republic
Argentina
Mexico
United States
Women
Men
Cardiovascular disease is the
top global cause of death.

14
GLOBAL HEALTHCARE
Industry Trends
Global Macro-Economic Picture
Lifted by accelerating global economic growth in 2017, worldwide
deals in all sectors rose significantly in total value, though only
slightly in number.
The macro-economic background in 2017 was buoyant and relatively synchronised
globally, despite the political shocks of 2016 in the form of the outcomes of the
Referendum on Membership of the European Union in the UK (to leave) and the
Presidential Election in the US (to elect Mr Donald Trump).
World economic growth (measured by the increase in Gross Domestic Product in
real terms) is estimated to have been 3.7%17
(vs. 3.2% in 2016, 3.2% in 2015 and
3.4% in 2014), with Developed Market growth of 2.3% (driven by the US and
Germany) and Emerging Market growth of 4.7% (driven by China and India). Growth
gradually accelerated through the year and key commodity prices rose significantly
(including oil and base metals). China’s GDP growth picked up in both the official
statistics and in alternative indicators, and concerns over its financial sector
receded somewhat.
Global deal activity was strong and up year-on-year, totalling $5,968bn of
announced deal value, up by 10% vs. 2016, representing the fifth highest year on
record. Low interest rates and accelerating economic growth represented clearly
favourable conditions for corporate Mergers & Acquisitions (“M&A”) and equity
investment. This is shown in Chart 6 below, which illustrates how this fall in global
deal value was mainly driven by many fewer very large deals of $10bn+.
17
Source: IMF World Economic Outlook Update 22 January 2018
2017 was a year of buoyant
and synchronised global
economic growth, despite
2016’s two political shocks…
…With a step-up in GDP
growth vs 2016…
...And worldwide deals rose
significantly in value terms,
though the deal count fell
slightly

15
GLOBAL HEALTHCARE
Chart 6: Annual Global Deal Value for All Sectors
Source: Dealogic
Note: Represents all announced deals worldwide for all sectors. It includes those that were not completed for any
reason.
The number of announced transactions increased slightly to 44,153, which was
up by 4% vs 2016, although this only represented the eighth-highest number of
M&A transactions in a single year. This is shown in Chart 7 below.
Chart 7: Annual Global Deal Count for All Sectors
Source: Dealogic
Note: Represents all announced deals worldwide for all sectors. It includes those that were not completed for any
reason.
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
2015201220092006200320001997
DealValue($m)
Less than 100m 100m to 500m
500m to 1bn 1bn to 10bn
Over 10bn Last-10-Year Mean Deal Value
Mean Deal ValueOver
Past10 Years
+1%
Since
2014
0
10,000
20,000
30,000
40,000
50,000
60,000
2015201220092006200320001997
No.ofDeals
Mean Deal ValueOver
Past10 Years
-3% Since
2014

16
GLOBAL HEALTHCARE
Pharma & MedTech Deals by Value
Pharma and MedTech deal value fell again, though only
modestly, after two extraordinary peak years in 2014 and 2015,
though it remained at a historically high level. The year was
marked by a more even balance of large and small deals.
For global Pharmaceutical and Medical Technology deals (“Pharma and MedTech”,
defined as those relating to healthcare products and excluding healthcare services,
insurance or financing companies), 2017 was a second year of a return to more
normal, though still strong levels that totalled $363bn in announced deal value
terms. This represented 6% of all announced deal value in all sectors worldwide,
which went against the longer-term trend of Pharma and MedTech representing an
increasing proportion of total global deals (the average since 1995 is 6%).
This $363bn of total Pharma and MedTech deal value fell by 13% vs 2016, which
again was close to a difficult basis for comparison in the form of the extraordinary
heights in 2014 and 2015. The $363bn total deal value was 10% below the average
annual deal value of the 10 years to the end of 2017. This is shown in Chart 8 below,
which illustrates the very marked step-up in total deal value in 2014 and 2015,
driven by very large deal sizes of $10bn+, which far outstripped the increases in all-
sector $10bn+ deals and total deal activity shown in Chart 6 above.
Chart 8: Annual Global Deal Value for Pharmaceutical and Medical Technology
Source: Dealogic
Note: Represents all announced deals for Healthcare Drugs/Pharmaceuticals, Healthcare Instruments, Healthcare
Biomed/Genetics, Healthcare Products and Healthcare Medical/Analytic Systems. It includes those that were not
completed for any reason.
The largest 5 bids in Pharma/MedTech worldwide announced in 2017 are shown in
Table 1 below. Some 39% of deals by value and 13% of deals by number announced
0
200,000
400,000
600,000
800,000
1,000,000
2015201220092006200320001997
DealValue($m)
Less than 100m 100m to 500m
500m to 1bn 1bn to 10bn
Over 10bn Last 10-Year Mean Deal Value
Mean Deal ValueOver Past10 Years
-55% Since 2014
Global Pharma & MedTech
deals totalled $363bn in
2017...
…Which fell by 13% against
2016 and continued a
slowdown following the
extraordinary strength of
2014 and 2015
The largest deal announced
worldwide in 2017 was
Johnson & Johnson / Actelion

17
GLOBAL HEALTHCARE
in 2017 have not yet completed for a set of reasons, although only 2% by value and
2% by number have been withdrawn or not pursued further.
Table 1: Largest 5 Bids in 2017 Worldwide for Pharma/MedTech Companies
Announcement
Date
Target
Company Name
Target
Company
Category
Target
Company
Country
Bidder Private
Equity
Entry /
Exit?
Bidder
Country
Deal Value Deal Status
26-Jan-17 Actelion Ltd
Drugs /
Pharma. Switz. Johnson &
Johnson
No US $31,416m Completed
23-Apr-17 CR Bard Inc
Instruments
US
Becton
Dickinson & Co No
US $25,525m Completed
10-Oct-17
Pfizer Inc
(Consumer
health division )
Drugs /
Pharma. US
Undisclosed
Acquiror No US $14,000m
Preliminary
discussions
28-Aug-17 Kite Pharma Inc
Biomed /
Genetics US
Gilead Sciences
Inc
15-May-17 Patheon NV
Drugs /
Pharma. US
Thermo Fisher
Scientific Inc Exit US $7,233m Completed
Source: Dealogic
Note: Represents the largest 5 announced deals by value worldwide for Healthcare Drugs/Pharmaceuticals, Healthcare Instruments, Healthcare Biomed/Genetics,
Healthcare Products and Healthcare Medical/Analytic Systems. It includes those that were not completed for any reason, but excludes rumours.
Whilst 2017 saw another year of a significantly lower level of total deal value
compared to the extraordinary levels of 2014 and 2015 in Pharma and MedTech,
long-term deal appetite is well-supported by the key drivers of healthcare spending:
(1) Demographics, including population growth, change in age distribution
and change in the prevalence of chronic and communicable diseases.
(2) Economics and specifically the resources available to finance the provision
of healthcare, including the value of national economic production and
growth (measured, for example, by Gross Domestic Product (“GDP”)).
(3) Cost of healthcare goods and services, including the aggregate cost of
research and development (“R&D”) for the corporate and public sectors
and the productivity of that R&D in terms of new therapies and medical
devices that are commercially launched per year.
(4) Other factors, including regulatory, insurance, legal and secular shifts in
healthcare provision. The cost of and change in regulatory requirements
for new products to be approved for commercial sale, the cost of
insurance and legal settlements arising from patient treatment, secular
shifts from volume-based to value-based healthcare provision and shifts
Long-term dealflow is
underpinned by 4 key
spending drivers for
healthcare

18
GLOBAL HEALTHCARE
from episodic interventions to continuous health management,
digitisation and connectivity of healthcare.
Pharma & MedTech Deals by Number and Size
In 2017, the number of deals in Pharma and MedTech increased by
1% and remained at a high level, although average deal sizes fell
again to materially below their historic mean level.
In terms of deal numbers, 2,136 individual material deals were announced in 2017,
which was the third-highest figure on record18
and was up by a slight 1% vs. the
2,111 in 2016. This represented just above 1.0x the average annual deal count of
the 10 years to the end of 2017. This is shown in Chart 9 below, which also shows
the prolonged but gradual slowdown since 2010, that reversed in 2015 and the long
growth trend in the run-up to the pre-Financial Crisis peak in 2007.
Chart 9: Annual Number of Deals for Pharmaceutical and Medical Technology
Source: Dealogic
For deals where the deal size has been disclosed, average announced deal size in
2017 was $274m, which represented a fall of -13% against 2016’s $314m. This
represented just below 0.9x the average annual deal size of the 10 years to the end
of 2017, which reflects the absence of some very large deals seen in 2014 and to a
lesser degree, in 2015. It demonstrates that the deal value spikes seen in 2014 and
18
Since the start of Dealogic’s records in 1995
0
500
1,000
1,500
2,000
2,500
2015201220092006200320001997
No.ofDeals
Total Last 10-Year Mean Deal Count
+13% Since2014Mean Deal Count
Over Past10 Years
In 2017, 2,136 material deals
were announced in Pharma &
MedTech, up 1% vs 2016
Average deal size fell to
$274m, which was below 0.9x
the last-10-year average

19
GLOBAL HEALTHCARE
in 2015 were almost all driven by higher average deal size, rather than the number
of deals. This is shown in Chart 10 below, which clearly demonstrates the
extraordinarily large average deal sizes in 2015, 2014 and 1999.
Chart 10: Annual Average Deal Size in $m for Pharmaceutical and Medical Technology
Source: Dealogic
Note: Represents all announced deals worldwide for Healthcare Drugs/Pharmaceuticals, Healthcare Instruments,
Healthcare Biomed/Genetics, Healthcare Products and Healthcare Medical/Analytic Systems. It includes those that
were not completed for any reason.
Pharma & MedTech Deals by Product Category
Drugs & Pharma was again the dominant category of target
business, though it continued to fall as a proportion of total deal
value.
By the value of announced deals, the Drugs/Pharmaceuticals category (for the
company in which shares were acquired) was by far the largest, with $168bn of deal
value announced in 2017, or 46% of the total. This continued a decline as a
proportion of total Pharma & MedTech deals that followed an extraordinary peak
in 2015 (at 81%). Over the long-term, this category has seen relative increasing
popularity, such that over the past 10 years, it has represented 60% of all Pharma
& MedTech deals compared to an average of 55% since 1995.
The next most popular targets in value terms were Instruments with 22% of 2017
deals (vs. average since 1995 of 19%), then Biomed / Genetics with 21% (vs. average
since 1995 of 11%, reflecting a slight resurgence in Instruments. This is shown in
Chart 11 below, which also depicts the long-term trend of lower share of deal value
for Instruments and Products and the rise of Drugs/Pharmaceuticals and
Biomed/Genetics.
0
200
400
600
800
2015201220092006200320001997
AverageDealSize($m)
Mean deal size ($m) Last 10-Year Mean Deal Size
-62%
Since
2014
Mean Deal Size
Over Past10 Years
The Drugs/Pharma category
dominated deal value in 2017
with 46% of the total...
...Followed by Instruments
and then by Biomed/
Genetics, the former of which
regained in popularity

20
GLOBAL HEALTHCARE
Chart 11: Category as % of Total Value of Deals in Pharmaceutical and Medical
Technology
Source: Dealogic
Note: Represents all announced deals worldwide for Healthcare Drugs/Pharmaceuticals
19
, Healthcare
Instruments20
, Healthcare Biomed/Genetics21
, Healthcare Products22
and Healthcare Medical/Analytic Systems. It
includes those that were not completed for any reason.
Four of the largest ten announced deals by value in Pharma & MedTech in 2017
were in the Instruments category, although the largest (Johnson & Johnson /
Actelion) fell into the Drugs / Pharma category.
In terms of the number of deals, whilst the Drugs/Pharmaceuticals category (for the
company in which shares were acquired) was similarly the most popular, it
represented only 734 (or 34%) of announced deals by number (which was very close
to its average since 1995 of 33%). This reflects the relatively higher average deal
value in the Drugs/Pharmaceuticals category, although the trend here has been
relatively flat in the past decade. The next two most popular categories by number
of deals were Instruments with 27% (matching its average since 1995 of 27%) and
19
“Drugs/Pharmaceuticals” comprises manufacturers or wholesalers engaged in medicine
and botanical uncompounded chemicals, including grading, grinding and milling of
uncompounded plants used for medication.
20
“Instruments” comprises manufacturers, rental or wholesalers of all kinds of medical
equipment.
21
“Biomed/Genetics” comprises manufacturers of biotechnology and biopharmaceutical
products, such as bacterial and viral vaccines.
22
“Products” comprises providers of general healthcare products and services - a
combination of equipment, medicines, supplies and services.
0%
20%
40%
60%
80%
100%
2015201220092006200320001997
PercentageofTotalDealValue($m)
Drugs/Pharmaceuticals Instruments
Biomed/Genetics Products
Medical/Analytical Systems
Drugs/Pharma is -
72% in deal value
terms since2014
4/10 of the top deals in 2017
were in Instruments
Though in number of deals,
Drugs/Pharma was only 34%
in 2017, reflecting higher deal
sizes

21
GLOBAL HEALTHCARE
Biomed/Genetics with 21% (vs. average since 1995 of 14%). This is shown in Chart
12 below.
Chart 12: Category as % of Total No. of Deals in Pharmaceutical and Medical Technology
Source: Dealogic
Pharma & MedTech Deals by Type of Deal (Trade vs Private
Equity)
2017 was a second straight year of significantly higher Private
Equity deal value, which spiked to hit an all-time high, and the
number of PE deals rose materially from 2016.
By the value of announced deals, companies owned by Strategic Investors
(essentially corporates, or trade buyers or trade sellers) continued to dominate,
with $258bn of deal value in 2017 (or 71% of the total). This represented a downtick
against the medium-term, post-Financial Crisis trend towards Strategics; since
1995, the category has averaged 81% of all Pharma & MedTech deals.
Deals involving a Financial Sponsor (virtually always a Private Equity house)
represented $98bn of deal value in 2017 (or 27% of the total), compared to an
average of 10% since 1995. The total value of Sponsor deals rose by 82% year-on-
year to an all-time high23
. These proportions of total deal value are shown in Chart
13 below, which also illustrates the relative rises and falls of Private Equity
23
Since Dealogic’s records begin in 1995
0%
20%
40%
60%
80%
100%
2015201220092006200320001997
PercentageofTotalNo.ofDeals
Biomed/Genetics Products
Drugs/Pharma is -1%in deal
count terms since2014
Strategic, or trade, players
dominated deal activity with
71% of the total by value…
...as Private Equity rose
strongly to 27%, confirming a
trend reversal

22
GLOBAL HEALTHCARE
participation in Pharma and MedTech deals since the mid-1990s, which peaked in
2007 and again in 2011 and 2012 with over 20% of deal value in those years.
Chart 13: Type of Deal as % of Total Value of Deals in Pharmaceutical and Medical
Technology
Source: Dealogic
In terms of the number of announced deals, the higher average value of Strategic
deals (compared to Private Equity deals) results in Strategic deals representing 88%
of announced deals by number in 2017, which is slightly above its average of 84%
since 1995. Financial Sponsor deals represented 11% of deals by number in 2017,
which was a modest step-up compared to 10% in 2016 and close to its average of
12% since 1995. This is shown in Chart 14 below, which again illustrates the rise
from 1995 to 2007 and slight fall since then of Private Equity deal-making by the
proportion of deals by number.
0%
20%
40%
60%
80%
100%
2015201220092006200320001997
Strategic Sponsor Buyback
Financial Sponsorsare
+65% in deal value
terms since2014
continued to lead deal
numbers with 88% of the
total, with Private Equity at
11%

23
GLOBAL HEALTHCARE
Chart 14: Type of Deal as % of Total No. of Deals in Pharmaceutical and Medical
Technology
Source: Dealogic
Pharma & MedTech Deals by Target Region
In 2016, North America fell significantly again as a proportion of
total deal value to just over half of the global total, which was
somewhat below its long-term average.
By the value of announced deals, North America (for the region in which the
investee target is based) continued to be the largest, with $203bn of deal value
announced in 2017, or 56% of the total (it has averaged 62% since 1995). For only
three years in the previous 20 years has it not been the largest region by deal size;
in all three cases where it was surpassed, Europe was the largest region.
The next largest region was Europe with 34% of 2016 deal value (vs. average since
1995 of 31%), then North Asia with 6% (vs. average since 1995 of 2%, reflecting a
clear trend of rising deal value in that region since 2002). This is shown in Chart 15
below, which illustrates the long-run dominance of North America, occasional
spikes for deal value in Japan and gradual rise of North Asia.
0%
20%
40%
60%
80%
100%
2015201220092006200320001997
-8% in deal count
terms since2014
North America was again the
largest region by deal value,
with a further drop in 2017 to
56% of the total...
… with Europe doubling year-
on-year to 34% of the total...

24
GLOBAL HEALTHCARE
Chart 15: Target Region as % of Total Deal Value in Pharmaceutical and Medical
Technology
Source: Dealogic
In terms of the number of announced deals, the lower average value of deals
outside North America and Europe results in North America representing only 34%
of announced deals by number in 2017, which is slightly below its average since
1995 of 47%. Europe represented 24% (in-line vs. its average since 1995 of 26%),
and notably North Asia continued its long-term rise to represent 23% (significantly
above its average since 1995 of 11%). This is shown in Chart 16 below, which shows
the clear trend since 1995 of significantly rising numbers of deals outside Europe
and North America, which as the industry in those other geographies matures, is
likely to result in a higher proportion of global deal value deriving from those
regions.
0%
20%
40%
60%
80%
100%
2015201220092006200320001997
North America Europe North Asia Japan
India Subc Australasia Middle East Latin America
Africa SE Asia Caribbean
North America is -57%
in deal valueterms
since2014
Although by deal numbers,
North America represented
only 34%, as North Asia grew
again to virtually level with
Europe

25
GLOBAL HEALTHCARE
Chart 16: Target Region as % of Total Number of Deals in Pharmaceutical and Medical
Technology
Source: Dealogic
0%
20%
40%
60%
80%
100%
2015201220092006200320001997
North America Europe North Asia Japan
India Subc Australasia Middle East Latin America
Africa SE Asia Caribbean
North America is +5% in
deal count terms since 2014

26
GLOBAL HEALTHCARE
Geographical Focus: UK
UK deal activity in Pharma and MedTech fell heavily in value terms
in 2017, although the number of deals fell proportionately less and
returned to their average level. Private Equity activity declined
again in value terms, although the number of deals nearly doubled
compared to 2016.
2017 deal activity in the UK Pharma and MedTech sector totalled just $7bn of deal
value, which decreased by 45% y/y, and it was far below the 10-year average
(excluding the spike year of 2014) of $13bn. Chart 17 below shows this and the
extraordinary spike in 2014 deal activity, which was distorted by the unsuccessful
Pfizer / AstraZeneca deal, the withdrawn AbbVie / Shire deal and the completed
disposal of its Oncology portfolio, R&D activities and AKT inhibitor rights by
GlaxoSmithKline to Novartis. The chart clearly shows the volatile nature of the UK
market, which is heavily distorted by sporadic transactions of very large value.
Chart 17: Pharma & MedTech Deals for UK Target Companies by Deal Value ($m)
Source: Dealogic
Note: Represents all announced deals for a UK target for Healthcare Drugs/Pharmaceuticals, Healthcare
Instruments, Healthcare Biomed/Genetics, Healthcare Products and Healthcare Medical/Analytic Systems. It
The largest 5 bids in UK Pharma/MedTech announced in 2017 are shown in the
table below. The largest deal, an acquisition of a 20% stake in ConvaTec Group plc
(a wound, ostomy, continence and critical care products company) was a Private
Equity entry (by Novo A/S) and exit (by Nordic Capital Svenska AB and Avista Capital
Partners) and all but one of the largest five UK deals announced in 2017 were
0
100,000
200,000
300,000
2015201220092006200320001997
DealValue($m)
Over 10bn 1bn to 10bn
500m to 1bn 100m to 500m
Less than 100m Last-10-Year Mean to 2017
Mean Deal Value
Over Past10 Years
-97%
Since
2014
In the UK, deal value in 2017
fell by 45% to the third lowest
level in the past decade
Novo / 20% stake in ConvaTec
was the largest announced
deal for a UK target in 2017

27
GLOBAL HEALTHCARE
subsequently completed (which contrasts with the relatively low completion rate
for a fourth consecutive year of the largest deals by value at global level).
Table 2: Largest 5 Bids in 2017 for UK Pharma/MedTech Companies
Announcement
Date
Target Company
Name
Target
Company
Category
Target
Company
Country
Bidder Private
Equity
Entry /
Exit?
Bidder
Country
Deal
Value
Deal Status
28-Mar-17 20% stake in
ConvaTec Group
plc
Products UK Novo A/S Entry &
Exit
Denmark $1,269m Completed
7-Jun-17 AstraZeneca plc
(Global rights to
migraine
treatment Zomig)
Drugs/
Pharma.
UK Gruenenthal
GmbH
No Germany $302m Completed
22-May-17 AstraZeneca plc
(beta-blocker drug
Seloken / Seloken
ZOK)
Drugs/
Pharma.
UK Recordati SpA No Italy $290m Completed
1-Nov-17 Quantum Pharma
plc
Drugs/
Pharma.
UK Clinigen Group plc No UK $220m Completed
20-Nov-17 LivaNova plc
(Cardiac rhythm
management
business)
Instrume
nts
UK Microport
Scientific Corp
No China $190m Pending
Source: Dealogi
Note: Represents the largest 5 announced deals by value for a UK target for Healthcare Drugs/Pharmaceuticals, Healthcare Instruments, Healthcare Biomed/Genetics,
Healthcare Products and Healthcare Medical/Analytic Systems. It includes those that were not completed for any reason. It excludes sales of equity stakes in quoted
companies by fund management entities.
In terms of deal numbers, 80 individual material deals were announced, which
dropped by 18% vs. the 98 in 2018. This represented 1.0x the average annual deal
count of the 10 years to the end of 2017. This is shown in Chart 18 below, which
also shows the relatively flat period for deals between 2010 and 2013 and bump in
2015 and 2016.
Whilst not declining as much
as deal value, deal numbers in
the UK in 2017 were down -
18% vs 2015, and matched
their 10-year average

28
GLOBAL HEALTHCARE
Chart 17: Pharma & MedTech Deals for UK Target Companies by Deal Count
Source: Dealogic
By the value of announced deals, the Products category (for the company in which
shares were acquired) was the largest, with $4bn of UK deal value announced in
2017, or 50% of the total. This represented a spike upwards for the category, which
since 1995 has averaged only 17% of all UK Pharma & MedTech deals. The next
most popular targets were Drugs / Pharma with 39% of 2017 UK deals (vs. average
since 1995 of 54%), then Instruments with 6% (vs. average since 1995 of 18%). This
is shown in Chart 19 below, which also depicts the long-term trend of lower share
of deal value for Instruments and Products, and the rise of Drugs/Pharmaceuticals
and Biomed/Genetics.
Chart 19: Category as % of Total Value of UK Target Company Deals in Pharmaceutical
and Medical Technology
0
20
40
60
80
100
120
2015201220092006200320001997
No.ofDeals
Mean Deal Count
Over Past10 Years
-1% Since 2014
0%
20%
40%
60%
80%
100%
2015201220092006200320001997
Products Biomed/Genetics
Drugs/Pharma is -98%
in deal valueterms
since2014
In contrast to the global
picture, Products was the
dominant category in the UK
by value in 2017 with 50%

29
GLOBAL HEALTHCARE
Source: Dealogic
By the value of announced deals, companies owned by Strategic investors
with $6bn of UK target company deal value in 2017 (or 83% of the total). This
reflected a relatively normal share for Strategic Investors following a spike in the
value of deals by Financial Sponsors in 2015 (which was the second such spike since
2012); since 1995, the category has averaged 79% of all UK Pharma & MedTech
deals.
represented $1bn of UK target company deal value in 2017 (or 17% of the total),
which was in-line with their average of 18% since 1995 (which reflects the relatively
higher amount of private equity involvement in UK Pharma and MedTech deals
compared to the global averages). This is shown in Chart 20 below, which also
illustrates the relative spikes in Private Equity participation in Pharma and MedTech
deals since the mid-1990s, which have represented 40% or more of total deal value
in 2015, 2012, 2004 and 1999. By comparison with the other regions discussed later
in this report, the UK sees this highest average levels of Private Equity participation
as a % of total deal value in Pharma and MedTech.
Chart 20: Type of Deal as % of Total Value of UK Target Company Deals in
Pharmaceutical and Medical Technology
Source: Dealogic
Note: Represents all announced deals for a UK target in Healthcare Drugs/Pharmaceuticals, Healthcare Instruments,
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015201220092006200320001997
+39% in deal value
terms since2014
dominated in the UK in 2017
with 83% of deal value…
…as Private Equity deals
picked up to 17% of the total
by value

30
GLOBAL HEALTHCARE
Geographical Focus: North America
North America saw a further significant fall in 2017 deal activity in
value and a more modest drop in number, continuing the slowdown
that started in 2016, though Private Equity activity rose markedly
for a second year.
2017 deal activity in the North American Pharma and MedTech sector totalled
$203bn of deal value, which was down -31% y/y and whiwlst this was below the 10-
year average of $252bn, if one excludes the spike years of 2014 and 2015, it was
slightly above this adjusted average of $186bn. The reduction was driven by
another fall in the value of $10bn-plus bids. Chart 21 below shows the spike in total
deal value in 2014 and 2015 and then the decline to below-normal levels in 2017.
Chart 21: Pharma & MedTech Deals for North American Target Companies by Deal Value
($m)
Source: Dealogic
Note: Represents all announced deals for a North American target for Healthcare Drugs/Pharmaceuticals,
Healthcare Instruments, Healthcare Biomed/Genetics, Healthcare Products and Healthcare Medical / Analytic
Systems. It includes those that were not completed for any reason.
The largest 5 bids in North American Pharma/MedTech announced in 2016 are
shown in the table below. The largest single deal, Beckton Dickinson/CR Bard,
represented an important consolidation of two large, quoted medical devices
companies.
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
2015201220092006200320001997
DealValue($m)
500m to 1bn 100m to 500m
Mean Deal Value
Over Past10 Years
-57%
Since
2014
In 2017, North American
Pharma & MedTech deals
amounted to $203bn, down
31% vs. 2016.
The largest North American
deal was Beckton
Dickinson/CR Bard in medical
devices

31
GLOBAL HEALTHCARE
Table 3: Largest 5 Bids in 2016 for North American Pharma/MedTech Companies
Announcement
Date
Target Company
Name
Target
Company
Category
Target
Company
Country
Bidder Private
Equity
Entry /
Exit?
Bidder
Country
Deal Value Deal Status
23-Apr-17 CR Bard Inc Instruments US Becton
Dickinson & Co
10-Oct-17 Pfizer Inc
(Consumer
Health division)
Drugs /
Pharma.
US Undisclosed
Acquiror
No US $14,000m Preliminary
discussions
28-Aug-17 Kite Pharma Inc Biomed /
Genetics
US Gilead Sciences
Inc
15-May-17 Patheon NV Drugs /
Pharma.
US Thermo Fisher
Scientific Inc
Exit US $7,233m Completed
10-Nov-17 Ortho-Clinical
Diagnostics Inc
Instruments US Undisclosed
Acquiror
Exit US $7,000m Rumour
Source: Dealogic
Note: Represents the largest 5 announced deals by value for a North American target for Healthcare Drugs/Pharmaceuticals, Healthcare Instruments, Healthcare
Biomed/Genetics, Healthcare Products and Healthcare Medical/Analytic Systems. It includes those that were not completed for any reason. It excludes sales of equity
stakes in quoted companies by fund management entities.
In terms of deal numbers, 733 individual material deals were announced in 2017,
which was down 7% vs. the 790 in 2016. This represented 0.9x the average annual
deal count of the 10 years to the end of 2017. This is shown in Chart 22 below,
which also shows the dip in deals between 2012 and 2014, the peak in 2015 and
then the decline since then.
Chart 22: Pharma & MedTech Deals for North American Target Companies by Deal Count
0
200
400
600
800
1,000
1,200
2015201220092006200320001997
No.ofDeals
Mean Deal Count
Over Past10 Years
+5%
Since
2014
North American deals by
number were down 7% vs
2016, continuing a fall
following a 2015 peak

32
GLOBAL HEALTHCARE
Source: Dealogic
Healthcare Instruments, Healthcare Biomed/Genetics, Healthcare Products and Healthcare Medical/Analytic
company in which shares were acquired) was by only a small margin the largest,
with $76bn of North American deal value announced in 2017, or 38% of the total,
which represents a somewhat low level; since 1995, the category has averaged 52%
of all North American Pharma & MedTech deals. The next most popular targets
were Instruments with 33% of 2017 North American deals (vs. average since 1995
of 25%), then Biomed / Genetics with 25% (vs. average since 1995 of 15%). This is
shown in Chart 23 below, which also depicts the long-term trend of lower share of
deal value for Products, and the rise of Drugs/Pharmaceuticals and
Biomed/Genetics.
Chart 23: Category as % of Total Value of North American Target Company Deals in
Source: Dealogic
with $143bn of North American target company deal value in 2017 (or 70% of the
total). This reflected a second consecutive year of rising value of deals by Financial
Sponsors from a very low 2015 level; since 1995, the category has averaged 78% of
all North American Pharma & MedTech deals.
represented $61bn of North American target company deal value in 2016 (or 30%
of the total), compared to an average of 10% since 1995. This is shown in Chart 24
0%
20%
40%
60%
80%
100%
2015201220092006200320001997
Drugs/Pharma is -77%in
deal valueterms since2014
was most popular for North
American deals in 2017, with
38% of total value
accounted for 70% of North
American deal value in 2017...
…as Private Equity rose again
to 30% of deal value

33
GLOBAL HEALTHCARE
below, which also illustrates the relative spikes in Private Equity participation in
Pharma and MedTech deals since the mid-1990s, which have represented 20% or
more of total deal value in 2011, 2010, and 2004.
Chart 24: Type of Deal as % of Total Value of North American Target Company Deals in
Source: Dealogic
Note: Represents all announced deals for a North American target in Healthcare Drugs/Pharmaceuticals, Healthcare
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015201220092006200320001997
+42% in deal value
terms since2014

34
GLOBAL HEALTHCARE
Geographical Focus: Continental
Europe
Continental European deal value rose very strongly in 2017 and the
number of deals nudged up; Private Equity deal value nearly tripled,
despite slightly fewer deals.
2017 deal activity in the Continental European Pharma and MedTech sector totalled
$115bn of deal value, which was up 106% vs. 2016, which reversed a three-year run
of falling deal value. Chart 25 below shows this rebound from the period of decline.
Chart 25: Pharma & MedTech Deals for Continental European Target Companies by Deal
Value ($m)
Source: Dealogic
Note: Represents all announced deals for a Continental European target for Healthcare Drugs/Pharmaceuticals,
The largest 5 bids in Continental European Pharma/MedTech announced in 2017
are shown in the table below. Notably, only one deal, Svenska Cellulosa / BSN
medical had Private Equity involvement (on both sides), and only three out of the
largest 5 Continental European deals announced in 2016 have so far been
completed.
0
50,000
100,000
150,000
200,000
2015201220092006200320001997
DealValue($m)
500m to 1bn 100m to 500m
Mean Deal Value
Over Past10 Years
+78%
Since
2014
Continental European deal
value in 2017 amounted to
$115bn, up 106% vs 2016
Johnson & Johnson / Actelion
was the largest Continental
European deal announced in
2017.

35
GLOBAL HEALTHCARE
Table 4: Largest 5 Bids in 2016 for Continental European Pharma/MedTech Companies
Announcement
Date
Target
Company Name
Target
Company
Category
Target
Company
Country
Bidder Private
Equity
Entry /
Exit?
Bidder
Country
Deal
Value
Deal Status
26-Jan-17 Actelion Ltd Drugs /
Pharma.
Switzerland Johnson &
Johnson
No US $31,416
m
Completed
04-May-17 Siemens
Healthineers
Products Germany Undisclosed
Acquiror
Exit;
Portfolio
Germany $15,000
m
Rumour
30-Nov-17 Genmab A/S Biomed /
Genetics
Denmark Johnson &
Johnson
No US $11,713
m
Rumour
12-Feb-17 Stada
Arzneimittel AG
(Bid No 1)
Drugs /
Pharma
Germany Bain Capital LLC
and Cinven Ltd
Entry Germany $5,590m Rejected
23-Feb-17 Stada
Arzneimittel AG
(Bid No 2)
Drugs /
Pharma
Switzerland Advent
International
Corp
Portfolio
Move;
Entry
Germany $5,022m Rejected
Source: Dealogic
Note: Represents the largest 5 announced deals by value for a Continental European target for Healthcare Drugs/Pharmaceuticals, Healthcare Instruments, Healthcare
Biomed/Genetics, Healthcare Products and Healthcare Medical/Analytic Systems. It includes those that were not completed for any reason. It excludes sales of equity
stakes in quoted companies by fund management entities.
In terms of deal numbers, 426 individual material deals were announced, which was
up 2% vs. the 416 in 2016. This represented 1.0x the average annual deal count of
the 10 years to the end of 2017. This is shown in Chart 26 below, which also shows
the decline in deals between 2011 and 2013 and the marked rising trend since then.
Chart 26: Pharma & MedTech Deals for Continental European Target Companies by Deal
Count
0
50
100
150
200
250
300
350
400
450
500
2015201220092006200320001997
No.ofDeals
Mean Deal Count
Over Past10 Years
-5%
Since
2014
By deal numbers, Continental
European deals were up 2% vs
2017 and remained at around
the 10-year average level

36
GLOBAL HEALTHCARE
Source: Dealogic
company in which shares were acquired) was by far the largest, with $70bn of
Continental European deal value announced in 2017, or 61% of the total. This
category stepped down in 2017, although it remained at a relatively high level; since
1995, the category has averaged a slightly lower 50% of all Continental European
Pharma & MedTech deals. The next most popular targets were Products with 18%
of 2016 Continental European deals (vs. average since 1995 of 14%), then
Biomed/Genetics with 15% (vs. average since 1995 of 7%). This is shown in Chart
27 below, which also depicts the long-term trend of lower share of deal value for
Instruments and Products, and the rise of Drugs/Pharmaceuticals and
Biomed/Genetics.
Chart 27: Category as % of Total Value of Continental European Target Company Deals in
Source: Dealogic
with $84bn of Continental European target company deal value in 2017 (or 73% of
the total, although this was down year-on-year, as Financial Sponsors rose). Since
1995, the category has averaged 82% of all Continental European Pharma &
MedTech deals.
represented $26bn of Continental European target company deal value in 2017 (or
0%
20%
40%
60%
80%
100%
2015201220092006200320001997
Drugs/Pharma is +61%in
represented 61% of total
Continental European deals
by value in 2017, falling
somewhat, but still at an
elevated level.
were 73% of the 2017 total
value in Continental Europe…

37
GLOBAL HEALTHCARE
23% of the total), compared to an average of 15% since 1995. This is shown in Chart
28 below, which also illustrates the relative spikes in Private Equity participation in
Pharma and MedTech deals since the mid-1990s, which have represented 20% or
more of total deal value in 2017, 2012, 2011, 2006 and 2005.
Chart 28: Type of Deal as % of Total Value of Continental European Target Company
Deals in Pharmaceutical and Medical Technology
Source: Dealogic
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20162013201020072004200119981995
Financial Sponsors are
+138% in deal value
terms since2014
...as Private Equity rose to
well above its historical
average at 23% of total value

38
GLOBAL HEALTHCARE
Geographical Focus: Rest of the World
The Rest of the World (ROW) saw a further significant fall in deal
value, though a significant rise in deal numbers in 2017, with
Private Equity jumping up to an all-time high of 23% of deal value.
2017 deal activity in the RoW Pharma and MedTech sector (i.e. those countries
outside the UK, North America and Continental Europe) totalled $38bn of deal
value, which was down 34% vs. 2016, and which sustained a reversal of the striking
growth trend that started in 2012. Chart 29 below shows these trends.
Chart 29: RoW Pharma & MedTech Deals for RoW Target Companies by Deal Value ($m)
Source: Dealogic
Note: Represents all announced deals for a RoW target for Healthcare Drugs/Pharmaceuticals, Healthcare
The largest 5 bids in RoW Pharma/MedTech announced in 2017 are shown in the
table below. Only one of these had any Private Equity involvement in 2017, and only
two of the largest five RoW deals announced in 2017 have so far been completed.
0
20,000
40,000
60,000
80,000
100,000
2015201220092006200320001997
DealValue($m)
500m to 1bn 100m to 500m
Mean Deal Value
Over Past10 Years
-18%
Since
2014
The Rest of the World
dropped in Pharma/MedTech
deal value in 2017 at $38bn,
down 34% vs 2016
The largest RoW announced
deal was Shanghai Pharma
Holding / China Distribution
Business of Cardinal Health

39
GLOBAL HEALTHCARE
Table 5: Largest 5 Bids in 2016 for RoW Pharma/MedTech Companies
Announcement
Date
Target Company
Name
Target
Company
Category
Target
Company
Country
Bidder Private
Equity
Entry /
Exit?
Bidder
Country
Deal
Value
Deal Status
15-Nov-17 Cardinal Health Inc
(Distribution
business in China)
Drugs /
Pharma.
China Canon Inc None China $1,200m Pending
28-Dec-17 Harbin
Pharmaceutical
Group Co Ltd
(51.7383%)
Drugs /
Pharma.
China Yunnan Baiyao
Holdings Co Ltd
Portfolio
Move
China $1,183m Pending
11-Sep-17 Teva
Pharmaceutical
Industries Ltd
(Rights to Paragard
contraceptive
device)
Drugs /
Pharma.
Israel New Huadu
Industrial Group
Co Ltd
None United
States
$1,100m Completed
24-Jul-17 Neuroderm Ltd Drugs /
Pharma.
Israel Fujifilm Holdings
Corp
None Japan $1,027m Completed
28-Nov-17 Zuellig Pharma
Holdings Pte Ltd
(20%)
Drugs /
Pharma.
Singapore LG Chem Ltd None Singapore $1,000m Rumour
Source: Dealogic
Note: Represents the largest 5 announced deals by value for a RoW target for Healthcare Drugs/Pharmaceuticals, Healthcare Instruments, Healthcare Biomed/Genetics,
Healthcare Products and Healthcare Medical/Analytic Systems. It includes those that were not completed for any reason. It excludes sales of equity stakes in quoted
companies by fund management entities.

40
GLOBAL HEALTHCARE
In terms of deal numbers, 897 individual material deals were announced, which
was an all-time high24
and was up 11% vs. the 807 in 2016. This represented 1.2x
the average annual deal count of the 10 years to the end of 2017. This is shown in
Chart 30 below, which also shows the relatively slow-growth period for deals since
2010.
Chart 30: Pharma & MedTech Deals for RoW Target Companies by Deal Count
Source: Dealogic
company in which shares were acquired) was by far the largest, with $20bn of
RoW deal value announced in 2017, or 52% of the total. This category saw a
reversion towards its average proportion of total deal value in 2017; since 1995,
the category has averaged 51% of all RoW Pharma & MedTech deals. The next
most popular targets were Instruments with 19% of 2017 RoW deals (vs. average
since 1995 of 12%), then Biomed / Genetics with 18% (vs. average since 1995 of
7%). This is shown in Chart 31 below, which also depicts the volatility of deal
values for other categories of company since 1995.
24
Since the start of Dealogic’s records in 1995
0
100
200
300
400
500
600
700
800
900
1,000
2015201220092006200320001997
No.ofDeals
Mean Deal Count
Over Past10 Years
+34%
Since
2014
RoW deals by number hit a
record high in 2017 at 897, up
11% vs 2016
Once again, Drugs/Pharma
was the top category, with
52% of deal value in the RoW
in 2017.

41
GLOBAL HEALTHCARE
Chart 31: Category as % of Total Value of RoW Target Company Deals in
Source: Dealogic
(essentially corporates, or trade buyers or trade sellers) saw a decline in their still-
dominant position, with $26bn of RoW target company deal value in 2017 (or 68%
of the total). This reflected a recent trend away from Strategic-owned targets
since the elevated levels seen in 2014 and 2013; since 1995, the category has
averaged 81% of all RoW Pharma & MedTech deals by value.
represented $9bn of RoW target company deal value in 2017 (or 23% of the total),
which nearly tripled year-on-year in dollar terms, which represented its highest
share of value ever, and which compares to an average of 8% since 1995. This is
shown in Chart 32 below, which also illustrates the long-term trend of rising
Private Equity involvement in RoW Pharma and MedTech deals, and their low level
historically compared to the global averages.
0%
20%
40%
60%
80%
100%
2015201220092006200320001997
Drugs/Pharma is -15%in
participated in 68% of RoW
deals by value in 2017…
…as Private Equity rose
powerfully to 23% of deal
value in the RoW in 2017

42
GLOBAL HEALTHCARE
Chart 32: Type of Deal as % of Total Value of RoW Target Company Deals in
Source: Dealogic
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015201220092006200320001997
+112% in deal value
terms since2014

43
GLOBAL HEALTHCARE
Conclusion
In conclusion, 2017 was a buoyant, though slowing year in terms of deal value
worldwide for Pharma & MedTech deals, with the fifth-highest deal value and
third-highest deal numbers on record. Strategic, or trade, players, whilst still
dominant, were less so, as Private Equity saw a near-doubling of deal value, albeit
with lower increase in the number of deals. Drugs/Pharma as a category of deal
targets fell again to less than half of deals by value and to just over one-third by
number.
As global economic growth accelerates in years to come and the four key drivers
of healthcare spending exert upward pressure on overall spending in the sector,
we anticipate that trends in terms of deal values and numbers are likely to
continue to push upwards.
Some critical drivers of deals are likely to be enduring over the following decade,
accelerating such as loss of revenue for Big Pharma due to patent expiries and
generic competition, both of which are increasing pricing pressure, amidst
declining R&D productivity. We see these factors propelling still-higher appetite in
coming years for fresh, innovative products and Intellectual Property from small
Pharma & MedTech companies.
The combination of the trends above and the strong organic growth drivers
(population growth, change in age distribution and change in the prevalence of
chronic and communicable diseases, rising resources available to finance the
provision of healthcare, relentless increases in the cost of healthcare goods and
services and regulatory pressures) means that Pharma & MedTech presents one
of the most compelling investment areas in the market today for High Net Worth
Investors and their Professional Advisers.
Arterial believe that for Family Offices, Private Wealth and Pension Fund
Managers, these powerful deal and organic growth trends are compelling.
Positions in the growth Pharma & MedTech companies of the future invariably
form a keystone of HNW investor portfolios and cannot be ignored.
We will leave the concluding remark not to Arterial, but to a leading fund manager:
John Nolan, Portfolio Manager, WBB Asset Management
2017 was a buoyant, though
slowing year...
…and key trends should drive
that higher
Strong and rising appetite is
set to stay for small Pharma &
MedTech with innovative
products
Deal trends and relentless
organic growth themes
combine to present a
compelling opportunity…
…which means that Pharma &
MedTech should be keystone
of portfolios.

44
GLOBAL HEALTHCARE
PIONEERING LIFE SCIENCE INVESTMENT
ARTERIAL CAPITAL MANAGEMENT
e: info@artcapman.com
w: www.artcapman.com
Main Office
Suite 15, 1st Floor
Oliaji Trade Centre
Francis Rachel Street
Victoria
Mahe
Seychelles
The views and opinions expressed within this document reflect those of our professional advisors, and are not
necessarily those of Arterial. Professional advisers should ensure that their clients seek independent and suitably
qualified advice before entering into such investment. Investment into biotech and pharmaceuticals is by its very
nature high risk and investors may lose some or all of their money.
Investors and their advisors must be prepared that some investments could fail. Arterial is only
available through professional advisers for HNW, sophisticated investors who genuinely understand
and accept risk. Investors should only invest money they do not need access to, and which they can
afford to lose. No investment may be entered into, neither in part nor in whole, on the basis of this
newsletter. This newsletter is not an offer nor an invitation to subscribe. Arterial does not provide or
imply investment advice.

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