2025 mid-year outlook

Global M&A trends in health industries

Global M&A trends in health industries hero image
  • Insight
  • 8 minute read
  • June 24, 2025

How are health industries dealmakers preparing for the M&A triple threat?

By Christian K. Moldt and Jaymal Patel

The prospect of tariffs, pricing reforms and longer approval times will test the resolve of health industries dealmakers in the second half of 2025.

The resilience and adaptability of health industries dealmakers will be tested in the second half of 2025 as macroeconomic headwinds, regulatory changes and geopolitical tensions converge. 

While we began 2025 with measured optimism for dealmaking across biopharma, medtech, healthcare services and health tech, the outlook for the sector has become increasingly complex. In particular, global pharma companies with significant operations in the US are facing greater uncertainty, with the potential for lower profits from a trifecta of changes in the offing: 

  • Tariffs: The implications of yet-to-be-announced tariffs on imported pharmaceuticals and the potential revocation of longstanding duty-free treatment for medical and life sciences products are affecting valuations and deal modelling assumptions. Based on our estimates, these new measures could potentially increase annual tariffs on the sector from $0.5bn to $63bn.

  • Drug pricing: Proposed drug pricing reforms in the US stemming from a new Most Favored Nation (MFN) pricing executive order may result in global reference pricing for US drugs. 

  • Regulations: The sector faces ongoing regulatory shake-ups at the FDA, which may result in extended drug approval timelines. 

Broader macroeconomic factors, including higher bond yields on top of these sector-specific changes, are also a dampener for health industries dealmakers, given that such factors could lower returns on investment.

In the shadow of this complexity, deal volumes and values have dropped in the first half of 2025. In early January, Johnson & Johnson’s announced $14.6bn acquisition of Intra-Cellular Therapies sparked optimism for a broader rebound in the sector of deals valued at more than $10bn, but this optimism has largely faded—with larger deals now expected to be in the $1bn–$10bn range in the second half of 2025. The imperative to find new opportunities in a rapidly evolving health landscape continues to underpin M&A activity in the sector. Among other deal activity this year to date, we continue to see biopharma companies carrying out their ‘string of pearls’ strategies, acquiring early- to mid-stage innovation to fill future drug pipeline gaps and capability gaps.

Strategic reviews triggered by the Trump administration’s recent tariff escalation are high priorities for dealmakers and CEOs, and the policy uncertainty more broadly is leading to a reshaping of valuation models. The valuation gap may widen between high-quality, IP-protected assets and those with vulnerable pricing structures. Meanwhile, supply chain restructuring is front of mind, with many firms modelling tariff-adjusted cost-of-goods, earnings-per-share and compliance scenarios.

In this unpredictable landscape, strategic and financial buyers alike are reevaluating M&A strategies to reflect heightened due diligence standards, valuation uncertainty and risk-adjusted investment returns. While public markets remain volatile, bold dealmakers who focus on what they can control, apply sector insight, undertake rigorous scenario planning and act with agility will be well positioned to capitalise on new opportunities.

‘Success in today’s volatile market comes down to speed and ability to adapt. Health industries dealmakers who proactively model multiple value creation scenarios will be best positioned to navigate uncertainty, act with conviction and capture value’.

Jaymal Patel, Global Health Industries Deals Leader, PwC UK

Spotlight on: Using M&A to move from ‘health industries’ to the ‘how we care’ domain

Global megatrends, including AI and climate change, are rapidly reshaping our healthcare systems. The emerging ‘how we care’ domain discussed in our recent Value in Motion research emphasises that to be successful, traditional healthcare companies must reframe their roles from transactional service providers operating in distinct fields to holistic care enablers. This entails embedding digital capabilities and new scientific breakthroughs that support prevention, early intervention and patient self-management. In this new paradigm, health tech is not just about digitalising legacy processes but about enabling an evolving standard of consumer-centric, connected care.

Some recent deals underscore this shift. Companies are targeting scalable health tech platforms that enable automation, interoperability and value-based care. ActiGraph’s acquisition of Biofourmis’ life sciences unit brings advanced remote patient monitoring and wearable data into its decentralised clinical trial stack, expanding the company’s role in digital biomarkers. TELUS Health announced its $500m acquisition of Workplace Options, a global provider of remote wellness and telehealth solutions, furthering its ambition to be a category leader in virtual care. Lens maker EssilorLuxottica announced a deal to buy Optegra, an AI-focused ophthalmology platform, highlighting its medtech strategy to bring eyecare, advanced diagnostics, therapeutic interventions and surgical treatments together in one platform.

These and other deals highlight a growing convergence of sectors, especially the heightened role of technology in health care. For dealmakers, cross-domain transactions involving health industries, technology and other sectors are likely to be a new focus in the coming months and years. 

‘Global forces like AI and shifting demographics are fundamentally redefining the healthcare landscape. For dealmakers, this means looking beyond traditional sector boundaries toward opportunities that fuse science, technology and consumer-centric care models. The next wave of M&A will be driven by those who can spot value in motion and move decisively to capture it—helping shape the next decade of global health’.

Christian K. Moldt, EMEA Health Industries Leader, Partner, PwC Germany

Key M&A themes for health industries in 2025

Below we outline the key themes we expect to drive M&A activity in health industries during the second half of 2025. 

Large-cap biopharma players are doubling down on their ‘string of pearls’ strategy, acquiring early- to mid-stage innovation to fill pipeline gaps and hedge against patent cliffs and to fill capability gaps. 

So far, the $1bn–$10bn deal value range remains especially active, with oncology, immunology and rare disease assets leading activity. Examples of such deals announced in the first half of 2025 include Sanofi’s $9.1bn purchase of Blueprint Medicines, which brings with it a commercialised drug and early-stage immunology pipeline; GSK’s acquisition of IDRx, a clinical-stage biopharmaceutical company, for up to $1.15bn; Novartis’ $3.1bn acquisition of Anthos Therapeutics, a clinical-stage biopharmaceutical company with a late-stage medicine in development for the prevention of stroke and systemic embolism in patients with atrial fibrillation; and Lilly’s $2.5bn acquisition of Scorpion Therapeutics’ PI3Kα inhibitor program STX-478, a precision oncology treatment under development.

{{clone:#accordion-content .stats}}

The US administration’s anticipated pharmaceutical import tariff and shift toward global reference pricing under MFN affect not just price realisation but also payer models and reimbursement rates. They have the potential to elevate drug prices globally, especially in Europe, as pharmaceutical companies weigh options to mitigate the impact on US profits. Cross-border M&A is facing higher scrutiny, and companies are reassessing supply chains, pricing corridors and geopolitical exposure. The US FDA’s leadership changes and internal restructuring are resulting in missed deadlines, reduced responsiveness and less predictable approval timelines. In this climate, even high-quality assets are being priced lower due to elevated risk premiums.

Trade policy risks, particularly related to China licencing and API sourcing, are now being modelled into due diligence, further elevating the role of IP and geographic footprint in asset selection.

We are seeing an increasing preference for alternative deal structures including earn-outs, royalties, licencing agreements and joint ventures to finance innovation and platform builds, especially in biotech and diagnostics. With biotech valuations remaining volatile, given uncertainty regarding drug approval timelines and the direction of interest rates, more acquirers are leveraging milestone-driven earn-outs, effectively tying additional payments to the achievement of specific, measurable objectives related to the development, regulatory approval or commercial success of a drug candidate or technology.

These earn-out structures are particularly well suited to the pharma industry because of the length of time drug development takes and the risk and regulatory hurdles to move from development to commercial success. Although earn-outs are not new, we expect to see more of them being used to manage risk and move deals forward over the next six months. Examples from the first half of 2025 include Novartis’ $3.1bn (with $925m up front) acquisition of Anthos Therapeutics, BMS’ agreement to licence a next-generation cancer drug from BioNTech for up to $11.1bn (with $1.5bn up front) and Sanofi’s purchase of Dren Bio’s investigational bispecific antibody DR-0201 for up to $1.9bn (with $600m up front). 

In digital health, alternative structures such as co-development partnerships are helping mitigate regulatory and reimbursement risk. These structures offer flexibility for both buyers navigating policy shocks and sellers waiting for IPO markets to recover.

Strategic portfolio reviews have continued in 2025, particularly in response to pricing pressure, cost inflation and regulatory risk. US and global players are spinning out assets with low growth or limited strategic fit. We also expect that assets with high exposure to tariff regimes may be candidates for divestiture in the months to come as companies continue to assess their portfolios and adjust accordingly. Notable moves include carve-outs by Becton Dickinson and Teva’s planned divestiture of its Teva API business and recently completed divestiture of its Teva Takeda business venture in Japan. These transactions, in some cases spurred by activist investors, are often being pursued to free up capital for reinvestment and to streamline supply chains as firms prepare for a prolonged period of trade and reimbursement volatility.

Private equity (PE) firms are under pressure as portfolio companies sit in extended holding periods amid delayed exits and muted IPO markets, often seen as a preferred exit option for early-stage pharmaceuticals and life sciences companies as a means to fund further development activities. Elevated financing costs and soft public valuations are reducing exit options. As a result, we’re seeing more secondary transactions and the use of continuation funds as a way to generate liquidity and preserve upside for high-conviction assets by allowing existing investors to exit or roll over while bringing in new capital to support continued growth. Examples include Thoma Bravo’s sale of a significant ownership stake in NextGen Healthcare to Madison Dearborn Partners and Inflexion’s closing of a £2.3bn ($3.1bn) continuation fund that includes a specialty pharma business and a liquid pharmaceuticals business among its key assets. The current M&A environment, with high-yield spreads and MFN-linked uncertainty, is discouraging short-term flips and instead pushing sponsors to focus on operational value creation and strategic tuck-ins to drive long-term returns.

Acquisitions of health tech and health-adjacent technology platforms, particularly in AI-driven diagnostics, digital therapeutics and care coordination businesses, remain an M&A hotspot. These assets are often capital-light and scalable, offering a hedge against reimbursement exposure and making them particularly attractive to PE. Now, PE players are competing directly with strategics for these targets, especially as MFN- and IRA-linked policies complicate traditional pharma and provider models. Examples of PE deals include Bain’s announced (in April 2025) acquisition of HealthEdge, a next-generation SaaS platform that connects health plans, providers and patients with a suite of end-to-end digital solutions; and New Mountain Capital’s  announced (in May 2025) plans to combine three health tech companies to create an AI-driven revenue cycle management platform that aims to automate hospital and health systems’ administrative workflows and strengthen financial performance. An example from a strategic buyer perspective is Mumbai-based Infinx’s announced (in May 2025) acquisition of i3 Verticals’ healthcare revenue cycle management business. We expect to see more deals in this space during the second half of 2025.

$63bn

The incremental annual US tariff exposure estimated by PwC under the latest trade policy proposals.

Global M&A trends in Health Industries

Biopharma M&A volumes will remain resilient, driven by a need to offset patent cliffs and secure innovation externally, though deals valued more than $10bn are considered less likely in the face of current policy uncertainty. We expect most activity will be in the $1bn–$10bn range, supported by the ‘string of pearls’ strategy employed by several major players. However, the outlook is complicated by MFN pricing policy, IRA implementation, and trade-related and regulatory disruptions.

US pharma firms now face pressure to match or fall below global reference prices, complicating deal models and increasing uncertainty in commercial forecasts. Companies outside the US must weigh the trade-offs of price increases abroad, market exits and potential US enforcement. Meanwhile, licencing deals with China, which have grown in strategic importance as China becomes a major biopharma player, have drawn heightened diligence as regulators and lawmakers scrutinise national security risks.

Despite these challenges, the innovation cycle continues to attract capital, particularly for oncology, rare diseases, and cell and gene therapy. Valuations remain compressed in biotech, with many public companies trading below cash. As noted earlier, firms are also modelling IP location shifts and new customs valuation strategies in anticipation of tariff exposure.

As noted in our Spotlight, health services technology companies that advance value-based care, digital engagement or personalised preventive care are attracting significant M&A interest from institutional and PE dealmakers alike. Labor cost pressures and reimbursement uncertainty are leading firms to look for M&A targets that will enable cost efficiency, cash collection improvement and patient engagement. Meanwhile, companies from outside the industry are looking to extend their reach into healthcare, such as tech companies pursuing wearable devices and remote health monitoring solutions. This activity is all in pursuit of a more holistic and efficient approach to healthcare delivery.

Healthcare providers are working through regulatory uncertainty about MFN, Medicare and Medicaid reimbursement in the US, and tariff-related cost pass-throughs, which has made diligence and revenue modelling more complex, slowing some transactions. 

M&A outlook for health industries in the second half of 2025

The dealmaking environment in the second half of 2025 will be defined by recalibration and readiness. Companies with strong balance sheets and dealmakers who have clear strategic priorities and have undertaken robust scenario planning are best positioned to act amid uncertainty. While headwinds persist, from trade and tariff risks to pricing reforms and capital costs, M&A remains an essential tool to drive innovation, resilience and transformation.

Our commentary on M&A trends is based on data from industry-recognised sources and our own independent research. Specifically, deal values and volumes referenced in this publication are based on officially announced transactions, excluding rumoured and withdrawn transactions, as provided by the London Stock Exchange Group (LSEG) as of 31 May 2025 and accessed between 1–4 June 2025. To facilitate meaningful comparisons with prior half-year periods, the LSEG deal volumes and values data for the first half of 2025 (denoted in the charts as H1’25e) is an estimate based on the first five months of the year, extrapolated to represent a six-month period, and adjusted to capture a reporting lag. These adjustments ensure consistency in the analysis and allow for better trend analysis across the reported timeframes. H1’25e does not represent a PwC forecast. This has been supplemented by additional information from S&P Capital IQ and our independent research. Certain adjustments have been made to the source information to align with PwC’s industry mapping. All dollar amounts are in US dollars. Megadeals are defined as deals greater than $5bn in value.  

Jay Patel is PwC’s global health industries deals leader. He is a partner with PwC UK. Christian K. Moldt is PwC’s EMEA health industries leader. He is a partner with PwC Germany.  

The authors would like to thank Mike Proppe and André Sassmannshausen from PwC’s health industries deals team for their insights and support with the development of this mid-year health industries M&A outlook.

Access our local M&A trends in health industries from the following countries or regions: