No Match Found
Pharmaceuticals and life sciences (PLS) and healthcare services (HCS) continue to attract substantial investor interest, and we expect this to continue during the latter half of 2023. As we highlighted in our 2023 M&A outlook, M&A remains a valuable transformation tool, even as increased antitrust scrutiny from regulators has made transformative megadeals more difficult to complete. Large-cap pharma companies continue to pursue investments in midsize biotech companies to bridge pipeline gaps, while portfolio reviews and divestitures of non-core assets remain top of mind. Private equity firms are eager to deploy their dry powder by acquiring innovative healthcare assets.
Challenging economic conditions and a persistent gap between buyers’ and sellers’ price expectations hampered some dealmaking during the first half of the year. However, as the valuation gap narrows, we expect an upswing in deal activity in the second half. With scarce initial public offerings, sale processes have emerged as the predominant investor exit strategy. Furthermore, with high interest rates creating a difficult financing environment, divestitures will likely become more important as a capital-raising mechanism. Public companies with underperforming stock prices are likewise vulnerable to take-private transactions initiated by cash-rich private equity firms. The emergence of generative AI has also added some effervescence to the market as health players seek to understand how to integrate it into their offerings and are compelled to acquire expertise.
‘Savvy health industry dealmakers who can navigate a tricky regulatory and macroeconomic landscape will continue to use M&A to innovate, grow in line with enterprise priorities and implement strategic portfolio measures. This way, they will stay ahead of their competitors.’
M&A remains a vital tool for health industries companies, enabling them to drive business transformation and deliver sustained outcomes by creating value over the long term. Despite regulatory frictions, M&A activity in health industries will remain robust, with the potential for acceleration in the second half of 2023 as valuation gaps between buyers and sellers begin to narrow and companies pursue innovative tech and AI-powered solutions to meet their strategic and operational challenges. Dealmakers should prepare for a more dynamic second half of 2023.