Pharmaceutical and life sciences: US Deals 2024 outlook

Healthy activity levels expected in 2024

2023 was a reasonably strong year for the pharmaceutical and life sciences sector with both deal value and volume of M&A close to pre-pandemic levels. In 2024, we expect similar levels of activity, in the $225 billion to $275 billion range across all subsectors. Executives will continue to deploy cash balances and seek out areas of innovation and clinical differentiation to help address remaining growth challenges in the latter half of the decade.      

Despite some stabilization in the macroeconomic environment and the potential for a soft landing in sight, continued geopolitical and regulatory uncertainty seems a given in 2024. Against this backdrop — and coupled with the reality of higher interest rates — we expect dealmakers to increasingly focus on margin accretion in M&A, rather than relying prominently on growth-driven dealmaking. As regulators' perspectives on key deal factors become better understood, there may be a return of larger deals, along with continued interest in the $5 billion to $15 billion deals to fill targeted strategic gaps.

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Pharmaceuticals and life sciences deals outlook

Differentiated science and clinical advances continue to come in waves and we expect to see dealmaking in areas with meaningful incremental innovation in 2024. Pharma and biotech dealmaking will continue to focus on precision medicine in areas such as oncology and immunology, but we also expect to see a heightened focus on weight loss and cardiovascular, a therapeutic area that went through a renaissance in 2023. 

As we saw in 2023, competition for innovation remains increasingly fierce on the back of resetting biotech valuations and a focused approach to deliver value on M&A remains an imperative. IPO markets are critical for biopharma and we expect the window to gradually reopen in 2024, likely skewing toward companies with strong clinical data. Looking beyond traditional M&A, the sector will also seek out increasingly creative structures that allow for greater R&D funding while still maintaining control over the development of critical compounds, leaving the door open for an increased role for private equity and structured solutions such as private credit. Along with asset swaps, profit-sharing arrangements, innovative joint ventures (JVs) or collaborations and divestitures, creativity will be essential to executing on strategic priorities in 2024, including delivering top quartile returns to shareholders while limiting capital exposure.

In medtech, to address investor concerns about the potential impact of GLP-1 medications along with the anticipation of sustained, higher interest rates, companies are increasingly focused on managing cost structures to unlock capital to invest in growth opportunities and innovation. While M&A activity in the subsector remained muted in 2023, we expect deals will return as a catalyst for growth in 2024. In addition to seeking out innovative products, medtech companies will continue to look to M&A to drive business model reinvention. Acquirers will seek out new capabilities related to robotics, AI and data to enable strategies centered on new sites of care and increased collaboration in healthcare to drive better patient outcomes. To overcome high valuation expectations from sellers and a higher cost of capital, acquirers will need to maintain a sharp focus on value creation, linking deal theses to integration planning and investing in integration capabilities to drive sustained outcomes. 

Private equity remains interested in contract development and manufacturing organizations (CDMOs) and contract research organizations (CROs) with differentiated capabilities, particularly in rapidly evolving areas like gene therapy. There is also potential for cross-sector deals as buyers outside pharma and biotech look for ways to leverage their manufacturing and other core competencies to gain exposure to high-growth areas in the sector. As in prior years, private equity acquisitions of underperforming public companies in market areas that benefit from secular growth trends will continue, particularly with strongly functioning investment grade credit markets and abundant private capital.

“We expect 2024 to be an active year for M&A where creativity will be imperative. Medium-term growth challenges remain for much of the sector and clinically differentiated science will continue to draw the attention of dealmakers.”

— Roel van den Akker, US PLS deals leader

Sub-sector outlook


The stakes for M&A for the pharma sector will be even higher in 2024. The competition for high quality assets will remain incredibly fierce and the regulatory landscape remains challenging. It will be critical that companies invest appropriately in a multi-pronged, technologically enabled and agile inorganic strategy. Companies taking a multi-faceted and capability-driven approach, wedding the "not innovated here" and "innovated here" approaches, will emerge in a stronger position. The traditional M&A approaches that got us here will not be the strategies that get us to tomorrow. We expect an increasing focus in M&A on delivering margin accretion.    

As was the case in 2023, we expect the US will remain the center for most global innovation in the sector and that foreign buyers will continue to lean in actively to take advantage of opportunities. With the implications of the Inflation Reduction Act (IRA) now better understood, we expect that companies will direct innovation dollars increasingly towards biologics at the expense of small molecules. 


The pace of technological innovation remains high in biotech and impressive strides continue to be made in areas of significant unmet medical need. M&A levels were healthy in 2023 with a focus on companies that have technological differentiation or superior clinical profiles compared to the standard of care. We expect this trend to carry into 2024. Our expectation is the challenging macro-environment and uncertainty that persists will push dealmakers into more creative options to deliver growth. Licensing and collaboration agreements, JVs, structured transactions, R&D funding structures, ecosystem building as well as spinoffs and divestitures will all be considered by dealmakers as they blaze new trails to deliver growth in 2024. 


While M&A activity in the subsector remained muted in 2023, we expect deals will return as a catalyst for growth in 2024. Medtech companies will continue to evaluate their portfolios and seek to divest businesses that are no longer a strategic fit and reinvest in differentiating capabilities and growth opportunities. The IPO market will also impact M&A activity in the sector and innovation in the industry more broadly. While a slow IPO market may create M&A opportunities in the near term, multiple exit opportunities will be required to attract investment in early-stage companies.   


Activity levels in 2023 were healthy across the services sectors as continued investment in CROs and CDMOs as well as take-privates by private equity took center stage. We predict M&A activity in these sectors to remain strong in 2024 as achieving scale and market leadership is critical and private equity (PE) firms will remain actively involved with plenty of dry powder. Increased focus on GLP-1s in the cardiovascular category and continued innovation into 2024 in that area will drive further investment and M&A in ancillary sectors such as CDMOs. The completion of spinoffs of pure play over-the-counter and consumer health businesses in 2022 and 2023 is also expected to provide a tailwind to increased M&A as these enterprises seek transformation in differentiated categories that benefit from secular growth areas such as vitamins, minerals and supplements.   

Key deal drivers

Capital allocation

In times of market volatility, companies that can effectively identify and invest in their core strengths have a greater opportunity to generate value. While some corporations have traditionally aimed to diversify their portfolios, experienced investors tend to favor companies that maintain a narrower, high-potential therapeutic area portfolio centered on a specific, distinctive capability. 

Engaging in strategic acquisitions that align with a buyer's unique strengths can lead to long-term success. Buyers across the industry are focusing on assets that can expedite innovation in early-stage research and development efforts, enhance speed to market and increase adaptability.

Necessity for business reinvention

The approaching expiration of patents in the latter half of the decade for prominent companies emphasizes the importance of constant reinvention to foster growth. Companies that utilize deals to transform their operations and drive innovation can position themselves to successfully navigate these significant events while still generating positive returns for shareholders. 

Sustained leadership in the field requires companies to consistently reassess their resources and swiftly address any gaps, often achieved through mergers and acquisitions. Companies that promptly and proactively integrate acquired entities after completing a deal have a better chance to create shareholder value. In this period of higher interest rates and restricted credit markets, divestitures can play a crucial role in accessing the capital required to strengthen core areas, as indicated by PwC's recent study on divestitures. This trend is evident in the market through active portfolio optimization plans, where companies aim to maximize value by establishing organizations solely focused on driving their core strategy and transferring non-core assets to other entities.

A series of significant scientific breakthroughs in recent years, particularly in growing therapeutic areas, is compelling category leaders to continuously innovate. A recent surge in drug shortages coupled with fluctuating demand for certain key areas has renewed pressure on the industry to reinvent their supply chains to withstand geopolitical unrest and rapid changes in market adoption.

Opportunity amid uncertainty

While navigating through deals during periods of significant uncertainty can be challenging, those who can effectively identify, execute and integrate targets have the potential to enhance long-term returns compared to those who wait for greater stability. Although relatively high inflation and increasing debt costs pose challenges for many participants, they also present unique opportunities. We anticipate a potential rebound in IPO volumes in the future, but the recent lack of activity in the IPO markets has limited the ability of innovative startups to raise the necessary capital to advance their programs through the clinical stage. As a result, they have been compelled to seek corporate partners or buyers who can provide the resources needed to bring their assets to commercialization. 

Timing and speed are crucial for achieving positive outcomes. Having an experienced M&A team, thorough planning, and swift access to funding are essential for successfully negotiating a deal amid geopolitical turbulence and economic volatility.

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