No Match Found
The pharmaceutical and life sciences (PLS) sector continued to use M&A as a strategic tool to drive growth and fuel product pipelines during the first half of 2023. As price gaps between buyers and sellers have begun to narrow, we expect deal activity to remain strong in the second half of the year. While debt markets remain challenging and the broader macroeconomic backdrop is unclear, companies with capital flexibility have become more willing to deploy the resources needed to acquire assets with significant upside potential.
In recent periods, companies within the sector have grown incrementally aware of the need to rebalance their portfolios and focus on their core capabilities. Succession planning for key C-suite roles at some of the largest players in the industry could deliver another wave of M&A as new leaders take a fresh look at their portfolios and look to inorganic avenues for growth. However, increasing regulatory scrutiny of larger deals in the sector could restrict the number of megadeals as many dealmakers continue to evaluate how to address the increased risk to closing deals.
Immunology and oncology are two key therapeutic areas that have seen significant scientific breakthroughs in recent periods and have drawn interest from big pharma and biotech.These subsectors have also seen a resurgence of cross-border deals and we have seen a strong level of inbound M&A by foreign acquirers into the US market in recent months.
Despite recent declines in medtech deal volumes, dealmakers continue to look for targets that will accelerate the push towards patient-centric ecosystems and product-enabled services. Improving conditions such as higher procedure volumes, easing supply chain challenges and new technologies coming to market are likely to support increased M&A activity. Value creation will have to remain a critical focus area for C-suites and boards. Companies that lag meaningfully behind their peers increasingly risk being taken private by private equity firms, which continue to have substantial amounts of dry powder and a willingness to invest in the space.
While market volatility can create strong buying opportunities for those with the right strategy, having an integration playbook that can quickly begin implementing the combined businesses’ long-term strategy is vital to achieving positive deal outcomes. When it comes to the successful integration of an acquired target, a one-size strategy does not fit all. Experienced dealmakers know that to make big, transformative transactions successful they must leverage experience, focus on an early and sustained investment in integration, and commit to creating and implementing new long-term operating models.
Learn more about leading practices and transformational mindsets in PwC’s new M&A integration report.
“While the broader macroeconomic backdrop remains unclear, PLS companies with capital flexibility have become more willing to deploy the resources needed to acquire assets with significant upside potential.”