Pharmaceutical & life sciences: US Deals 2023 outlook

Strong year ahead for M&A in the sector

2022 has been a challenging year for M&A in the pharmaceutical and life sciences sector, with both deal value and volume at multiyear lows thanks to overall macro headwinds coupled with broad-based market dislocation. In 2023 we expect M&A to more closely resemble prior years with a total deal value in the $225 billion to $275 billion range across all subsectors. Ample corporate cash, the need to continue to invest to address medium-term pipeline gaps and the resetting of biotech valuations will provide the backdrop for an active year. 

As the overall economic outlook stabilizes somewhat, the need to invest to achieve transformation will remain unparalleled. Achieving scale to deliver shareholder value is imperative. We continue to expect that deals in the $5 billion to $15 billion range will be the market sweet spot but see the potential for one or more deals in the $20 billion to $40 billion range before year-end. With the outcomes of the midterm elections known and the effect of the Inflation Reduction Act on pricing better understood, much of the uncertainty that plagued the sector in 2022 should be in the rearview mirror. 

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Pharmaceutical & life sciences deals outlook

We expect to see activity in areas of high expected future growth in 2023. Pharma and biotech M&A will continue to focus on oncology and immunology, but other areas such as central nervous system and cardiovascular diseases as well as vaccines will see interest. We expect that the market will place a significant premium on therapeutic area leadership. Promising science that addresses unmet medical needs is incredibly valuable, but significant competition for differentiated and de-risked assets remains. A clear and agile approach to evaluating options will therefore be critical in achieving desired outcomes. Thinking broadly about success is imperative as companies will need to create a brand as the partner of choice as well as a new playbook to satisfy the insatiable market demand for shareholder returns. Structured deals, new and creative approaches to R&D funding and portfolio reassessments leading to divestitures are also going to be important themes in the M&A toolkit in 2023.

The medtech sector continues to face headwinds with deal values down significantly in 2022 and uneven capital market performance. Even so, we remain optimistic about the 2023 prospects for the sector. The recent reset in valuations may provide opportunities for companies to outperform investor expectations and create shareholder value by focusing on differentiated growth opportunities such as robotic surgery, structural heart disease and connected care. Balance sheets and cash flow across the industry remain strong, and we believe M&A will remain a priority for capital allocation.

The services sector will continue to see healthy M&A levels in 2023. Achieving scale will be critical in the various subsectors, for example in differentiated contract development management organizations (CDMOs) and contract research organizations (CROs), and M&A is a means to that end. Private equity (PE) is expected to continue to be a driving force on this front. PE acquisitions of underperforming public companies in market areas that benefit from secular growth trends will also be a theme in 2023, particularly in the latter half as the debt markets reopen more formally. PE dry powder has never been greater and the services subsector has long been a favorite.

Divestitures study insights for pharmaceutical and life sciences

Given the uncertain macroeconomic outlook, portfolio management and optimization is a preeminent topic on the sector’s C-suite agenda. During 2022, companies in the PLS sector announced or otherwise implemented strategic realignment plans to drive value for shareholders, generate investment capacity or unlock trapped value.

We predict this trend will continue in 2023 and consequently companies will need to adhere to a clear playbook to deliver the desired outcomes. Prepared and proactive management teams willing to consider both acquisitions and divestitures will be best positioned to create value. An upcoming PwC study has found that timely decision making also can help increase the value creation possibilities.

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Sub-sector outlook


Despite the lackluster year from an activity perspective in 2022, transactions have always been the fabric of the pharma industry, and deal activity will accelerate in 2023 as companies look to inorganic activities to achieve their growth plans. Differentiated capabilities will be required to achieve success, and we expect a healthy and synergistic combination of “not made here” and “made here” innovation will dictate success over the next few years. We also expect to continue to see deals in the $5 billion to $15 billion range, which will require a unique playbook in key growth therapeutic areas such as oncology. We would not be surprised to see one or more deals in the $20 billion to $40 billion range in the latter half of 2023 as companies gain more comfort around the Federal Trade Commission’s posture in a period of divided government for the next few years. 


Biotech deal activity was lower in 2022 in terms of deal value, but from a volume perspective performance was reasonable compared to 2018-2020. Even with rebalanced valuations, the premiums required to get deals done will continue to make it imperative that the underwritten biotech deal value is fully realized. Pharma companies need a more streamlined and less invasive approach to integration and to make the dealmaking experience more rewarding for buyers and sellers. For riskier and/or early-stage compounds, partnership deals will continue to dominate the headlines particularly in light of a challenging IPO market. Companies will increasingly have to commit to a long-term plan around building an ecosystem while maintaining the agility to move with a changing macro business environment.


The medtech sector continues to face headwinds with deal values down significantly in 2022 and uneven capital market performance. We remain optimistic about mid- and long-term prospects for the sector. Strong cash flow and balance sheets create good fundamentals for M&A in 2023. We expect M&A to continue in traditional areas of medical technology such as cardiology and orthopedics. We also expect companies to seek to add innovative technologies to portfolios as they enter new markets and adopt new business models. Market dislocation could persist for a little longer particularly in private deals where sellers are slower to adjust expectations, possibly leading to renewed interest in structured deals to bridge value gaps. We expect medtech executives will remain focused on growth. Medtech companies should move beyond the traditional playbook of incremental product improvements, narrow M&A activity and investment in sales and marketing efforts. Executives should consider new strategies to accelerate growth and increase market share with a focus on ecosystem building, mastering care settings and creating product enabled services.


The services sector has seen healthy levels of M&A in recent years albeit in ebbs and flows. There was increased deal activity involving CROs and CDMOs as well as medical communications in 2022 relative to the longer term trend. We predict M&A activity in these sectors will remain strong in 2023 as achieving scale and market leadership is critical and PE firms will remain actively involved. Furthermore, the completion of spinoffs of pure play over-the-counter and consumer health businesses in 2022 and 2023 is 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.

“We expect M&A to rebound strongly across all subsectors in 2023. Ample corporate cash, the need to continue to invest to address medium term pipeline gaps and biotech valuations resetting will provide the backdrop for an active year.”

— Roel van den Akker, US Pharmaceutical & Life Sciences Deals Leader

Key deal drivers

Capital discipline

In the face of rising costs of capital, many industry participants are reevaluating which areas they are willing to invest resources in. This is leading to companies to double down on their core competencies to drive a higher return where they can fully leverage their existing capabilities. The market rewards leadership in key categories and scale drives efficiency. To fund this reinvestment, companies are looking at strategic divestitures of assets in some therapeutic areas and are even exploring asset swaps in certain instances.

Navigating uncertainty

The PLS sector continues to face some uncertainty related to antitrust scrutiny and the rising cost of capital, which will create additional challenges for M&A. Additionally, China continues to feature prominently on C-suite agendas as the legal and regulatory landscape evolves and companies ponder how to best drive returns in this large market, which is expected to continue to show rapid growth in coming years. We expect international companies to increasingly focus on acquiring regional capabilities to receive domestic benefits and quickly enter the market segment in China as a local player, providing timely service to Chinese customers.

Speed to unlocking value from transformational deals

While difficult economic environments create some of the best M&A opportunities, unlocking value quickly becomes even more pivotal. Ensuring that a return on investment is delivered quickly helps curb concerns from investors about capital deployment. Companies need to be cognizant of more success factors than ever before when evaluating the impact of acquisitions or divestitures. They need to consider environmental, social and governance standards, diversity and inclusion and the impact to human capital, as well as digital capabilities, digital transformation and integration focused on key performance indicators.

Increasing resilience and security

Securing a more reliable supply chain, whether in manufacturing or development, will continue to be a key focus area where companies look to innovate through both internal strategic realignments and M&A. Beyond historical risk factors, companies face an expanding array of new cyber threats to pharma’s valuable IP from across the globe. As companies continue to look for geographic growth, ensuring data security remains a critical concern, particularly when looking to M&A as a way to achieve geographic expansion.

Contact us

Glenn Hunzinger

Glenn Hunzinger

US PLS Leader, PwC US

Roel Van Den Akker

Roel Van Den Akker

Partner, Pharmaceutical & Life Science Deals Leader, PwC US

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