Global Healthcare M&A and Capital Markets Q1 2024 Review

The global healthcare market witnessed healthy broad-based deal activity in Q1’24 as dealmakers continued to look and generate value in the current challenging market environment. The COVID-19 knock-on effects, labour force displacement, geopolitical unpredictability and liquidity scarcity that dominated talks previously has stabilized to a certain extent, thereby providing a conducive environment for deal discussions. The ability to identify, negotiate and realize value from increasingly complex partnerships and alternative collaboration models continues to drive deal making and serve as a key competitive advantage.

The sector witnessed numerous 'big ticket' agreements, especially in the pharmaceuticals and biotech sub-sector given their significant war chest, which drove investors’ confidence and set the tone for the remainder of the year. However, lack of mega deals resulted in subdued y-o-y figures owing to strong base effect. Nonetheless, dealmakers continued to amend their strategies to bridge the valuation gaps and conducted deeper analyses of the targets, thereby extending duration of negotiations and due diligence.

Key M&A sentiments observed during Q1’24:

• Lower valuations and heightened boardroom CEO confidence across healthcare subsectors drove deal volume though lack of mega deals muted y-o-y growth (high base effect)
• Portfolio realignment is happening among the strategics to divest non-core or under-performing assets; the proceeds of which are expected to be used in ramping of R&D, technology, and scale
• Rapid paradigm shift towards utilizing data and actionable insights to implement person-centric network/product strategies across sub-sectors
• Uncertain geopolitical environment and higher for longer interest cycle continued to put pressure on justifying synergies and ROIs
• The increasing demand for GLP-1 medications may lead to more deals in the weight loss industry, as start-ups compete with Big Pharma
• Sponsors remained cautious and revised their expectations to factor in the changing deal making landscape with lower valuations justifying ‘firepower’ deployment during the year
• Traditional initial public offerings made a strong comeback as the primary investor exit method