Global Healthcare M&A and Capital Markets FY 2023 Review

Global Healthcare M&A 2023: An Active Deal Chessboard!

The global healthcare market witnessed a surge of deals in 2023 (especially in Q4’23) as dealmakers returned with the intention to stay ahead of the deal curve. Even though investors and acquirers were speculating about a quieter summer, deal activity was robust in the second half of the year, reaching an extraordinary peak in August. The COVID-19 knock-on effects, labour force displacement, geopolitical unpredictability and liquidity scarcity that dominated talks in 2022 had 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 as well as solid deal closures, both of which drove investors’ confidence and set the tone for the whole of the year. The volume of deals withdrawn in 2023 was extremely low, a stark contrast to that of 2022, which saw deals taken off the market on account of geo-political and economic uncertainties. 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 2023:

  • Lower valuations and heightened boardroom CEO confidence across healthcare subsectors drove deal volume
  • 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 interest cycle continued to put pressure on justifying synergies and ROIs
  • Sponsors remained cautious and revised their expectations to factor in the changing deal making landscape with lower valuations justifying ‘firepower’ deployment during the year
  • Scarcity of initial public offerings made sale processes the primary investor exit method
Arjun Paul
Manager, Corporate and Investment Banking LoB Posts

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