Global Healthcare M&A and Capital Markets H1 2023 Update

Global Healthcare M&A H1’23: Big-Ticket Deals Demonstrate Resiliency

The global healthcare market witnessed a surge of deals in H1’23 as dealmakers returned with the intention to stay ahead of the deal curve. The COVID-19 knock-on effects, labour force displacement, geopolitical unpredictability, and liquidity scarcity that dominated talks last year had subsided, thereby providing a conducive environment for deal making. The ability to identify, negotiate and realize value from increasingly complex partnerships and alternative collaboration models continues to a key competitive advantage.

The sector witnessed numerous 'big ticket' agreements as well as solid deal closures, both of which are expected to drive investors’ confidence and set the tone for the remainder of the year. The volume of deals withdrawn during the first half was extremely low, a stark contrast to last year, which saw deals taken off the market on account of geo-political and economic uncertainties. Dealmakers continue to amend their strategies to bridge the valuation gaps. They are conducting deeper analyses of the targets, thereby extending duration of negotiations and due diligence. Key M&A sentiments observed during the year:

  • Even while greater antitrust scrutiny from authorities has made transformative mega deals more difficult to accomplish, M&A remains a crucial transformation instrument for business leaders
  • 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 continue to put pressure on justifying synergies and ROIs
  • Sponsors being cautious and revising 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, Financial Services Posts

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