PwC - Global M&A Trends in Health Industries: 2022 Outlook

Pharmaceuticals and life sciences (PLS) and healthcare services (HCS) continued to attract high levels of investor interest throughout 2021, led by innovations in biotechnology and patient services. Capability-driven deals have increased in relevance for many companies, including deals that provide access to new technologies such as mRNA and gene therapy. Looking ahead, we expect that an abundant availability of capital will continue to fuel M&A activity and valuations over the next year.

Competition between large pharma companies and institutional investors—venture capital (VC), initial public offerings (IPOs), etc.—remains high, particularly for medium-sized biotech platforms. As we anticipated in our mid-year update, traditional pharma companies are optimising their portfolios by divesting non-core assets in order to free up capital to invest in innovation and address portfolio gaps.

As multiples continue to increase, buyers need to define their post-deal value capture-and-creation plans. Companies with well-crafted long-term plans will be able to unlock value in the current market, while those that take a hands-off approach may struggle to earn the desired return on investment.

“We expect deal activity to remain high in 2022, as companies look to optimise their portfolios for growth. Innovative biotech and med device companies will continue to be attractive M&A targets.”

Tobias KlimpeGlobal Health Industries Deals Leader, Partner, PwC Germany

M&A hotspots

We expect the following areas to be M&A activity hotspots during the next six to 12 months:

Pharmaceuticals and life sciences

• Traditional big pharma players seek to optimise their portfolios by divesting over-the-counter and other less innovative platforms, and continuing to target biotech companies at the frontier of science, such as cell and gene therapy or next generation therapeutics.
• Prolonged effects of the pandemic and the emergence of new variants suggests vaccine demand will remain high. Innovative companies that can deliver efficiencies in the mRNA manufacturing process and address bottlenecks in equipment availability experienced by vaccine manufacturers will draw significant interest from investors.

Healthcare services

• Speciality care platform roll-ups are coming to market, as investors reach the end of their desired holding period and seek to sell to the next tier of private equity (PE) funds, which have significant dry powder to deploy.
• Telehealth, health tech, and data and analytics companies that enable quicker, more efficient and/or virtual delivery of patient care via automation and digital solutions such as clinical decision support present value creation opportunities and are attracting investor interest.
• Cross-border transactions will remain at elevated levels as PE groups and strategic players continue to build regional growth platforms and/or enter new markets.

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Source: Global M&A Industry Trends in Health Industries (pwc.com)

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