By Andres Gonzalez
LONDON (Reuters) – Merger and acquisition (M&A) activity in the global healthcare sector should continue to rise next year, led by healthcare companies rather than private equity, according to a survey of industry executives.
The report, published by investment bank Jefferies on Tuesday, surveyed 600 senior leaders in the sector. It found 68% of respondents expected the volume of deals in healthcare to rise in 2024, with 60% believing companies within the sector will dominate the transactions.
The volume of M&A deals in the healthcare sector has surged 22% to $341 billion so far this year, according to data provider Dealogic, bucking a decline in M&A activity across most industries.
“Sentiment towards Europe, in particular, is improving, with the region increasingly seen as a value opportunity for 2024 – with private equity investors the most bullish,” said Tommy Erdei, global joint head of healthcare investment banking at Jefferies.
M&A activity across all industries globally has fallen from a peak in 2021 as rising interest rates, slowing economies and geopolitical tensions hit financial markets. So far this year deals are down 23% from the same period last year to $2.6 trillion, according to Dealogic.
Healthcare executives surveyed were sour on the likelihood of initial public offerings being a source for transactions next year with only 6% of all respondents viewing IPOs as the most dominant deal for 2024.
Raising new capital has been a challenge and 68% of the executives surveyed expect that the adverse economic environment will have a major impact on the ability of healthcare companies to raise capital.
(Reporting by Andres Gonzalez, editing by Anousha Sakoui and Susan Fenton)
