On July 4, Data from LSEG Deals Intelligence revealed that the healthcare sector experienced a notable 35% increase in deals, reaching $174.6 billion in the first half of 2023. This marks a two-year high and defies the downward trend seen in global dealmaking, which fell 38% to a post-pandemic low.
Healthcare deals now constitute 14% of global mergers and acquisitions (M&A), despite a 12% decrease in the number of deals compared to the same period last year. M&A activity within the biotechnology, healthcare equipment, and health services sectors accounts for 85% of the overall dealmaking within the healthcare sector.
Among the notable deals announced this year, Pfizer’s acquisition of Seagen for $42.1 billion takes the top spot, followed by CVS Health’s $10.7 billion acquisition of Oak Street Health and Merck’s $10.3 billion purchase of Prometheus Biosciences. Prior to Merck’s deal, GSK had acquired Bellus Health for approximately $2 billion.
Furthermore, the healthcare sector witnessed the highest number of companies transitioning from small cap to large cap during the FTSE Russell US Indexes Reconstitution in June. Six healthcare companies were among the 22 companies moving up from the Russell 2000 to the Russell 1000.
“Huge amounts of cash reserves amassed during the coronavirus pandemic have been deployed to fuel growth and boost investor confidence. He caveated, however that, more broadly, economic pressures have continued to dampen the global deal making environment, with fears of recession and rising interest rates biting.”
– Matt Toole, Director at LSEG Deals Intelligence
In contrast, global deal making has seen an 11% decrease in the number of deals so far this year, reaching a three-year low. However, M&A activity in the second quarter of 2023 increased by 23% compared to the sluggish first quarter, which marked the slowest first quarter since 2013.
The pharmaceutical industry had also experienced a slowdown in major acquisitions, but with a resurgence in investments, it is anticipated that the industry could enter another Phase of consolidation and expansion within their respective niches.
