The outlook for healthcare and life sciences investments is brimming with potential and growth.
Despite an overall decrease in global M&A levels across all sectors over the past two years, and uncertainty around when investment activity will bounce back, interest in healthcare and life sciences (HLS) continues to weather unfavourable headwinds.
In fact, this year we have witnessed a surge in HLS megadeals that have seen biotech and healthcare startups raise upwards of $100 million.
Several macro-economic drivers are likely responsible for the increased levels of interest in the sector.
Technological advancements in the HLS space, ageing populations, particularly in Asia, and an accelerated interest in telemedicine and agile vaccine development triggered by the pandemic all have a part to play.
Meanwhile, both the pandemic and trade tensions have highlighted the value of supply chain security, resulting in an increased focus on local manufacturing infrastructure.
Based on extensive research among 351 senior counsel and C-suite decision makers working at companies in the HLS sector in Europe, 361 investors in Europe with HLS portfolios, and a panel of our in-house legal experts, our latest report on HLS sector investments provides in-depth analysis of the landscape in which these major deals are taking place.
We explore the key trends shaping the sector, as well as offering expert guidance on how businesses and investors can overcome the challenges they currently face.
According to Alexandre Regniault, partner and healthcare and life sciences sector head “the powerful insights within this report are proof of the intrinsic value of healthcare and life sciences as fields for investments. Straight away, we see that investors are hungry, with a substantial 86% expecting their company to increase its investment allocation in the HLS sector in the next three years. Combine this appetite with the depth of opportunity provided by the sector’s strong innovation pipeline and this becomes a recipe for success.”
Contributing to this positive outlook is the sense that relatively speaking investing in the HLS sector is viewed as an easy win.
As Robert Turner, partner and asset management and investment funds sector head states “from an investor perspective, external factors such as geopolitical tensions are actually incentivising HLS investments by making investing in other areas much more difficult.”
At the same time, the opportunities on offer play into investors’ need to invest capital raised via private credit strategies.
Partner and financial institutions sector head Charlotte Stalin points out that “private credit has been a hot topic in recent years. Now, funds are looking for businesses offering five-year investment opportunities to allow them to quickly service their debt. HLS businesses have significant funding needs, and they also tend to be very cash generative which make them perfect candidates for investment.”
As well as highlighting corporate and investor optimism regarding the state of future HLS investments, our report dives into the key trends shaping the sector.
