Healthcare 'bucks global trend' Hitting Two Year High for M&A in First Half of 2023 says LSEG Deals Intelligence

As per reports LSEG Deals Intelligence, deal making in the healthcare sector accounts for 14% of global M&A so far this year, with US$ 174.6 billion in announced deals, up 35% from last year and a two-year high. The Biotechnology, Healthcare Equipment, and Healthcare Services sectors account for 85% of total deal activity in the sector. The largest announced deal of the year, the US$ 42.1 billion acquisition of Seagen by Pfizer, and the US$ 10.7 acquisition of Oak Street Health by CVS Health topped the list of Healthcare M&A during year-to-date 2023.

Merck's acquisition of Prometheus Biosciences for $10.2 billion rounded out the top three Healthcare transactions this year. Healthcare M&A is down 12% in terms of deal volume compared to this time last year. The healthcare industry graduated the most companies from small cap to large cap during the Russell US Indexes Reconstitution earlier this month, with six healthcare companies among the 22 companies moving up from the Russell 2000 to the Russell 1000. This is more pronounced in smaller companies, with the healthcare industry accounting for 42% of the approximately 200 Russell Microcap companies moving up into the Russell 2000. “Huge amounts of cash reserves amassed during the coronavirus pandemic have been deployed to fuel growth and boost investor confidence.”

Global dealmaking falls to 38% to post-pandemic low in first half of 2023. M&A activity totals US$ 1.3 trillion during year-to-date 2023, down 38% compared to the same period last year. The year-to-date tally marks the slowest first half period for deal making since 2020 and the largest year-over-year first half percentage decline post pandemic (down 41%). “There are glimpses of positivity however as the rate of decline has slowed compared to the first quarter of 2023. With the Fed pause on interest rate rises, this could represent a turning point as dealmakers regain confidence.”