Healthcare ‘bucks global trend’ hitting two year high for M&A in first half of 2023

Healthcare ‘bucks global trend’ hitting two year high for M&A in first half of 2023

• US$42.1 billion acquisition of Seagen by Pfizer is the largest announced deal of the year
• Healthcare graduated highest number of companies from small cap to large cap in FTSE Russell reconstitution
• Global dealmaking falls 38% to post-pandemic low in first half of 2023

LONDON, 30 June 2023: Deal making in the Healthcare sector accounts for 14% of global M&A so far this year with US$174.6 billion of deals announced, up 35% compared to last year and a two-year high according to LSEG Deals Intelligence. M&A activity in the Biotechnology, Healthcare Equipment and Healthcare Services sectors account for 85% of overall deal making in the sector.

The US$42.1 billion acquisition of Seagen by Pfizer, the largest announced deal of the year, 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. The US$10.2 billion acquisition of Prometheus Biosciences by Merck rounded out the top three Healthcare deals this year. By number of deals, Healthcare M&A is down 12% compared to last year at this time.

In the Russell US Indexes Reconstitution, which took place earlier this month, the healthcare industry graduated the highest number of companies from small cap to large cap, with six healthcare companies among the 22 companies moving up from the Russell 2000 to the Russell 1000. This is more pronounced with smaller companies, with 42% of the approximately 200 Russell Microcap companies shifting up into the Russell 2000 allocated to the healthcare industry.

Matt Toole, Director at LSEG Deals Intelligence, comments: “Healthcare companies have bucked the trend where we have seen declines in M&A activity across most sectors.

“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%). By number of deals, worldwide deal making has decreased 11% so far this year, a three-year low.  Global M&A for deals greater than US$10 billion has decreased 52% compared to the same period last year, while deals under $500 million have registered a decline of 38% by value and 8% by number of deals compared to a year ago.  Second quarter-to-date 2023 M&A activity has increased 23% compared to the first quarter of this year, which ranked as the slowest first quarter since the first quarter of 2013.

Matt Toole, Director at LSEG Deals Intelligence, comments: “More broadly, economic pressures have continued to dampen the global dealmaking environment with fears of recession and rising interest rates biting.

“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.”