Against the backdrop of an evolving regulatory landscape, heightened geopolitical tensions, and challenging economic environment, healthcare and life sciences (HCLS) investors remain undeterred in their M&A plans. Nearly two-thirds of investors plan to increase deal activity in the year ahead while a mere 9% anticipate a decline in deal volume, according to the 2024 KPMG Healthcare and Life Sciences Investment Outlook.
“As the heightened volatility we saw this past year continues into 2024, HCLS leaders will need to remain agile as they balance the challenges of today against their growth objectives of tomorrow,” said Kristin Pothier, U.S. Sector Leader for Life Sciences at KPMG. “The ascension of Generative AI and precision medicine has transformed the landscape placing a greater emphasis on digital health, value-based care, and patient-centricity driving investment and innovation.”
The 2024 KPMG Healthcare and Life Sciences Outlook features insights from a survey of 500 industry executives who provide their views on how changing market conditions and policy developments may impact investment decisions in 2024.
Key Survey Findings Include:
Areas of Capital Deployment Focus for 2024
When it comes to deploying capital in 2024, improving operational efficiency, investing in joint ventures, and platform expansion or bolt-on acquisitions are forecasted to be key capital deployment areas for HCLS respondents.
“The smart optimism that has defined deal activity – companies’ need to expand their capabilities through strategic acquisitions – is likely to continue in 2024. However, smart optimism must also include smart diligence to mitigate execution risks, which are elevated in today’s business environment,” said Ash Shehata, U.S. Sector Leader for Healthcare at KPMG. “We see a convergence of factors laying the groundwork for a potentially stronger deal market in 2024. Notably, private equity sitting on high levels of dry powder and valuations stabilizing due to the presumption that health system volumes are under way as a result of a total volume recovery.”
Select Subsector Highlights:
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