Amid a challenging economic environment defined by persistent inflation, rising interest rates, recessionary concerns and falling equity values increasing uncertainty, healthcare and life sciences (HCLS) investors are poised to forge ahead with 60% of respondents indicating they plan to increase their M&A activity in 2023 according to new findings from the 2023 KPMG Healthcare and Life Sciences Investment Outlook.
“2022 is a story of both tailwinds and headwinds," said Ash Shehata, KPMG National Sector Leader Healthcare and Life Sciences. "Hospital systems are dealing with rising labor and supply costs while biopharma and medical device companies have been exposed to supply chain, logistics, and labor issues that slow down production. Now is the time for HCLS leaders to adjust their strategies to build durability and resilience within their companies."
The 2023 KPMG Healthcare and Life Sciences Investment Outlook features insights from a survey of more than 300 industry executives who provide their perspectives on how evolving market factors and the policy environment may impact investment decisions in 2023.
Key Survey Findings Include:
Areas of Capital Deployment Focus for 2023
When it comes to deploying capital in 2023, operational efficiency and expansion into new offerings, platforms and milestone-based deals are forecasted to be key capital deployment areas for HCLS respondents.
“The tailwinds that drove M&A in the last two years-the need for innovation and the need to fill pipelines-remain in force,” said Kristin Pothier, Principal, National and Global Healthcare and Life Sciences Deal Advisory and Strategy Leader. “Companies are sitting on a lot of cash and assessing their opportunities to make strategic investments now that will set them up to gain a competitive advantage as we come out of a possible downturn. Whether investing in new technology platforms, enhancing their digital ecosystem, or reimagining approaches to new geographies, deals are likely to continue to reflect the new reality of the industry, a reality that balances scientific and clinical advancement with cost.”
Select Subsector Highlights: