Healthcare M&A Set to Rebound Under Trump Administration
The healthcare industry is poised for a resurgence in mega-deals exceeding $10 billion, driven by expectations of less stringent antitrust scrutiny under President-elect Donald Trump. As 8,000 executives, bankers, and lawyers gather in San Francisco for the JPMorgan Healthcare Conference, optimism is running high.
A Shift in Regulatory Environment
Following Trump’s election, deals that were put on hold due to antitrust concerns, high interest rates, or declining share values are being reevaluated. The nomination of a less stringent chair for the Federal Trade Commission has been welcomed by dealmakers, who see a more pro-business stance from the incoming administration.
Dealmakers Expect a Rebound
Seventeen healthcare dealmakers surveyed by Reuters are unanimous in their optimism about a M&A recovery. “Eventually, the dam starts to break,” said Ben Carpenter, JPMorgan’s global co-head of healthcare investment banking. “I would expect to see at least a few deals that rise above $10 billion.”
Caution Remains
While dealmakers are optimistic, 14 out of 17 bankers, lawyers, and financial advisers consulted caution that it may take more than a year for activity to return to its heyday of 2019 or 2021, when healthcare deals totaled half a trillion dollars.
Market Conditions Improve
Companies with strong earnings have recovered to levels that allow for dealmaking, said Devin O’Reilly, head of healthcare North America at Bain Capital. “It may not be the ideal price people were thinking, but it’s a normal multiple that they can sell this year and have a very good outcome.”
Traditional Buyers Return
Traditional buyers like Merck & Co, Bristol Myers Squibb, Johnson & Johnson, and Pfizer are now more likely to make big acquisitions, driven by the need to fill revenue holes left by big-selling medicines going off patent.
Private Equity Firms to Play a Big Role
Private equity firms with cash to spend are expected to be big players in hot areas like technology and artificial intelligence, which are seen as more insulated from regulatory constraints. They will focus on medicines for heart and metabolic conditions, nervous system disorders, immune system disorders, and the particularly lucrative oncology and rare diseases spaces.
New Generation of Weight-Loss Drugs
The new generation of weight-loss drugs is also likely to be in the deal crosshairs, with analysts forecasting that market reaching as high as $200 billion by 2031. A company with a pill as effective as the popular injected drugs would be especially attractive.
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