By Emma-Victoria Farr
FRANKFURT (Reuters) – Healthcare executives and traders anticipate an uptick in preliminary public choices and company dealmaking in 2025, with geopolitical tensions overtaking funding challenges as the most important danger to the sector, Jefferies’ annual healthcare report confirmed on Tuesday.
WHY IT’S IMPORTANT
Healthcare is an energetic sector for M&A, with offers reminiscent of Johnson & Johnson (NYSE:)’s acquisition of coronary heart gadget enterprise Shockwave Medical (NASDAQ:) for $13.1 billion introduced in April, and KKR’s acquisition of a stake in well being tech agency Cotiviti in February.
With deal exercise globally muted in current months, 72% of the survey’s individuals anticipate healthcare M&A ranges to be greater in 2025, with round 50% of personal fairness respondents figuring out Europe as a area of alternative for the sector.
Now in its seventh yr, the report surveys round 500 senior individuals from the healthcare sector, spanning institutional and personal fairness traders, in addition to executives at healthcare corporations.
MARKET RISKS
Geopolitical dangers are seen as the most important danger for healthcare traders, with 40% highlighting it as the best drawback, up from 26% final yr.
Funding and pricing cuts proceed to be a priority, and have been a slim second selection by respondents as the best problem for the sector – or 36%, up from 33% who have been anxious a couple of lack of funding final yr.
North America will proceed to dominate the dealmaking panorama, considered by 74% of respondents as the most important market alternative.
Continental Europe slipped, chosen by 36% of respondents towards 43% final yr, whereas those that noticed the UK as the most important alternative fell barely to 18% from 20% in 2023.
China has recovered barely from final yr, highlighted by 16% of respondents as providing the most effective alternative, up from 12% in 2023.
BY THE NUMBERS
There’s confidence in corporations seeking to record, with 64% of respondents anticipating extra healthcare IPOs in 2025, in a robust sign that the fairness capital markets might be making a comeback.
Of these polled, 20% anticipate fairness financing and IPOs to dominate transactional exercise – the best quantity since Jefferies began the survey in 2018.
KEY QUOTE
“This year’s report shows a noticeable uptick in confidence for the sector as we look ahead. This confidence is reaffirmed by the elevated investment activity across the market towards the end of this year, indicating that we have turned a corner,” stated Tommy Erdei, world joint head of healthcare funding banking at Jefferies.
KEY FINDINGS
Weight reduction medicine are right here to remain, with 47% of respondents indicating that the impression of those remedies might be giant and sustainable long run, up from simply 33% final yr.
CONTEXT
Earlier in November, Novo Nordisk (NYSE:)’s Wegovy weight-loss drug gross sales beat its forecast, in an weight problems drug market that some analysts forecast might be value about $150 billion by the early 2030s. In the meanwhile demand outweighs provide.
MARKET OUTLOOK
Respondents have been optimistic on market forecasts, with two thirds of respondents believing Britain’s blue chip might be greater by the tip of 2025. This confidence is much more pronounced for healthcare particularly, with 73% anticipating the Healthcare Index to shut greater in 2025 too.