European Health & Life Sciences Symposium 2023 | Key Takeaways

Transaction Trends in Life Sciences

The transactions landscape in the life sciences industry is constantly evolving, with new challenges and exciting opportunities awaiting in 2024. Innovative funding models, and the integration of cutting-edge technologies continue to drive the market forward.

1. Despite strong expectations, transaction activity in the health and life sciences space has been depressed in 2023. We have seen some interesting activity from large pharma in the second half and potential green shoots of recovery in licensing deals and moves for pharma, medtech and biotech trading assets.
2. Higher costs of capital and delayed R&D programmes continue to challenge biotech valuations, causing companies to focus inward rather than prioritise transactions.
3. There is the potential for private equity to be more active in the healthcare space in 2024 following significant fundraising in recent years. PE involvement in life sciences has historically been limited primarily to the “pharma services” sub-sector but potential PE investors look more broadly at life sciences as investors look for growth and life sciences assets mature and have greater cash flow certainty.
4. For the first time in history, US Congress is looking to introduce pricing regulation in 2026. Litigation is ongoing and it is unclear what pricing controls will ultimately look like, but the prospect creates great uncertainty for drug companies globally.
5. Pricing regulation is not the only regulatory challenge facing dealmakers as governments increasingly consider biotech and pharma as strategic industries and ramp up their scrutiny on the foreign direct investment and antitrust side.

Innovation in Financing

As debt markets react to macroeconomic events globally, borrowers and lenders have had to be creative with their financing needs. At the same time, some of the more traditional thinking around financings, resilient sectors and the like has been challenged by new business types and innovative structures.

1. The broader macro and geopolitical landscape has created a particularly challenging financing environment in 2023, with uncertainty and the higher cost of capital driving lender reticence and a flight to quality borrowers and top-tier assets.
2. Cash-strapped biotech businesses are streamlining their businesses and leveraging relationships with big pharma to address liquidity.
3. Relationships have been prioritised in 2023 and will remain the focus in 2024, with lenders looking to build productive two-way partnerships with management teams and sponsors in order to navigate balance sheet challenges.

Investment Opportunities in Health and Life Sciences and Developments in Data, AI & Health IT

In an era marked by rapid advancements and unprecedented challenges, transformative technologies are revolutionizing patient care, clinical decision-making, and operational efficiency. From digital health startups to innovative care delivery models, there is a wealth of potential in the market.

1. There is still room for consolidation in healthcare services in Europe in areas such as clinical care, radiology, dental practices and veterinary surgeries. We can also expect more cross-border deals in the medtech space as US players look to acquire European assets.
2. Investors will be particularly focused on assets underpinned by innovation or addressing the need to increase efficiencies in the system. These will include digital health startups, innovative care delivery models and businesses harnessing the power of big data or embracing cutting-edge AI algorithms.
3. The era of personalised medicine and the increased adoption and integration of technology into drug discovery, diagnostics and therapeutics will require investors to think carefully about risk mitigation as valuations and cost of capital remain challenging.