Q3’23 M&A trends in life sciences: Dealmaking holds steady

M&A activity in the life sciences sector held steady for the fifth consecutive quarter despite concerns over inflation, recession, and high interest rates. And with recession fears easing, interest rates appearing to be topping out, and inflation remaining largely under control, the expectation is that M&A activity in the life sciences industry will pick up in 2024.

However, dealmaking trends and considerations vary in each of its three major subsectors:

• Medical devices: While deal volume reached its lowest level since Q1’20, several factors are expected to drive a rebound in 2024. This includes advances in AI-supported devices in surgery, diabetic care, cardiology, and other areas.
• Pharmaceutical services: Q3’23 dealmaking in this subsector tied for the lowest quarterly volume since Q3’20 as many companies in this space are still recovering from the pandemic. But demand for many pharma services continues to be strong and private equity seems increasingly ready to get back into this space.
• Diagnostic and lab services: Diagnostics and lab services dealmaking reached its highest volume in more than a year. Technological advances and changes in consumer attitudes regarding diagnostic testing outside of hospitals and doctors’ offices (e.g., COVID home tests) have contributed to this increase. This space presents potential opportunities for investors, including private equity and corporate acquirers.

Download our report to learn more about M&A activity in the life science sector, the factors that may impact this activity, potential pitfalls to avoid, and how to position yourself to take advantage of investment opportunities as they arise.