The healthcare sector is gearing up for a potential revival of large-scale mergers and acquisitions (M&A) exceeding $10 billion, driven by the prospect of reduced antitrust scrutiny under President-elect Donald Trump. This week, around 8,000 executives, bankers, and legal experts are convening in San Francisco for the annual JPMorgan Healthcare Conference, an event marked by heightened security measures following a recent executive incident. Despite uncertainties surrounding Trump’s healthcare policies, industry insiders express optimism about the M&A landscape, noting that deals previously shelved due to antitrust concerns or economic factors are now being reconsidered. While full recovery to pre-pandemic levels may take time, the anticipation of favorable business conditions and recovering company valuations signals a promising shift in the market.
Industry professionals are increasingly bullish on the prospects for major healthcare transactions. The election has sparked renewed interest in deals that had been put on hold due to various challenges, including stringent antitrust regulations and fluctuating market conditions. Ben Carpenter, co-head of JPMorgan’s global healthcare investment banking division, predicts that several deals surpassing $10 billion could materialize soon. He attributes this optimism to the expectation of less stringent oversight from the Federal Trade Commission (FTC), which could facilitate larger transactions. While the exact nature of Trump’s healthcare policies remains unclear, the general pro-business stance of his administration is seen as a positive indicator for the industry.
However, caution prevails among some stakeholders. Of the 17 financial experts consulted, 14 believe it may take over a year for activity to return to its peak levels seen in 2019 and 2021. During those years, healthcare M&A activity reached half a trillion dollars, according to data from LSEG. In contrast, M&A in the healthcare sector fell by about half over the past three years, totaling $257 billion in 2024. The decline was partly attributed to stricter antitrust enforcement under the previous administration and companies' reluctance to sell at lower valuations. Nonetheless, the improving macroeconomic environment, with controlled inflation and declining interest rates, is expected to bolster deal-making activities in 2025.
Private equity firms, armed with substantial capital, are anticipated to play a significant role in key areas like technology and artificial intelligence, sectors less affected by regulatory constraints. Strategic buyers, including pharmaceutical giants like Merck & Co., Bristol Myers Squibb, Johnson & Johnson, and Pfizer, are also expected to focus on acquiring assets in critical therapeutic areas such as oncology, rare diseases, and weight-loss drugs. The latter, in particular, is forecast to become a highly sought-after market, potentially reaching $200 billion by 2031. A breakthrough oral medication for weight loss could be the "Holy Grail" of pharmaceutical innovations, attracting considerable interest from investors and companies alike.
As the healthcare industry looks ahead, the combination of favorable economic conditions and a more lenient regulatory environment is likely to foster a resurgence in major deals. While uncertainties persist, the gradual recovery of company earnings and the influx of private equity investments suggest that the sector is poised for a significant transformation in the coming years. The upcoming JPMorgan Healthcare Conference will serve as a pivotal platform for shaping these developments, setting the stage for a new era of strategic partnerships and acquisitions in the healthcare space.