Political uncertainty and a challenging macroeconomic environment led to a significant drop in deal value and deal count in the North America healthcare sector during the first half of 2024. As experts consider the next six months, however, they see M&A fundamentals improving and both financial sponsors and strategic buyers reentering the market, creating expectations for a big upswing in activity in the back half of the year. Baker McKenzie North America Transactional Practice Chair, Alan Zoccolillo, discussed with Mergermarket/Ion Analytics the current trends driving the market and the near-term outlook for M&A activity in the sector.

Alan noted that, right now, biotechs are exploring, "triple track processes by running all three paths [i.e., obtaining more funding for clinical development on their own; partnering via licensing and collaborations; and IPOs or M&A deals] simultaneously [in order] to get the best value.” This has led potential buyers to offer multiple deal structures, a trend that he believes will continue.

Continuing to look forward, Alan expects that pharma deals will get a particularly strong reception, with the highest premiums being paid for oncology, central nervous system disorders, inflammatory diseases, and diabetes/weight loss drugs. With its potential for expediting drug discovery, he also expects to see the number of deals involving generative AI to increase considerably.

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