Healthcare M&A Booms in 2024: Innovation and Regulation Drive Sector Growth

Healthcare M&A Activity Remains Strong in 2024, Benchmark International Reports

Key Highlights

• Benchmark International’s latest report indicates robust healthcare mergers and acquisitions (M&A) activity in 2024, driven by technological advancements, regulatory changes, and evolving healthcare demands.
• The healthcare market is expected to reach $734.5 billion by 2030, with a compound annual growth rate (CAGR) of 4.6%.
• Private equity firms, family offices, and strategic buyers are key players driving current M&A activity, seeking to capitalize on the sector’s growth potential.

Current M&A Landscape and Drivers

The volume and value of healthcare M&A transactions in 2024 remain robust, according to Benchmark International. Key drivers propelling this activity include the need for increased operational efficiency, improved access to capital, and the pursuit of growth through strategic partnerships. Regulatory changes, evolving healthcare demands, and financial pressures are also fueling consolidation and strategic acquisitions.

Private equity and venture capital firms are playing a significant role in fueling transactions, particularly in sectors like pharmaceutical services, healthcare IT, physician practice management groups (PPMs), and non-PPM healthcare services. These investors are feeling pressure to deploy capital in the healthcare services space, which is expected to drive deal activity in the second half of 2024.

Notable Transactions and Sector-Specific Trends

Benchmark International has facilitated several high-profile transactions in 2024, ranging from large-scale acquisitions aimed at creating regional powerhouses to smaller, more targeted partnerships designed to fill specific service gaps or enhance capabilities in niche areas.

Telehealth, biotech, and pharmaceuticals are experiencing significant M&A activity. Telehealth services, for instance, have seen a surge in demand due to the COVID-19 pandemic, prompting companies to invest in digital health solutions. Biotech companies are also attracting substantial investment as they develop innovative treatments and therapies.

Technological advancements, such as generative AI, are influencing M&A strategies. AI is being leveraged to enhance due diligence processes, identify potential target companies, and manage timelines, thereby speeding up deal-making.

Challenges, Risks, and Future Outlook

Companies navigating M&A face integration issues and regulatory hurdles. Cultural differences and operational complexities can pose significant hurdles during mergers and acquisitions. Regulatory scrutiny is expected to remain high, with antitrust concerns and the potential impact on healthcare costs and quality being key considerations for regulators reviewing proposed mergers and acquisitions.

Despite these challenges, the forecast for M&A activity in the remainder of 2024 and into 2025 indicates continued robustness. The health-tech market is forecast to reach $852.2 billion by 2027 at a CAGR of around 18%, making it the fastest-growing sub-segment of the broader healthcare industry.

Healthcare M&A Activity – Conclusion and Future Outlook