2024 Healthscape: Insights into Emerging Healthcare Trends

April 10, 2024

A new quarter, same rates. Following the Bank of England’s Monetary Policy Committee meeting last week where interest rates were held at 5.25%, there were murmurs as to whether there would be any change. Stateside, the same story, with Jerome Powell holding at 5.25% to 5.5%. At least we can thank the BOJ for some excitement. For dealmaking, there will always be an inverse relationship to such a monetary environment amongst large cap buyouts, however there are many silver linings the headlines would rather omit. With a balancing act between sustainable growth and expensive debt, corporations across industries have been forced to analyse their portfolios and divest non-core assets, while seeking inorganic opportunities to access greater internal efficiencies. While we have seen this across sectors, this has been no more apparent than within the healthcare and medtech sectors.

 

Companies across the healthcare vertical have had worsening margins and poor supply chains compounded by macroeconomic factors and have since pushed to optimise internal processes and leveraging existing resources in order to enhance productivity and streamline operations. These initiatives include investing in automating technology workflows, implementing cost-saving measures to reduce overhead expenses, and reevaluating their supply chain management. Generative AI has and will continue to underpin the longer-term growth strategy of healthcare companies. In particular, next-gen development and diagnostic equipment is dramatically reducing drug discovery and patient scanning times. By focusing on internal optimisation strategies, healthcare businesses can navigate the challenges posed by high debt costs, while still driving performance improvements and delivering value to patients and customers.

 

As such, we anticipate a focus of transactions throughout 2024 with a focus on driving internal growth, obtaining access to technology, and fostering innovation. Companies will continue to rely on divestitures to optimise portfolios, which presents consolidation opportunities within the divestures’ focus-sector. Additionally, the current level of cross-border transactions is set to remain, with foreign capital seeking to gain a market foothold in developed UK-based intellectual property. Lastly, financial sponsors who are struggling to exit primary investments in the short-term will look to bolster their asset value the meantime by deploying growth capital to fund bolt-on acquisitions.

 

While positive for our M&A outlook in 2024, these conditions mean that the stakes of transaction completion have to be justified and bought in by all stakeholders to achieve a successful deal outcome. At Bluebox, we comprehend the complexities of M&A and offer bespoke advisory services to help clients seize opportunities and navigate challenges in any market environment. Contact us today to discover how we can assist you in achieving your strategic goals.

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