A surge in healthcare IPOs and mergers and acquisitions is expected in 2025, according to Jefferies" annual healthcare report.
This positive outlook is based on a survey of institutional and private investors, as well as healthcare executives, which found that 64% of respondents anticipate an increase in companies going public. This represents a significant shift in confidence, with 20% of those surveyed predicting that equity financing and IPOs will dominate transactional activity, the highest level recorded since 2018.
The healthcare sector has been a vibrant arena for M&A activity, with notable transactions such as Johnson & Johnson"s acquisition of Shockwave Medical for $13.1 billion and KKR"s investment in Cotiviti. Despite a recent global moderation in M&A activity, 72% of survey participants expect increased activity in the healthcare sector by 2025. This anticipated growth is particularly pronounced in Europe, where around 50% of private equity respondents view the region as ripe for investment opportunities.
The report also highlights the evolving landscape of weight-loss drugs, with Novo Nordisk"s obesity treatment, Wegovy, expected to have a significant and enduring impact. Analysts project that the weight-loss drug market could reach approximately $150 billion by the early 2030s.
Geopolitical uncertainties have emerged as the primary concern for investors, surpassing financing difficulties. North America remains the leader in healthcare transactions, while Europe has seen a decline in attractiveness to investors, with the UK maintaining a more stable position.
The anticipated growth in healthcare IPOs and M&A activity reflects a recovery in investor confidence and the sector"s resilience amid global uncertainties.