Emerging trends in the European HealthTech M&A market 2023

Exec Summary:

The European HealthTech M&A market is expected to remain active in 2023, albeit with some slowdown from the record-breaking levels seen in 2022.

The key trends that are expected to shape the market in 2023 include:

• Increased focus on digital health: Healthcare companies are increasingly looking to acquire digital health businesses in order to improve their offerings and stay ahead of the competition. This is being driven by the increasing adoption of digital health technologies by patients and healthcare providers, as well as the growing need for healthcare organizations to improve efficiency and reduce costs.

• Growth of the life sciences sector: The life sciences sector is expected to continue to grow in 2023, driven by the development of new drugs and therapies, as well as the increasing demand for personalized medicine. This growth is expected to create opportunities for M&A activity, as pharmaceutical companies look to acquire smaller, innovative biotech companies.

• Consolidation of the healthcare industry: The healthcare industry is consolidating, as larger companies acquire smaller ones in order to gain market share and scale. This trend is expected to continue in 2023, particularly in the areas of primary care, diagnostics, and hospital services.

• Increased regulatory scrutiny: The regulatory environment for M&A in the healthcare sector is becoming more complex, as governments around the world seek to protect patients and ensure the safety and efficacy of new products and services. This is expected to lead to longer and more complex approval processes for M&A deals in the healthcare sector.

The following are some of the specific subsectors of the European HealthTech M&A market that are expected to be active in 2023:

Digital health:

This includes companies that develop and provide software, hardware, and services for the healthcare industry. Some of the key subsectors within digital health include:

• Telehealth: This includes companies that provide remote patient monitoring, virtual doctor visits, and other services.

• Artificial intelligence (AI): This includes companies that develop AI-powered solutions for healthcare, such as diagnostics, drug discovery, and clinical decision support.

• Wearable devices: This includes companies that develop and sell wearable devices that track health data, such as fitness trackers and smartwatches.

Life sciences:

This includes companies that develop and commercialize drugs, biologics, and medical devices. Some of the key subsectors within life sciences include:

• Oncology: This includes companies that develop and commercialize cancer drugs and therapies.

• Cardiovascular: This includes companies that develop and commercialize drugs and therapies for heart disease and stroke.

• Immunology: This includes companies that develop and commercialize drugs and therapies for autoimmune diseases.

Diagnostics:

This includes companies that develop and commercialize diagnostic tests and devices. Some of the key subsectors within diagnostics include:

• Molecular diagnostics: This includes companies that develop and commercialize tests that analyze DNA and RNA.

• Imaging: This includes companies that develop and commercialize medical imaging devices, such as MRI machines and CT scanners.

Average multiples for HealthTech M&A deals

The overall outlook for the European HealthTech M&A market in 2023 is positive, with continued growth expected in the key subsectors mentioned above. However, the market is likely to face some challenges, such as rising interest rates and increased regulatory scrutiny.

The average enterprise value (EV) to sales multiple for HealthTech M&A deals in Europe is expected to be around 5x in 2023. This is down from the levels seen in 2022, but it is still higher than the average EV to sales multiple for all industries.

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Digital Health - European HealthTech M&A market 2023:

The increased focus on digital health in the European HealthTech M&A market in 2023 is being driven by a number of factors, including:

• The growing adoption of digital health solutions by patients and providers.

• The increasing availability of data and analytics.

• The need for healthcare companies to improve their efficiency and effectiveness.

• The desire to stay ahead of the competition.

Some of the specific areas of digital health that are expected to see the most M&A activity in 2023 include:

• Telehealth: This includes companies that provide remote patient care services, such as video conferencing and online chat.

• Wearables and sensors: This includes companies that develop and manufacture wearable devices, such as fitness trackers and smartwatches, and sensors that can be used to collect data on patients' health.

• EHRs and patient portals: This includes companies that develop and provide electronic health records (EHRs) and patient portals, which allow patients to access their health information online.

• AI and machine learning: This includes companies that develop and use artificial intelligence (AI) and machine learning to improve healthcare delivery.

• Drug discovery and development: This includes companies that use digital health technologies to develop new drugs and treatments.

Life Sciences - European HealthTech M&A market 2023:

The growth of the life sciences sector is another key trend that is expected to shape the European HealthTech M&A market in 2023. This growth is being driven by a number of factors, including:

• The aging population, which is leading to an increased demand for new treatments for age-related diseases.

• The increasing prevalence of chronic diseases, such as cancer and diabetes.

• The growing demand for personalized medicine, which is tailored to the individual patient's needs.

• The advances in technology, which are making it possible to develop new and more effective treatments.

Some of the specific areas of the life sciences sector that are expected to see the most M&A activity in 2023 include:

• Drug discovery and development: This includes companies that are developing new drugs and treatments for diseases.

• Biotechnology: This includes companies that are developing new technologies for the production of biological products, such as vaccines and gene therapies.

• Medical devices: This includes companies that are developing new medical devices, such as implants and imaging equipment.

• Diagnostics: This includes companies that are developing new diagnostic tests and devices.

• Regenerative medicine: This includes companies that are developing new technologies for the repair or regeneration of damaged tissues and organs.

Healthcare IT - European HealthTech M&A market 2023

The increased focus on Healthcare IT in the European HealthTech M&A market in 2023 is being driven by a number of factors, including:

• The need for healthcare organizations to improve their efficiency and effectiveness.

• The desire to stay ahead of the competition.

• The growing adoption of digital health solutions by patients and providers.

• The increasing availability of data and analytics.

Some of the specific areas of Healthcare IT that are expected to see the most M&A activity in 2023 include:

• Electronic health records (EHRs): This includes companies that develop and provide EHR software and services.

• Patient portals: This includes companies that develop and provide patient portals, which allow patients to access their health information online.

• Remote patient monitoring (RPM): This includes companies that develop and provide RPM solutions, which allow healthcare providers to monitor patients remotely.

• Clinical decision support (CDS): This includes companies that develop and provide CDS solutions, which help healthcare providers make better decisions about patient care.

• Healthcare analytics: This includes companies that develop and provide healthcare analytics solutions, which help healthcare organizations make better use of data.

Final Thoughts:

The average enterprise value (EV) to sales multiple for HealthTech M&A deals in Europe is expected to be around 5x in 2023. This is down from the levels seen in 2022, but it is still higher than the average EV to sales multiple for all industries.

The specific subsectors of the European HealthTech market that are expected to see the most M&A activity in 2023:

• Digital health: This includes companies that develop and provide software, hardware, and services for the healthcare industry.

• Life sciences: This includes companies that develop and manufacture drugs, vaccines, and other medical products.

• Medical devices: This includes companies that develop and manufacture medical devices, such as implants, imaging equipment, and surgical robots.

• Diagnostics: This includes companies that develop and manufacture diagnostic tests and devices.

• Healthcare IT: This includes companies that develop and provide software and services for the healthcare industry, such as electronic health records (EHRs) and patient portals.

Engage with the HealthTech Community

HealthTech M&A Newsletter from Nelson Advisors - Market Insights & Analysis for Founders & Investors. Subscribe today! https://lnkd.in/e5hTp_xb

HealthTech M&A Advisory by Founders for Founders, Owners & Investors. Buy Side, Sell Side, Growth and Strategy mandates - Email lloyd@nelsonadvisors.co.uk

HealthTech Thought Leadership from Nelson Advisors - Industry Insights & Analysis for Founders, Owners & Investors. Visit https://www.healthcare.digital