What's the current state of the healthcare M&A market?
David Levin: The life sciences M&A market has been incredibly strong. In the second half of 2025 and first half of 2026, 33 $1 billion-plus deals were done, triple the number in the four previous quarters.
As well as the big cap biotechs, there's been significant activity among the mid-caps too. And we've seen big deals on the pharma side, such as Sun Pharma's purchase of Organon. Among sponsors, we've seen ArchiMed's buyout of Esperion.
Premiums have been more mixed, with low double-digits alongside higher premiums. That flexibility fuels more deal activity. And there have been a lot more competitive situations, with people bidding up to the finish line, helping to drive value.
Ahmed Attia: In medtech and healthcare services, there are still a lot of companies that want to build scale, and others looking to fill portfolio gaps. Tech disruption and innovation are also driving M&A. But there's a lot less focus on geographical expansion driving volume.
Take-private activity was $50 billion in 2025, double the previous year, and we expect it to increase further. That's a function of the dislocation in terms of public company share prices in healthcare IT, pharma services, and traditional services. We've also seen a ton of carve-out activity.
Activity is being driven by very specific pockets within each sub-sector. For example, in services, you see a significant amount of deals in the revenue cycle management space, a pocket of healthcare IT. It's an area where returns have been really robust for the strategics and the sponsor community.
"Take-private activity was $50 billion in 2025, double the previous year, and we expect it to increase further."
Ahmed Attia, Managing Director, Healthcare M&A
How is healthcare performing in the equity markets?
Jason Levitz: Healthcare weighting in the S&P500 is roughly 8.5%, a multi-year low, and several hundred basis points below the historical average. So on one hand, the sector is facing challenging performance, particularly among large-cap medical technology and services companies.
On the flip side, the financing markets have been incredibly robust. In the life sciences and biotech area, we've seen record levels of activity.
As a consequence, investor outcomes have varied quite a bit. Many of the large, long-only diversified healthcare funds are down on the year, but many investors indexed to life sciences and biotech have done extremely well.
"Many of the large, long-only diversified healthcare funds are down on the year, but many investors indexed to life sciences and biotech have done extremely well."
Jason Levitz, Head of Healthcare Equity Capital Markets
What is IPO activity like?
Levitz: We've seen a nice rebound after some disappointing years. In life sciences and biotech, we've seen 11 IPOs year to date, including the largest biotech IPO in history.
Deal flow has tended to center around oncology, I&I, and CNS. The more successful deals have been from a lower clinical risk standpoint.
We haven't seen as much activity across other segments of healthcare in the IPO market as we would have hoped.
Another option for well-funded companies backed by strong science and quality private investors is to find reverse merger partners and raise substantial capital in the form of a PIPE transaction, to get public through a different vector.
Attia: One dynamic we're seeing is the pursuit of dual track processes, where shareholders are considering both pathways: to sell or take the company public. As the equity capital markets are improving, there is that competitive tension you can create on M&A.
A lot of portfolio healthcare companies have exceeded the five or six-year investment horizon. Continuation vehicles have been in vogue recently, but ultimately the sponsor owners of those assets want to capitalize. We expect to see a lot of sponsor-to-sponsor bespoke negotiated situations that will help one sponsor monetize and another deploy capital.
How is the current U.S. administration affecting dealmaking?
Attia: Liberation Day drove pharma manufacturing businesses in Europe and Asia to try to find capabilities within the U.S. That's a net positive in terms of inflow.
Political developments around reimbursement have definitely had an impact on companies that focus on Medicare Advantage or Medicaid. We're still seeing transactions get to a conclusion, but there is a challenge for both strategic and sponsor buyers to underwrite some of that risk.
Levin: There's been a lot of noise and uncertainty around FDA regulation. It seems the consolidators have been able to put that aside and move forward.
Some of the initial concern over the effect of Most Favored Nation pricing has dissipated. But there's still uncertainty on how to manage drugs with different prices in Europe and the U.S. It's probably had a chilling effect on European regional rights deals.
"There's been a lot of noise and uncertainty around FDA regulation – it seems the consolidators have been able to put that aside and move forward."
David Levin, Co-Head of U.S. M&A
How is AI affecting the sector?
Levitz: There's tremendous interest in leveraging AI to build molecules that are better on target, with fewer off-target effects. Over time, companies may be able to use AI to better assess the probability of success in drug development. These variables are in very early stage so it's hard to quantify the impact.
Attia: In our conversations with the C-suite, companies of scale believe they've got the competitive advantage in leveraging AI, by acquiring differentiated AI companies to really drive profitability, but more importantly, to drive competitive differentiation.
