The KPMG 2021 Healthcare and Life Sciences Investment Outlook provides insights to investors based upon a comprehensive analysis of 10 industry subsectors. The report leverages results from a nationwide survey of nearly 300 industry leaders, who provide their perspectives on M&A trends from an unprecedented year of disruption that included the COVID-19 pandemic, the 2020 election and policy changes, and market factors.
Despite the pandemic, the healthcare and life sciences deal market in 2020 was still active. While the dollar value of deals may be lower overall than in 2019, the volume of total healthcare and life sciences transactions was 15 percent higher. There was variation across subsectors, but, overall, deal activity was reflective of the industry’s resilience and ability to pivot and/or transform to meet evolving needs.
The global pandemic impacted healthcare and life sciences very differently in 2020; yet there is optimism across both healthcare and life sciences going into 2021:
- Healthcare: In 2020, as elective surgeries, regular wellness visits, and chronic illness checkups were put on hold, healthcare organizations were on a rollercoaster in terms of patient volume. Deals slowed in the second quarter but accelerated through the end of the year and into 2021.
- Life sciences: There were steady life sciences transactions throughout 2020 despite high valuations, largely driven by government investment in COVID-19 vaccines and treatments, as well as ongoing activity and interest in breakthrough treatments. Investment activity in the sector is expected to continue to accelerate into 2021.
Resilience and transformation
Companies in the 10 subsectors reviewed in the report can be indexed in terms of their (1) resilience, i.e., the ability to withstand and embrace significant change, not just through COVID, but in general, and, (2) transformation, i.e., commitment to continuous innovation in order to evolve and align with the changing needs of patients and the public
Highly resilient and sophisticated in terms of innovation and continuous transformation
- Healthcare IT
- Risk-based physician practices
Fairly resilient to change, but with potential for business transformation
- Behavioral health
- Biopharma services and diagnostic lab services
- Diagnostics manufacturers
- Specialty physician practices
- Home care and hospice
Resilience challenged by economic disruption; need to increase innovation and uncover new areas for growth
- Medical devices
- Hospitals and health systems
Our annual healthcare and life sciences investment outlook provides insights at the beginning of the calendar year. This year we are more hopeful than ever that the survey responses and analyses provided in this report will help industry players navigate a very complex marketplace, maximize their resilience to change, and transform to align with the new reality.