Clifford Chance

Europe is back in favour with healthcare deal-makers

Developed markets such as Europe appear to be back on the radar for healthcare companies when considering opportunities for M&A deals. Almost half of respondents (48%) to Clifford Chance's European M&A: On the road to recovery? survey from the healthcare sector say their focus is currently on developed markets, with the remaining 52% on emerging markets. This is in contrast to a similar survey last year where 72% said they were focused on emerging markets.

Four out of five healthcare respondents say that the current socio-economic uncertainty is either increasing their appetite for European M&A or not having any impact at all and that their company is still highly interested in Europe. In comparison to other sectors, this indicates a fairly positive outlook for the healthcare sector.

Nearly half (47%) of sector respondents say that the primary driver for M&A in Europe is securing unique know-how, expertise and technology and to eliminate emerging IP risks, while a third (33%) say it is gaining market share in existing markets. 

The survey, conducted by the Economist Intelligence Unit (EIU) on behalf of Clifford Chance, canvassed the views of senior executives at close to 400 large companies globally from a wide range of industries, including the healthcare sector. Over one-half of companies represented in the survey have annual revenues in excess of US$1 billion.

Political or economic events in Europe such as another banking crisis is expected to have little impact (35%) on the company's pursuit of M&A and could even increase their appetite (33%). Almost three-quarters of sector respondents expect their company's pursuit of M&A to increase should Angela Merkel be re-elected as German Chancellor in September.

The majority of healthcare respondents (70%) prefer a traditional deal structure if carrying out European M&A over the next two years, while minority investment – a surprising trend identified in last year's survey – seems to be of lesser interest this year (7%).

Globally, half the number of healthcare respondents say that the Americas offer the most attractive M&A opportunities followed by Europe with 43%. Within Asia-Pacific, 60% see growth opportunities for their company in India and 50% in Greater China, with attractive M&A opportunities also expected in these regions.

Commenting on the results of the survey from the sector's perspective, Clifford Chance's global head of Healthcare, Life Sciences and Chemicals Sector Group, Peter Dieners, said:

"For healthcare companies, Europe is currently the region to watch. On the one hand, there is still plenty of market potential but, on the other hand, the commercial and regulatory environment in terms of pricing pressure, market access and reimbursement becomes more and more challenging.

“Europe still continues to be one of the hottest places to acquire the technology needed to fill R&D pipelines. So even though many companies remain cautious at the moment, we should soon see the light at the end of the tunnel."