In 2022, we expect M&A investments to reach $350 billion to $400 billion, driven by all subsectors. The continuation of the $5 billion to $15 billion biotech deals, combined with medium-sized pharma ($50 billion) and medical device ($25 billion) deals is expected to drive significant investment dollars in M&A. The sector could also see a large deal ($100 billion or more) as part of a transact-to-transform strategy, given the continued need for scale. Tailwinds around the need to invest in growth and access to capital will likely more than offset the potential headwinds around drug pricing, the eminent tax rate increases and the recently active Federal Trade Commission (FTC) agenda, which could impact the ability to execute larger deals in the short term.
As predicted, pharmaceutical and life sciences (PLS) M&A rebounded in 2021 as large pharma acquisitions of biotechs continued, medical device activity increased after a pause driven by COVID-19 uncertainty and the cyclicality of the larger other/services subsector (representing three of the top 10 deals in 2021). Overall, the activity in 2021 represented a more normal year of M&A investing and some level of deferred M&A from 2020. We believe there remains a significant amount of capital allocation available for M&A, which will drive an exciting 2022. ... “We should see an exceptional level of activity across all sectors in 2022 as companies look to further their growth agenda. Biotech and smaller medical device deals should continue in the first half of the year, with the second half poised for larger deals driven by a need for scale and an expected settling of the regulatory landscape.”
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