M&A professionals see bright future for healthcare deals, despite political uncertainties

Despite considerable trepidation about international politics, most merger and acquisition professionals believe healthcare deal-making will continue apace in the coming year, according to a recent poll.

The Merrill Insight survey of more than 200 global M&A professionals found  52 percent of respondents believe that the M&A market is headed in a positive direction in the next year -- even against the backdrops of a looming 2020 presidential election in the U.S. and the Brexit debacle in the U.K. 

WHY THIS MATTERS

Respondents, who hailed from the Americas, Europe, the Middle East, and Africa, had a 12 percent rosier outlook on the healthcare M&A market than when Merrill last polled them in November, reflecting confidence in a wide range of booming healthcare IT sectors.

Still, 37 percent cited political uncertainty as the most likely factor to sink healthcare deals in the next year, with that issue causing more concern than investor confidence (22 percent), data privacy (21 percent), antitrust/competition (14 percent), and national security regulations (6 percent).

On top of that, the poll revealed an industry struggling to identify and recruit the talent necessary to capitalize on growth in areas of opportunity including  population health and precision medicine, diagnostics and devices, biosensors and trackers, and telehealth. Respondents said the hardest part of getting a healthcare or life sciences deal right is talent assessment (35 percent), followed by data privacy compliance (22 percent), and regulatory communications (16 percent).

THE LARGER TREND

While healthcare M&A activity has slowed somewhat, that deceleration is not expected to last -- nor has it impacted the size of recent deals.

Meanwhile, healthcare is a top issue for voters in the U.S., with Medicare for All getting mainstream consideration among 2020 Democratic primary contenders and President Donald Trump's handling of healthcare dinging him in early polls.

Experts also warn that persistent uncertainty stemming from Brexit has negative implications for M&A activity among companies that operate in the United Kingdom and Europe.

ON THE RECORD

"The healthcare landscape is becoming increasingly difficult for dealmakers to navigate, as the U.S. enters a major election season and questions still surround the details of Brexit," said Rusty Wiley, CEO of Merrill Corporation. "On top of this, the healthcare industry is still grappling with how to operationalize and protect vast amounts of data, as well as how to attract the technology talent needed to capture that opportunity."

Deirdre Fulton is communications professional and freelancer based in Maine.
On Twitter: @deirdrefulton