Health Check: The Future of Healthcare M&A

Hello, everyone. Welcome to today's webinar. My name is John Hannon, Sales Director at SS&C Intralinks, and I'm very excited to be hosting today's session, specifically around the future of healthcare M&A. I'm joined by four great panelists, Josh, Roby, Daniel, Elias. And to start, I'd like to give each panelist a moment just to introduce themselves and maybe provide any relevant background information on themselves for the audience. So maybe Josh, let's start with you.

Sure, everyone. Josh Mastracci. I'm a managing Director in the Healthcare Group at TM Capital, TM's investment banking division of Janney Montgomery Scott, portfolio company of KKR. I'm down in Tampa today. TM's Atlanta, Boston, New York and I cover healthcare services for us.

That's great. Thanks, Josh. Roby, how about you? Thanks, Josh.

Hi, everyone. My name is Roby Kanichay and I'm heading the business development team at Merck Healthcare, responsible for technologies and externalizations, biochemist by training, did some management consultancy, also spent a stint in venture capital and for the better part of 10 years now within business development at Merck.

In my role, I regularly interact with, of course, biotechs, pharma, but also VCs, crossover funds and M&A, investment banks and advisors. So I'm hoping to share some of that insight and discuss that with the panel in the audience. Looking forward to it. Thanks.

My name is Daniel Parisotto. I'm a Managing Director on the healthcare Banking team at Oppenheimer. At Oppenheimer, we do everything from private placements to IP, OS and follow ONS and everything in between. Joined the firm six years ago by way of Regeneron Pharmaceuticals, where its strategy analysis, before that was in equity research covering big pharma biotech companies across the board. And in reality, I'm just a recovering neuroscientist coming out of academia.

Thanks, Daniel. Elias, last but not least.

Thanks, John. I'm the global director for investments in business development for Opella. Opella is basically the consumer healthcare spin off of Sanofi. So I've been with the company with Sanofi and Opella together, let's say I've been for six years and a half now. Most of them are on the M&A team and before that my background is also in strategy, consulting and venture.

So thanks everyone and just to get started for everyone on the line. In a time of evolving regulatory frameworks and economic uncertainty, healthcare and life sciences companies face increasing pressure to adapt their M&A strategies. Join us for a timely conversation that will explore how dealmakers are navigating today's complex and changing landscape. This session will unpack the macroeconomic forces influencing M&A transaction volume, delve into the impact of changing U.S. and global healthcare policies, and spotlight where strategic and financial buyers are finding opportunity. It will also explore the key drivers behind current healthcare and life sciences M&A trends, including the impact of advancements and the strategic imperatives of major industry players in response to changing dynamics.

Whether you're on the buy side, sell side or advising healthcare transactions, this webinar will offer the prescription that provides critical dealmaking insights to better position you to execute successful deals in 2025 and beyond. And for everyone on the line, just a reminder, there is a Q&A section in today's webinar. It's at the bottom of your screen. Myself and the panelists will do our best to get towards that maybe with 10 to 15 minutes left in the session. But first, I did have a few questions for the panelists. And I'll open this one up just to about everyone.

In general, how are macroeconomic pressures like interest rate hikes and inflation reshaping the healthcare M&A landscape this year in 2025? And Elias, since you were the last one I was speaking to, why don't you start us off?

Thanks, John. So definitely, I mean, of course that there is a big, big impact on how we see M&A and how we do M&A. I think the first thing that we see is that I think this applied to all the buyers here is that everyone's becoming more careful. We are taking more time, I'll say, to make a decision.

So that's definitely putting also pressure on the sell side and we see that from the number of teasers that we that we are receiving. I think the second thing I think is that for us, I mean as a European company, we are diversifying from a region standpoint. I mean the tariffs are destabilizing. I would say some regions and probably we were looking more like in a more focused way probably on US and Europe and the best. But now we look, we will broader and we look at other regions as well.

Thank you, Roby, you have anything you wanted to add?

Yes. Very similar to Elias. I think there's some sort of from a macroeconomic perspective sort of counter acting forces, right. On the one hand side, you have what looks to be sort of a more decreasing interest rates environment or a tendency towards that, you know, a trend towards higher inflation, which is both tend to be sort of more in favor of M&A activity in general. On top of that, particularly the biopharma industry, you have a huge patent gap coming up in the next 5 years.

I think there's estimates between 180 and 250 billion U.S. dollars of sales going off patent in the next 5 years, things like Keytruda or Vito Iniquis and so on and so forth. And pharma companies are under pressure to rebuild their pipelines to fill up that those sales gaps, right. So that's certain certainly something that that sort of speaks towards more M&A activity. At the same time as he has pointed out, there is the economic uncertainty that is introduced by the US administration around tariffs and so on and so forth. And you know, it's much more difficult and requires much more thought now to think about to structure a deal in a way, and think about what the target that in most cases buyers like us want to globalize still can be globalized in the way that, you know, used to be the playbook maybe five years ago or even three years ago.

And so things have become more difficult and yeah, more thought is being put into sort of M&A and evaluating targets that on the face of it look very attractive, but then in the detail might, you know, sort of impaired the business case substantially.

Right. Thanks. And we're certainly going to touch on a few of those points in a little bit, but I'll leave it over to to Daniel. Any input just to start out?

I think the high interest rate environment is probably the most impactful when it comes to deal sizes. They remain smaller despite the looming patent cliffs. And I think year to date in 2025, we've seen quite a good chunk of biopharma M&A. And I just focus on biopharma, but it the deal sizes remain lower compared to pre pandemic years as higher financing costs just make a large scale acquisition less feasible even as those patent cliffs are looming for big pharma. And certainly we've seen, seen a few larger deals this year of around or even more than USD 10 billion. But we have not seen any real mega deals since the acquisition of Siegen by Pfizer in early 2023. And so the vast majority of M&A deals, even the the USD 10 billion deals are all cash transaction transactions without any that component.

And the cash rich buyers, the big pharma companies are just very selective, right in this post pandemic world. They prioritize smaller bolt on deals over transformational M&A despite having pretty strong balance sheets for the most part. And the high interest rates are, are pushing boards to and management teams to preserve cash for stock buybacks and dividends rather than to deploy aggressively in M&A. And lastly, that's also somewhat of a macroeconomic factor. Several billion dollars have been pledged by Big Pharma to bring back manufacturing to the United States. No crown has been broken yet, but Big Pharma has to think in in long arcs and those billions have to come from somewhere, including potential dollars you're much for M&A.

Got it. Thanks. Josh, from your perspective, any, any macroeconomic pressures that you're seeing?

Yeah. Look, I think that interest rate environment lasts few years has put a lot of pressure on sponsors and not in a particularly good way, right. We've seen a sort of swelling of whole periods for portfolio companies and speaking specifically in in healthcare services and probably in the provider sub sector more specifically, that's been a pretty acute issue. But look, I think it's a bubble. We expect to pop it. It has to right. Dollars have to be returned to LP's and dollars in dry powder have to be spent. So that's probably what we're most closely tracking at the moment.

Thanks, everyone. And Roby and Daniel both mentioned and touched on the biopharma industry. How does M&A activity within biopharma compare this year to years prior? Anything you want to add, Robbie?

Yeah, I think Daniel mentioned it already, right. I mean in in the general trend as towards smaller deals, I think actually I don't have the exact statistic, but I think the overall number of M&A deals has actually increased. But the overall if you take the cumulative volume was actually less than has been previous years. So the overall deal size could it decreases and continues to decrease. And I think we'll continue to see that, you know, not necessarily those very big M&A transactions like the Pfizer, Siegen or you know, previous others before that, but more smaller bolt on acquisitions, which are not necessarily transformational, but you know, served the purpose of, of filling the pipeline in a very deliberate manner in the ballpark of, you know, two to 10 billion. And that's the trend. And I believe that trend is going to continue because of those macroeconomics factors that we talked about.

Got it, Daniel, anything else to add?

Yeah. A few high level points here. We've seen already around USD 48 billion in biopharma M&A announced in the first half of 2025. I've included Verona in that, in that calculation because it was just acquired in early July, so kind of just around the midpoint of the year. So 2025 is actually on track to surpass 2024 by a wide margin with total M&A dollars spent already exceeding the full year 2024 levels.

But still 2025 will likely fall short of 2023, which remains the record year on file of recent history. And the main reason for that is really the absence of a true mega merger. I mean, you're a transactional more than 40 or 50 billion, which as already mentioned appears unlikely in the current high interest rate environment. And that said, big Pharma obviously faces mounting pressure from looming patent cliffs. But it's worth noting that the that most of this decades cliffs involves biologics where biosimilar erosion tends to be more gradual rather than a prop of revenue collapsing with small molecule generics.

So are there still a lot of revenue to be lost? I think dealing with biologics is a little easier for big pharma. And in terms of deal count, 2025 is roughly on par with 24 and 23. So deal activity overall remains quite robust and looking at the largest yields this year, we see an intracellular blueprint Verona. And the common theme here is pretty clear commercial, commercial stage assets. So big Pharma is squarely focused on revenue gap filling from these M&A.

And on the beauty side of things, there's still plenty of platform and discovery deals. So big pharma goes early, especially involving any IPO ready companies that are just struggling to attract investors. And so big Pharma effectively stepping in where the public markets fall short and in some cases even acquiring IPO ready companies. The trend that began in 2023 and persists amid the ongoing biotech IPO troll. 
 

Thanks, Daniel. Yeah, sure. OK. So I think what's interesting really is that despite the patent cliffs, it's not really a sellers’ market out there. It's still a buyers’ market. And over the past two years to the 30 day average M&A premiums have actually compressed quite a bit. In 2023 it was around 115 percent. That came down to 75 percent in 2024 and then to only 60 percent in 2025. If you just zoom in into Q2, it's below 50 percent. And so these are some interesting dynamics, I think. And there's always, you know, these headline grabbing companies that were trading at or below cash being acquired for a premium of 300 or 400 percent. But those are outliers and not representative of the broader trend.

And in terms of what Big Pharma is interested in, I think it's you know, immunology and inflammation, autoimmune space in particular, B cell depletion approaches, targeted oncology in particular ABC's, radiopharma, but also small molecules. And then of course in the cardiovascular space, a lot of obesity deals less so on the M&A side this year and last year more so on the on the business development side. And a lot of Big Pharma companies are also doubling down if they like one treatment modality of they like one therapeutic area, they do more than one PE deal, more than one M&A deal, despite the fact that they already have a well established pipeline for the therapeutic area. So I think that's also interesting to point out.

That's great. Thank you. And I'm glad you touched on some of those focus areas because within Western big Pharma, we we've seen a big trend in Chinese drug assets. Are there any dynamics when thinking about a trade in China that you might want to consider?

Yeah. So I mean this, this trend really started in in late 2023 and continued through 2024. And we've seen big pharma, smaller biotechs and we see actively licensing or acquiring assets from China. And the rationale was pretty straightforward, high quality assets at lower development costs that also come with smaller upfront payments relative to comparable Western assets. But over the past few quarters, upfront payments for Chinese assets have risen steadily, I wouldn't say sharply, but steadily and they still remain cheaper than Western assets. But from a milestone payment standpoint, these Chinese deals have reached parity with Western transactions, reflecting the intense competition for the highest quality Chinese assets. And it's not just about the cheaper assets. The real draw is the lower preclinical and clinical development costs in China. pH, DS and patients cost a fraction of their Western counterparts, enabling Big pharma to reach proof of concept faster and more cost effectively before transitioning to global registrational trials.

And for smaller U.S. biotechs that are trading at or below cash, China still offers access to inexpensive licensing opportunities. The key question really here is this. Does the quality hold up? And there might be growing skepticism at the lower end of the market. And there's more I could say on China, but yeah, others chime in. Yeah, I appreciate it. Elias maybe if you had anything to add there. Yeah. So, so I think of course, I mean China  has been, let's say a focus geography.

I think for all of us since 2023, I think it has been a focus geography. Now I'm not probably from the same seeing it from the same angle as Daniel is that from our angle as consumer healthcare, we don't see the, the Chinese asset as cheaper assets. I think it's the opposite. They are today. I mean, and, and no matter like in all the matters of calculations today, they are more expensive than European assets, for example. So on this one, I think, I think it's probably also a barrier for us because we when we look at them, we find them a bit expensive from a multiple standpoint. And that's also, yeah, that's also kind of one of the blockers for us in China.

Good. And Elias, just one more question for you on that topic. I know you touched on it briefly in the beginning, but how are tariffs and supply chain disruptions impacting Chinese medical products and being factored into due diligence of those targets in particular?

I think it's a very good question, John. Reality is it's not up until now it's not. And the reason for that is that we don't know yet how the tariffs will shape and, and every week we see that there's a change of direction. So even though at some point we thought of kind of integrating that or due diligence, but then when you see the changes on a weekly basis, we, we decided to just like simply not integrate it and wait until it settles until the water settles and then think how we can integrate it in our reductions.

Thanks, Elias. Switching over to the services sector. Josh, question for you, are there any sectors in particular from behavioral health to medical staffing that are most attractive in particular to private equity buyers this year?

Yeah, that started at an even higher level than those sub sectors, right. The sectors we cover within services sort of by design, right, is what we're trying to skate to where the puck's going to be and where the interest right now is principal and services as categories like payer, employer and facility. Outsource services to providers and facilities in to some extent provider services. We'll touch on that a bit later I expect. But a couple of sub sectors I'd point to specifically one within provider. Interestingly, consumer healthcare, you know, there's been a trend away from providers at large, but there is a bright spot within it in in what look and feel like more consumer healthcare businesses.

They have elements of lower acuity ability for more mid-level involvement, less perception of reimbursement risk or exposure. And that ends up being categories or specialties like aesthetic medicine. So think Med spa or derm, plastic surgery, behavioral, you mentioned there's several white hot categories. We're spending time there whether it be ABA or, or otherwise a point we'll probably talk a little bit later, but concierge models as well I'm in around primary care are really picking up steam and in a material way. Another area I'd point to is cost containment, right? It sortof touches payer, employer and outsource services. So think utilization management, equipment, lifecycle management and other specialty services.

It's really addressing a broader concern about cost trends in healthcare services. And so there's a lot of press from LPs to sponsors to find ways to invest in solving and addressing that issue. So that would be where you know, we're on points very, very long list. The couple couple really strong examples of where there's been pretty material interest has played.

Thanks so much. And I wanted to shift over quickly to the financing of any sort of transaction. How have you guys seen inflation and interest rate volatility and tighter credit markets affect the actual financing of a transaction?

Maybe Roby, because we haven't heard from you in a little bit, maybe we could start with you there.

Sorry, can you repeat the question?

Sure. Yeah, of course, just what you've seen from your perspective in terms of the financing of a transaction and how it's been impacted by inflation, interest rate volatility, volatility and tighter credit markets, yeah.

Yeah. I mean, I think there's it’s, it's a complex sort of picture and it really depends on, you know, again I'm talking about primary biotech financing where the company is in its life cycle, right. I mean late stage companies which have assets in clinical development and it's actually already marketed. I mean those are clear M&A or potential M&A targets for biopharma companies. The IPO market is quite challenging for them as a financing route nowadays. And if you come to companies in earlier stage, particularly platform companies who haven't developed asset clinical stage assets yet, they have really difficulty raising money and financing the operations because the VC market particularly Series B plus tends to be very scarce. So there is some money out there for seat financing Series A and so on and so forth.

But the larger ticket items in the VC world, crossover funds and so on and so forth, they are being very a conservative or more conservative and also their fundraising is tends to be quite difficult because you know, the, the big money givers with, with the higher interest rate environments have other alternatives to invest their money versus adding as in becoming an LP any VC on a crossover fund. So, and I think because of the high interest environment also there's a tendency now way a tendency towards more full cash transactions. That's for bio, you know, biopharma, MNA, big farmers. But I think in this environment, there is actually an opportunity for creative dealmaking and creative structuring of deals for entities like private equity companies who are willing to take a bit more risk and help companies to get to the next inflection point to then sell themselves to big pharma.

But because the IPO route is has become more challenging, it's also going to require them to be comfortable with longer holding times and maybe taking a bit more risk than they would typically like to. So what I'm seeing is what I'm thinking is that there is quite some opportunity here. It's a bias market as I think Daniel mentioned already. And yeah, there continues to be opportunity in the market, but deal making has become more challenging because financing groups have become more limited. Thanks so much, Elias. I don't know if you had anything to add there, but they're going to pass it over to you as well.

Yeah, Yeah, John. Yeah, sure. I mean, I think I'm gonna probably repeat what Daniel said I think in a previous question that like premiums are just going down. And, and I feel like we're going back to the basics of finance and how we, we really look at an asset and putting like a real value on an asset. And what, what, what we've seen, I think is that buyers are struggling to, sellers are, are struggling to adapt to this new world. And hence we see all these like, I don't know, but in our space, at least in OTCVMSCHC, we see a very high rate of failed processes, failed selling processes.

And that's basically because I think sellers are struggling to adapt to this new reality. And we're seeing that basically just recently some of the same assets are coming back to the market now, but adapting to the new reality. So it took some time, I think for sellers to adapt to this new reality and hopefully reach a point now where sellers kind of are, you know, are in the same, are in the same world as where, where we live and probably hopefully we're going to see a more successful processes. Yeah. And maybe, maybe one comment on on creative deal structures.

I think what is interesting and this challenging IPO market for private companies is that the advice for any company has always been don't give away your crown jewels, meaning don't give away your lead asset. But there have been a couple of examples now where companies are doing exactly just that, like Trend Bio gave away one of their lead assets to Centro fee for I think it was USD 600 million upfront. Scorpion sold the whole company to Lilly and then Lily kept the lead assets, but they spun out the platform as a new private entity and new MAP spun out the lead asset in a subsidiary that ultimately was acquired by J&J. So there's different structures of how in particular private companies can go about monetizing their pipeline now without any of the backlash that you would see with a well functioning IPO market.

Got it. Thanks, Daniel and Elias, just to bring it back to you, I know it's something you touched on earlier, but how are companies adjusting their M&A strategies to balance the short term pressures with long term growth? I mean, I would say at least, you know,I can. It's hard for me to talk about everyone, but probably I can talk about us.

I mean we are becoming less. I would say we are cherry picking less. I would say we are, we are looking more at zeal making rather than cherry picking. So, so I think in the past we used to be more of a strategic investor cherry picking, looking at these assets that meet everything that we look for. Probably now we're more willing to accept and do a good deal and be less of a cherry picker. Great.

Thanks so much, Elias. And I wanted to now shift towards the second-half of this year and I just figured I'd open it up to the group. Are there any areas that are emerging, particularly in the second-half of this year as M&A hotspots despite the despite the previously mentioned headwinds? And Josh, I just saw you kind of nod your head, so maybe I can start with you there.

Sure. Yeah, No, I think it, it segues nicely from the point I was making earlier, right. As we think about the sectors we cover, you know, providers, a good example of a category that you know, pick up the journal and you think that, you know, sort of the institutional investor market at large has really been turned off there.

And that's true to some extent. And but again, I think there's pockets that are really, really bright spots or emerging hotspots sort of as you say. I think concierge, which I mentioned earlier is a really good example of that, right. It, it sort of solves a big and some big problem. And I think that's, you know, where healthcare services investors are looking to spend time today. And that's sort of how do we, how do we solve problems not play into sort of the problem of a sort of complex, broken, expensive market that large, right?

And you know, I think about as we spend time on deals in that category, I think about my own experiences with primary care providers, right? It's, it does feel broken and like it could be more, you know, it could be a better experience. And I think that there's real growing interest in in solving for them developing businesses at scale that that do that the right way. There's a couple examples of that in the market right business called MD Squared is owned by Next Phase Capital that's sort of an ultra deluxe model on the more standard end of the market Signature MD, which Blue Sea Capital owns or MDVIP, which Goldman and Charles Bank are in are good illustrations that I think another quickly would be mental health and you think about a pocket of providers of care that are addressing the population that have been really sort of largely under diagnosed undertreated historically, but there's been sort of a groundswell of interests in addressing that.

I think it's in part because there's been more of an openness to just having conversations around that investing in more progressive sort of treatments technologies, you know, think TMS or J and JS bravado product for example, what you're addressing a treatment resistant depression and so a lot of hotspots, you know, just picking on a few and in provider, but I think it bodes really well again for sort of deal flow over the next 18 months. Thanks, Josh. And I don't know if anyone else in the panel. Wanted to chime in on maybe some hotspots that we're seeing in the second-half of the year. I think from a, from a biopharma perspective, there's probably some of the trends that continue over into the second-half of the year from earlier this year and last year.

There's probably a few more acquisitions or BD deals around AD, CS, B cell depletion and B cell modulation with all sorts of different modalities, BI specs, Tri specs and cell therapy in particular in vivo cell therapies. Then probably more deals in the obesity space. And once there's more clinical data available from some of the emerging players, a few additional acquisitions in the radiopharma space. And then if I think about sort of like what's next beyond these more established modalities and therapeutic areas? You know, B cell depletion is a hot topic these days, but don't forget there's also T cells that are implicated in all the immune diseases.

So I think big pharma is going to focus on finding the next T cell depleter. And then for neurodegeneration, any blood, blood brain barrier crossing platforms, be it maps or vectorized antibodies. And then to Josh's point on bravado in particular, I think neuropsychiatry hot topic bravado is sort of the, well, it's a blockbuster truck basically. And with some of the positive news coming out of the administration around psychedelics, I think we could see some M&A activity. I think Big Pharma is just at the moment a little too conservative to really pick up on, on psychedelics. But with more and more clinical data readouts at one point, this is going to change, especially with the positive news coming out of the administration.

And then, you know, things like targeted oncology and at the INI space, they're always hot. And I think they will remain hot later this year and in 2026. That's great. Thanks, Daniel. And to the other panelists, I don't know if you want to chime in before we move on to the next question. Perfect. I mean, so yes. Oh, go ahead, Elise. No, go ahead.

No, no. I was going to say that for us, I mean I think there is from, from the consumer healthcare with ECDMS space there, there is no big change I would think, I would say on hotspots and and H2, I think still probiotics, I would say JP the well known hotspots are, are still the same. I think we don't see any change for now. Thanks so much.

And before we move in into or on to 2026, Elias, maybe we can stick with you. We have a bunch of folks in the line at the corporate level, a lot of executives that I see in the attendee list. Is there any advice you'd give them as they prepare for a transaction later on in the year? Well, I think the advice that I would really give is to look always bigger. I mean, we've seen like, I think we've all, we're all living through these uncertainties over the last two quarters, but we've seen more uncertainties or more disruption during COVID. But, but we see that eventually. I mean, the long trends, the long term trends are not changing. And, and I think my, my advice or my guidance to an executive is to keep this long term vision and, and if they find the right, the right transaction, the right asset to just, you know, go for it.

Thanks so much. And Roby, Josh, Daniel, I'm not sure if you had anything to to add there. If not, what I can do is we can start looking towards 2026 and I can open it up to the floor and Roby, maybe we could start with you, But in your opinion, what does a landscape look like? I know we have a couple months left in the year. Obviously we're only a little over halfway, but what is 2026 look like in your opinion?

Yeah. I mean, it's obviously difficult to have a sort of crystal ball, right. But I, I, you know, I, I would hope that there will be a little bit more clarity around what the tariff situation is going to be and how that will affect different parts of the healthcare system. And therefore more clarity on the future. Or, you know, sort of the people can stop building hypothesis on how they are going to operate their businesses in the US.. I think that's going to be very important for sort of business plan clarity  and, and business continuity in terms of, you know, there's supplies, we've heard supply chain aspects and to some extent IP aspects.

There's also now, you know, hurdles around using patient data that hasn't been generated from US patients for FDA submissions and vice versa and so on and so forth. So you know, hopefully throughout the course of this year, some of this is settled and provides the industry more clarity on the way forward. US continues to be and you know by all estimates, I think continues to be the largest market for healthcare products and services. So that's going to be a big sort of determinant of the future of the industry and that's also the clay. So I think a lot of that will depends on how the chips fall on, on the US market to see whether you know, there's going to be a continued sort of it's called a fragmentation of the market where you know, global pharma, global companies need to fragmentize their business more and sort of leverage more local footprints or whether we can continue to build on this sort of global model like global globalized footprint that most pharma companies have established over the last 10-20 years. I don't know that I probably wasn't a good answer to your question, but the best answer that I have.

No, that's perfect. Thanks so much, Roby and Josh, I'll pass it over to you. Any predictions for 2026? I know it's still early. No, I think it's, I've got what I feel like is pretty good clarity in fact around there's just an absolute need for next year to see increased deal flow amongst private equity owned assets that are not there a plus minus assets which have been the entirety of the market in terms of what's been launched over the past 18-24 months.

These, you know, sub, you know, called substandard, they're really not, they're still fairly attractive assets. There's just been a perception that in the more stagnant market, there's increased sort of beta around bringing out assets with imperfections and ultimately that has to change, right? I referenced it earlier, you know, the whole period extension over the past few years that we've seen is not sustainable, right? And LP's need their money back. There's a reason why sort of CVS have increased in popularity, but I don't feel that as particularly sustainable for sponsors since so that would be my prediction, if you want to call it that is that we'll see sponsors taking more risks around marketing there, you know, BC distressed assets that that they, you know, ultimately have run out of rope on.

Thank you. Thanks, Josh. Before we move over to. One quick comment, I think because interest rates have come up on in our discussion quite a bit. I think I have a crystal ball but with a big crack in it. But my hope is that interest rates will come down later this year or in 2026, which should really help all growth sectors, but in particular biotech. And the question is if it's because of political pressure or because the economic data sets actually support to bring down interest rates and inflation.

1. Thanks, Daniel. And I just wanted to shift over to Q&A because I know we've got about 15 minutes left and there's been some really good questions in the chat. So Roby, I can start with you because I know a lot of the conversation, at least in the first half of the phone, the call was around AUS centric view. How do you see the situation in Europe currently? And what would be your expectations for the market in the? In the future.

Yeah, I think it's very true. A lot of the conversation on this high level are colored by what's happening in the U.S. and in particular U.S. interest rates and so on and so forth because that tends to be as the key source of innovation and also the the primary sort of customer for healthcare products and services. Having said that, I mean Merck for example, is a, you know, globally diversified company and we do lots of regional deals as well. So we've done recent in licensing of pimacotinib in China for example, and the in licensing of libinetnib in Japan.

So we are really keen on local or regional deals that are not effective necessarily by the macroeconomic environment around the US and you know, from a supposed supply chain and in other ways sort of insulated from that situation. And so I think there is actually lots of opportunities on a regional level, including Europe for deal making. It's sort of, but I think that is a slightly different bio universe than the big mega deals, which you know, due to, you know, if you want to have an evaluation in the 10s of billions, you need to have a global business model. And, and for that in, in many cases the U.S. business case is the dominating case, right. But certainly for smaller, still sizable transactions, regional and local deals are very attractive, including in Europe.

Thank you. Daniel. There's a question for you in the chat, because I know we spoke about China earlier on the the webinar. What are some good tips that you can offer on how to identify good assets in China, particularly as AUS or a European company?

Yeah, so. I mean the, the three players that are active in China these days are big pharma, the VCs and smaller biotech companies, right? And if I had to rank them on who can do the best due diligence in China, it would be big pharma because they have a ton of boots on the ground in China and long standing business relationships. Then on the VC side, there's a few funds that have also long-standing relationships in China like an Orbimet, Bain or Beyond in particular and a few others. And then for the smaller biotech companies trying to identify high quality assets in China, it's the most difficult unless you have a very good relationship with the Chinese counterpart. The ecosystem can be a bit messy, but I think good starting points just to, you know, to dig for some assets is going to any of the cross-border conferences where Chinese companies present and you can just listen to their presentations, pretty much like the Chinese version of the JP Morgan healthcare conference.

Those take place in the United States in New York and SF pretty frequently. Now they also take place in in Europe or go to any of the conferences in Shanghai. They're on like every quarter there's now 123 larger conferences taking place showcasing Chinese innovation. And then lastly, there's a plenty of bankers and you know the usual suspects trafficking in those assets. So you can reach out to me, there's a few Chinese assets that I know. I'm happy to discuss more in detail. I'd love to ask you more, but just in the interest of time, because I know we've got a bunch more questions coming.

Daniel, I'm going to shift it over to you. Josh, do you foresee the upcoming Medicaid cuts under the one big beautiful bill shifting the healthcare sectors PE firms will increasingly target? And if so, which ones will be winners and which ones will be losers?

Yeah, no doubt. I think there's, there's sort of too many potential, you know, quote UN quote lives set stick to be dropped for private equity not to have a fairly keen eye on potential impacts there. You know, I think some potential losers, rural exposure in particular think swath of ambulatory surgery center assets that may be fairly materially impacted and home health in Medicare, Medicaid heavy states as well I think are sort of at risk in combination with some reimbursement declines expected there over the next several years.

I think potential winners I alluded to earlier it's sort of those with insulated reimbursement exposure. So from a sector standpoint, think consumer healthcare, from a sub sector standpoint think animal health. And in that sort of largely cash pay aesthetic medicine, behavioral depending on the pocket is sort of on the fence. But even specialties like ENT allergy, which if they have some plastics components can skew cash heavier specialties. I've mentioned concierge a couple times, often practices that are that are cash heavier and have less reimbursement exposure. And so that that's the way I would view it is let's think about reimbursement exposures and sort of where can we find insulation from that in the assets that were marketing and having the pipeline today.

That's what's attracting sort of the most interesting, where we expect to see the winners. Thanks so much, Josh. Now we've only got about 10 minutes left and I want to make sure everyone gets a chance to kind of close out and provide some last statements. So I just want to open it up with the team and maybe you can share some final sentiments before we close out. So Roby, I don't know if there's anything else he wanted to to leave the audience with.

Yeah, maybe by summary, you know, it continues to be a sort of bias markets, you know, financing environment is tough for biotechs and you know, so if anybody's is looking to sell, you know, take the opportunities you get depending on you know what your corporate goals are and what your what your cash requirements are.

You know sort of pharma is looking to buy because of the patent cliffs and you know particularly late stage assets are of particular interest. Having said that, I mean we had Merck continue to transact across the across the development chain from discovery deals to late stage assets to M&A. And so, yeah, just reach out and, you know, build those relationships that ultimately leads to a transaction.

Thanks Roby, Elias, I can hand it off to you for maybe some closing statements. \Sure. Yeah. Thanks John.

Yeah, maybe I think I will probably also follow Daniel and his, his, his view on 2026, which to me, I think you know, for us as corporate, let's say at least in my space, I think we have a window, we have a window of 12 months where it's still a buyer's market. But there is a big, I think there is a big chance that next year we might see the, the shift towards sellers market. As I think also Josh said before, I mean bright powder needs to be deployed interest rates. I think I follow Daniel his assumption that probably the direction is down.

So we might see a shift into a sellers market next year. So for us, I think we should be, we should be very aware of that and we should take advantage of this window of 12 months that we have maybe less. And then I think last thing maybe on the, on the, all the, the macro I would say changes and all that's happening. I hope that and I hope and I see probably a stability in in in 2026. And for us, I mean, and the OTC consumer healthcare space, I think the trends like the, the growth is going to be like, I see the steady growth and, and I think the, the trends are irreversible, whether it's the trends of healthy aging, you know, taking care of, of ourselves.

I think this, this, this trend is, is just irreversible. And, and this is gonna keep driving, I think our OTCCHC space. And I think pressure on the healthcare systems will keep on growing and we'll see more and more switches. And I think that this will also drive more growth on the OTCCHD space. So I'm a bit optimistic, I would say, I'm optimistic, I would say for, for us as an industry. And also I'm optimistic for next year for, for probably like a more dynamic here and maybe a shift into a sellers’ market.

Thanks so much. And Daniel, how about you? Anything to close out with? Sure. So me, I already mentioned that we see in around USD 48 billion of acquisitions in the first half of the year. I think in the second-half of the year, we'll we'll get pretty close to a number similar to that. So making 2025 a year, that's not too shabby when it comes to M&A. And then I think what we haven't mentioned yet throughout the discussion is the FDA, obviously there were quite a few hiccups earlier this year, but sentiment seems to be improving and there's still a bit of musical chairs going on at FDA.

But I think we are entering now hopefully a period of more stabilization at FDA. So that should be a big positive for the industry. And then lastly, just going back to to China, I think the the rise of the China trade could have negative implications for traditional biotech hubs such as Boston, San Francisco, maybe not in 2026, but in the mid and long term. I think if we continue to focus so much on Chinese assets that will at one point restrict innovation here in the United States.

Great. Thanks. And Josh, I'll pass it over to you if there's any closing statements or remarks you want to make.

Sure. Yeah, I think I share everybody's optimism is interesting year this year, right, If you attended JP Morgan and out in San Francisco, the sentiment was sort of unbridled optimism that very sort of quickly thereafter at least in M&A markets at you know called Mcdermott's healthcare private equity event down in Miami led to questioning as to where all that deal flow that was talked about in San Francisco was. I think the back half of this year there's going to be a lot more clarity around the regulatory environment rates sort of such that what folks expected for this year we'll get next.

Again, no crystal ball there, but you know, I think our institutional opinion on what's to come is, is fairly bullish. Thanks, Josh. And Josh, Daniel, Roby, Elias, thanks so much for the time today. It was amazing. We had some good Q&A with the audience. And I think this is going to conclude today's webinar. And for those still on the line, we're going to have a recording of this that we'll be able to pass out via e-mail or you'll probably see it on our website.

So thanks so much for joining us and hope to talk to you guys all again soon. Awesome. Thank you. Thank you.