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A positive trend
Despite the M&A market suffered in 2023 due to adverse macroeconomic conditions, including high interest rates and difficulties in accessing credit, the Health Industries sector in Italy showed a positive trend, marking a 23% growth in the number of completed deals, 118 vs. 96 in 2022. 47 additional deals were completed in the first half of 2024. This trend, together with the large amount of liquidity available for investments by Private Equity funds and their strong interest in this sector, leads to increasing optimism for the second half of 2024 and, in particular, 2025.
Diagnostic services, consumer healthcare, nutraceuticals and CDMO remain the most dynamic sectors. This is what emerges from the PwC Global & Italian M&A Trends in the Health Industries sector 2024.
"In FY23 and 1H24, in a macro context still complex and characterized by economic uncertainty, the Italian Health Industries sector has shown some resilience, driven mainly by national pharmaceutical companies that have leveraged the cash available to make strategic acquisitions aimed at expanding the product offering, strengthening and completing the pipeline, increasing production capacity and geographical coverage. These dynamics, together with the growing interest of Private Equity funds should support M&A activity in the Health Industries sector in the second half of 2024 and, in particular, in 2025"
M&A Activity in 2023-1H24
In Italy, the Health Industries sector concluded 2023 with 118 announced transactions, an increase compared to 2022 (96). This growth related to both the Health Services segment (45 transactions in 2023 vs. 36 in 2022) and the Pharma & Life Sciences segment (from 60 in 2022 to 73 in 2023). 47 transactions were completed in 1H24, of which 30 in the Pharma & Life Sciences world and 17 in the Health Services segment.
The main transactions announced in the FY23-1H24 period were Chiesi/Amryt Pharma, PI Health Sciences Ltd/Archimica, Giuliani/Biogena, Biofarma/US Pharma Lab, Abiogen/EffRx, Ceres Pharma/Amnol, Ceres Pharma/Aescolapius Farmaceutici, HIG/Polygon, Bain Capital/Fabbrica Italiana Sintetici, Dr Max/Neo Apotek, Dentressangle Capital/Dietopack, Alfasigma/Jyseleca Business, Enovis/Limacorporate, ICG/Vision Group, 21Invest/Omega Pharma Srl, Fidia farmaceutici/Sanofi Global Gynecology & Gastroenterology Brands Portfolio, DOC Generici/Muscoril.
There were also significant transactions involving international assets with extensive operations in Italy, such as the acquisition of Alliance Medical by iCON and the acquisition of Viatris' OTC portfolio by Cooper Consumer Health (CVC).
54% of the 118 deals announced in 2023 were completed by financial investors (54% in 2022). Conversely, in 1H24, there was increased activity from strategic investors (60% of closed deals).
| FY22 | FY23 | 1H24 | Chg. % FY23 vs FY22 |
|
| Health Services | 36 | 45 | 17 | 25% |
| Pharma & Life Sciences | 60 | 73 | 30 | 21.7% |
| Deal Volumes | 96 | 118 | 47 | 22.9% |
| Corporate | 44 | 54 | 28 | 22.7% |
| PE | 52 | 64 | 19 | 23.1% |
M&A Analysis by Segment
Health Services
The transactions concluded in 2023 and in the first half of 2024 in the Health Services sector confirmed a continuation of the aggregation dynamics, particularly in the sectors of diagnostic/outpatient clinics, hospitals, labs, veterinary and dental clinics, all characterized by high fragmentation.
The consolidation of health service offerings around existing platforms remains, therefore, the main driver of M&A deals in the Health Services sector with the expectation of an extension to new sectors, such as ophthalmology and aesthetic medicine, so far less affected by aggregation dynamics. In addition, the strong interest in private healthcare operators is fuelled by the growing demand for services and treatments not met by public facilities which increasingly push patients to rely on private healthcare.
This trend, represents an opportunity for private operators to attract new patients and increase revenues and margins. However, there are also challenges that healthcare companies are facing, such as the shortage of medical and health personnel and the resulting pressure on staff costs, further accentuated by recent inflationary dynamics, in addition to the general increase in operational costs only partially passed on to private patients as the tariffs for services provided to public patients have remained almost stable. The search for efficiencies will therefore be central in the coming years with increased productivity, centralization of procurement and digitization of processes playing a determinant role in protecting the profitability of healthcare businesses. The implementation of synergies resulting from ongoing aggregation processes will be another essential lever for margin protection.
Pharma & Life Sciences
The announced deals in the Pharma & Life Sciences segment in 2023 and in the first half of 2024 were 103 in total, mainly driven by national pharmaceutical companies that have leveraged available liquidity to accelerate acquisitions aimed at expanding the product portfolio and enriching / completing the pipeline to achieve their growth plans (i.e. Chiesi/Amryt Pharma, Abiogen/EffRx, Alfasigma/Jyseleca Business, Fidia Pharmaceuticals/Sanofi Global Gynecology & Gastroenterology Brands Portfolio, DOC Generici/Muscoril).
In addition, despite a context of limited activity from Private Equity funds, 2023 and the first half of 2024 have reiterated the strong interest in the CDMO (contract development and manufacturing organization) sector with the acquisition of Fabbrica Italiana Sintetici by Bain Capital and several other deals aimed at expanding the national/international CDMO platforms created by Private Equity (i.e., Biofarma, Mipharm, Procemsa, for example, completed acquisitions in 2023).
Companies in the nutraceutical/food supplement sector, supported by a steadily growing demand for 'consumer health' products, have also confirmed their strong attractiveness with numerous deals completed in 2023, including the delisting of Labomar, the acquisition of Dietopak by Dentressangle Capital, in addition to the add ons completed by Biofarma and Procemsa. PwC Italy expects these dynamics to continue in the second half of 2024 and in 2025, representing the main drivers of M&A activity in the pharmaceutical sector.
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