The Spark Of Change In Healthcare's 2024 Investment Ecosystem
By Joseph Pategou
In 2021, I explored the impact of COVID-19 on the biotech sector in the article “Private Equity and SPACs in the Biopharma and Biotech Landscape.” The results were surprising:
- Euronext Growth: The market capitalization of 62 biotech firms on Euronext hit €29 billion in 2020, a €5.36 billion increase from 2019. Share prices rose by 66.8% in the first half of 2020 and another 29.7% in the second half.
- U.S. Market Strength: Biotech IPOs raised $14 billion through 74 deals in 2020, making the U.S. the leader in biopharma IPOs.
- The Rise of SPACs: SPACs made up 53% of U.S. IPOs in 2020 and 75% in Q1 2021. Globally, 307 SPAC IPOs were completed in Q1 2021.
Fast forward to today: How has the landscape evolved over the past four years?
Charting New Territories: Healthcare Private Equity's $115 Billion Journey
In 2024, global healthcare private equity surged to an estimated $115 billion, marking the second-highest total deal value ever recorded. This growth was driven by an uptick in large-scale deals, with five transactions exceeding $5 billion, up from just two in 2023 and one in 2022.
North America remained the dominant market, accounting for 65% of the global deal value, while Europe and Asia-Pacific represented 22% and 12%, respectively. Deal volumes remained relatively stable compared to historical averages, with increased activity in North America and Europe compensating for a 49% decline in transaction volume within the Asia-Pacific region since 2023.
Biopharma emerged as the leading sector in terms of deal value, fueled by significant investments in clinical trial IT infrastructure, including GI Partners' acquisition of eClinical Solutions. Novo Holdings’ acquisition of Catalent also played a key role.
In North America, the demand for derivative services drove provider deals, while in Asia-Pacific, investments focused on hospital chains, multi-specialty and single-specialty clinics, as well as senior living facilities. Healthcare IT investments were centered around enhancing core systems and improving revenue cycle management within the provider sector.
Bolt-Ons And Breakthroughs: Pharma’s Quest For Innovation In 2024
In 2023, the pharmaceutical industry accumulated a record $171 billion in cash reserves. While the overall deal volume declined compared to previous years, the total deal value increased significantly due to major megadeals in pharma and medtech. In 2024, M&A activity dropped to 57 transactions from 65 in 2023, and BD&L deals decreased to 172 from 194. However, Big Pharma remained dominant, accounting for more than half of all M&A transactions (30 out of 57) and contributing 75% of the total transaction value ($45 billion out of $59 billion). Most of these were smaller bolt-on acquisitions, with no single deal exceeding $5 billion. BD&L transactions involved a substantial $11 billion in up-front payments, reflecting strong capital deployment.
Asia, particularly China, played a prominent role in 2024. One example is Genmab’s $1.8 billion acquisition of ProfoundBio, which granted worldwide rights to three clinical candidates.
Private markets also experienced notable trends. While the number of deals declined slightly, from 353 in 2023 to 337 in 2024, the total deal value rose from $19.6 billion to $23.7 billion. Fewer companies raised larger sums of capital, with 95 megarounds recorded in 2024 compared to 62 in the previous year. Preclinical companies secured significant funding, though the largest megarounds ($250 million or more) were led by clinical-stage companies. Series B and C rounds often resembled crossover financings, with some companies going public the same year, such as Alumis, BioAge, and Zenas.
Most private market deals were led or co-led by new investors, and extension rounds became increasingly common, though typically at smaller deal sizes than in 2023. Limited partner funding showed uneven distributions, with most investments directed toward mega and midsized funds with established track records. While Series D+ step-ups continued to decline, Series A and B valuations remained stable, and Series C valuations rebounded in 2024.
The industry in 2024 shifted focus toward clinical-stage companies and asset-driven strategies, moving away from the previous emphasis on preclinical platform companies. Oncology and autoimmune therapies remained dominant areas of M&A and BD&L activity, with CNS following closely. Small molecules accounted for 45% of strategic activity, despite concerns surrounding the Inflation Reduction Act. Companies with clinical-stage assets enjoyed valuation premiums, while platform and AI-focused ventures with near-term clinical milestones also drew significant attention.
Strategic M&A And Investment Surge: Shaping The Future Of CGT
Investment in cell and gene therapy has surged to $15.2 billion in 2024, reflecting a 30% year-over-year increase. Public financings have seen substantial growth, with Insmed raising $650 million in May 2024 and Kyverna’s IPO generating $319 million to support its autoimmune cell therapy mission. Venture capital investment also has been robust, with ArsenalBio securing $325 million in a Series C funding round, Capstan Therapeutics raising $175 million through an oversubscribed Series B, and Obsidian Therapeutics closing a $160.5 million Series C round to advance OBX-115 clinical development.
Mergers and acquisitions have further bolstered the industry. Roche acquired Poseida Therapeutics for approximately $1.5 billion, strengthening its CAR-T therapy portfolio. Novartis signed a $1.1 billion deal to acquire Kate Therapeutics, a gene therapy biotech company, while MilliporeSigma expanded its manufacturing capabilities through the $600 million acquisition of Mirus Bio.
Nova One Advisor reports that the global cell and gene therapy market was valued at $18.13 billion in 2023 and is forecasted to grow at a CAGR of 18.3% from 2024 to 2033, reaching an estimated $97.33 billion by 2033. Notably, cell therapy dominated the market in 2023 with a valuation of $15.6 billion and is expected to maintain its leading position in the coming years.
An Exciting New Phase
The biotech and healthcare sectors have shown impressive resilience and growth, driven by strong private equity investments and strategic M&A activity. With North America and Europe maintaining dominance, Asia, especially China, has emerged as a key player. The shift toward clinical-stage companies and asset-driven strategies, alongside innovation in cell and gene therapies, marks an exciting phase for the industry. As the market continues to evolve, the sector is poised for groundbreaking advancements and sustained financial growth, creating abundant opportunities for the future.
Acknowledgment
I want to express my gratitude to the Alliance for Regenerative Medicine for giving me access to data. The Alliance for Regenerative Medicine (ARM) is the leading international advocacy organization dedicated to realizing the promise of regenerative medicines and advanced therapies.
About The Author:
Joseph Pategou has authored over 30 articles in esteemed journals such as Cell and Gene Therapy, The Indian Economist, Labotech.eu, Drug Discovery & Development and others. A former consultant at Boston Consulting Group in New York, he has held and continues to hold operational roles in biopharma companies. The views expressed are his own. He holds an MBA from New York University and a master’s degree from HEC Paris.
References:
- Industry Reports & Market Insights
- Bain Global M&A Report 2024
- Goldman Sachs Healthcare Report
- Bank of America Healthcare Report
- Corporate Announcements & Acquisitions
- Genmab. Genmab to Broaden and Strengthen Oncology Portfolio with Acquisition of ProfoundBio. PressRelease
- MilliporeSigma. MilliporeSigma Boosts Its Gene Therapy Manufacturing Capability with $600M Acquisition. Fierce Pharma
- Biotech & Investment News
- Kyverna Overshoots Even Its Raised IPO Expectations, Bringing in $319M in Oversized Offering. FierceBiotech
- Cell & Gene Therapy Financing: What Is the Role for Private Equity and SPACs? Cell & Gene
- Kyverna Ups IPO to Roughly $300M After Seeing Peers Land Upsized Raises. Fierce Biotech
- Bristol Myers Axes Immatics Bispecific After $150M Bet. Fierce Biotech
- Funding & Investment Trends
- Obsidian Therapeutics Announces Oversubscribed $160.5 Million Series C Financing to Drive OBX-115 Clinical Development. Obsidian Therapeutics
- ArsenalBio Secures $325M Series C Funding with Nvidia, Regeneron Support. Patsnap Synapse
- Regulatory & Industry Organizations