According to the latest data from Real Deals’ Data Hub, a total of 1,005 investments worth more than €117bn have been recorded involving European healthcare-related businesses between Q2 2021 and the end of Q1 2023.

This equates to some 16% of the total dealflow in that timeframe, making it an important component of the overall regional investment landscape.

Given the significant drivers of an ageing population on one hand and an increased focus on mental and physical health/wellbeing (especially among younger generations) on the other, the sector will continue to present a strong flow of investment opportunities and be relatively well protected from other economic and geopolitical headwinds.

During the period covered, the quarterly volume of healthcare deals trended slowly but steadily upwards until the final three months of 2022 and first quarter of 2023, though this spike in coverage can be partly explained by increased research capacity in the Real Deals data team, which specifically added to the breadth of VC coverage.

Stripping out the VC content shows a slight downward trend in dealflow, with the 48 deals recorded in Q1 2023 representing the low point in the whole period.

However, the more striking trend is that of overall value, which has plummeted during the nine-quarter period, as the flow of larger healthcare deals has dried up. While it is these deals that tend to drive the quarterly spikes in deal value (Q1 2021 at €31bn and Q3 2021 at €24bn), the average quarterly total has dropped from €18bn in 2021 to €10.5bn in 2022, and the Q1 2023 value sat at just €2.4bn.

While this phenomenon is visible across other sectors, it is especially pronounced in the healthcare space: only three €1bn+ deals in the sector have been recorded since the end of H1 2022, compared with the 10 that were seen in Q1 2021 and eight in Q3 2021.

Without the buyouts of Neopharmed Gentili (Ardian, NB Renaissance), Spectrum Medical (CVC Capital Partners) and Unither Pharma (GIC, IK Partners), the overall fall in the value of healthcare deals would have been even more profound.

Until interest rate pressure begins to ease and the cost of capital becomes more affordable, it is unlikely that the squeeze on dealflow at the larger end of the market – in the healthcare space or elsewhere – will loosen.

On the plus side, a poll at the recent Real Deals healthcare event in London backed up other anecdotal feedback that investment conditions could start to improve as early as H2 2023 and certainly into the first half of 2024.

To read the full statistical breakdown, turn to page 10 of the Real Deals Healthcare Report here.