Dealmaking in Europe’s life sciences sector has been relatively muted in recent years, but the first half of 2025 has shown signs of strength as companies respond to the stark realities of an aging population
Earlier this year, the European Parliament sounded the alarm on the growing strains on the continent’s healthcare market. The persistent challenge of an aging demographic is being exacerbated by a shortage of human capital, with an estimated deficit of 1.2 million doctors across the region. And it is not only the patient population that is aging, but the caregiving workforce, too.
Nearly 30 percent of Europe's population will be over 65 by 2050, up from 21 percent in 2023, increasing age-related diseases and straining healthcare resources. Compounding the challenge, it is estimated that more than a third of doctors and a quarter of nurses in the EU were aged over 55 as of 2022. In almost half of EU countries, the proportion of doctors over 55 is 40 percent or higher.
The care worker deficit was worsened by the pandemic, which saw working conditions grow more demanding, leading to burnout and retention issues. The post-pandemic era has intensified the sector’s focus on system resilience and preventative care, especially with rising obesity rates and low physical activity levels.
Concerns over inactivity are well founded: Across the EU, adherence to World Health Organization exercise recommendations sits at 35 percent for adults aged 18 to 64 and falls to just 22 percent for those over 65.
Adapting through M&A
Faced with escalating long-term demand and increasingly stretched fiscal budgets, healthcare providers and pharmaceutical groups will depend on M&A to innovate, scale and adapt, with private equity sponsors joining in on the opportunity.
However, recent dealmaking has been relatively static. For example, M&A volume in Western Europe’s pharma, medical and biotech sector in 2024 was flat on the previous year, with 1,023 deals. Value over this period almost halved, to US$48.1 billion.
But things could be shifting gear. Value in 2025 so far (as of July 14) has hit US$48.3 billion, already eclipsing 2024’s total value. This was achieved with 527 deals (YTD), marginally down on H1 2024’s figure of 535.
M&A activity by value Q2 2023 – Q2 2025
Target location: Western Europe Bidder location: Global Sectors: Pharma, medical and biotech
Explore the data
Obesity gold rush
The success of GLP-1 agonists, a new class of drugs for obesity and diabetes, has prompted a surge of investment and is proving to be a reliable M&A catalyst, as companies race to develop or acquire next-generation therapies and production capacities in this multibillion-dollar market.
In March, Roche Holding inked a US$5.3 billion deal with Denmark's Zealand Pharma for the development and commercialization rights to petrelintide, a monotherapy for obesity and potentially other metabolic diseases, highlighting the ongoing commercial interest in the weight-loss drug market. This licensing agreement, featuring a US$1.7 billion upfront payment and significant earnouts, allows Roche to tap into a promising late-stage asset while sharing development risks and commercialization efforts with Zealand. This is a clear example of using M&A to enter high-growth therapeutic areas such as GLP-1s.
In some cases, the race to develop innovative drugs is having an indirect effect on dealmaking. For example, in October last year, Sanofi sold a 50 percent stake in its consumer healthcare arm, Opella Healthcare Group, to PE firm Clayton, Dubilier & Rice, a deal valuing the company at €16 billion (US$18.5 billion). The partial divestment allows Sanofi to channel greater resources toward its innovative pipeline.
More broadly, pharmaceutical giants are refining their focus on core drug pipelines, giving rise to carve-out opportunities for financial sponsors.
Healthcare consumerism
The deal also speaks to another prevailing trend: the confluence of healthcare consumerism with disease prevention. Opella specializes in over-the-counter products, including vitamins and supplements, which are increasingly viewed by a new generation of consumers as critical for maintaining health and wellbeing.
In July last year, Viatris also sold its over-the-counter business. Cooper Consumer Health, a France-based company backed by CVC Capital Partners, paid approximately US$2.2 billion for the business. The product portfolio included a range of wellbeing supplements.
As consumers continue to place greater emphasis on long-term wellness and independently managing their health, and companies streamline their business lines to hone their strategic focus, non-prescription portfolios with strong brand value are becoming attractive assets for PE buyers.
Acquiring AI
Technology will be critical in alleviating the mounting pressures in Europe’s healthcare systems over the coming decades in multiple ways, with artificial intelligence at the forefront. AI has the potential to enhance efficiency, improve diagnostics, accelerate drug discovery and personalize patient care, thereby addressing some of the core challenges of workforce shortages and rising demand.
For many life sciences companies and healthcare providers, M&A is a critical pathway to rapidly integrate cutting-edge AI capabilities, rather than developing them from the ground up. A prime example of this trend is the US$688 million acquisition of UK-based Exscientia, a company specializing in AI-driven drug discovery, by US clinical-stage biotech company Recursion Pharmaceuticals in August last year. The transaction underscores the value placed on AI platforms that can significantly shorten timelines and reduce costs in the arduous process of bringing new medicines to market.
In diagnostics, AI is transforming medical imaging and predictive analytics, enabling earlier and more accurate disease detection. One notable recent deal example is EssilorLuxottica’s acquisition of Optegra, announced last month. Optegra operates over 70 eye hospitals across Europe and uses AI to enhance ophthalmic diagnostics and personalized eyecare.
Trade and policy protectionism
Few sectors benefit as greatly from such powerful and converging tailwinds as life sciences. However, short-term risks are building. Escalating US tariffs pose a challenge to Europe’s pharmaceutical industry, which exported €90 billion (US$102 billion) in medicines to the US in 2023, according to Eurostat data.
Tariffs could disrupt transatlantic supply chains, impacting active pharmaceutical ingredients and finished drugs, particularly generics and biologics reliant on multi-country production. An estimated 50 percent of active ingredients imported into the US come from the EU and India.
This, in turn, has the potential to increase drug prices, reduce patient access and erode profit margins, prompting companies to seek M&A to secure supply chains or diversify markets. For instance, tariffs may push European firms to acquire US-based assets with manufacturing capacity to bypass duties, as seen in other sectors actively pursuing onshoring strategies.
Running counter to this, however, is the Critical Medicines Act. Proposed by the European Commission in March, the act seeks to introduce measures that will bolster pharmaceutical supply chain resilience and reduce reliance on non-EU suppliers.
It promotes investment in EU-based production through incentives like fast-tracked permits and funding for strategic projects, targeting over 270 medicines on the EU’s Union List of Critical Medicines. It also reforms public procurement to prioritize suppliers with diversified, EU-centric supply chains, encouraging joint procurement among member states to ensure equitable access. While the act may drive M&A to secure local production—potentially boosting acquisitions tied to European manufacturing—it risks deterring inbound cross-border deals.
Outlook
These immediate-term considerations do nothing to change the fact that the fundamental, long-term tailwinds forcing transformation across European healthcare are mounting.
The persistent, compounding pressures of an aging population and a constrained workforce, the unceasing demand for medical innovation, and the growing empowerment of health-conscious consumers will continue to make M&A an essential strategic pathway that companies must take to rise to the region’s needs.
