Buckle your seatbelts, 2025 could be a busy year for healthcare dealmaking. That’s one takeaway from our time at the J.P. Morgan Healthcare Conference. During our week in San Francisco, we met with leaders from health systems, pharmaceutical companies, banks, and investment firms. There was a healthy dose of optimism that dealmaking will rebound from a relatively slow 2023 and 2024. In fact, two major deals were unveiled at the conference — Johnson & Johnson’s acquisition of biotechnology company Intra-Cellular Therapies for $14.6 billion and GSK’s purchase of IDRx, which develops precision cancer medicines, for $1 billion.
We identified four overarching trends to watch this year:
Expect to see more dealmaking
Bankers, investors, and executives from life sciences companies nodded toward more activity in 2025. Part of that is driven by global inflation being under control and interest rates declining, or at least stabilizing. Investors and bankers are eager to put their money to work and we anticipate seeing more M&A and IPO moves this year. As we noted late last year, venture capital among large pharmaceutical companies is also positioned for growth.
The other factor to watch is on the regulatory front in the US. There’s a strong belief that the Trump administration — especially new leadership at the Federal Trade Commission — will take a less stringent view of M&A than did the Biden administration.
A continued focus on operational improvement
Payers and providers presenting at the conference — as well as several we met with — said there will be heightened attention to improving operations in the coming year. For providers especially, those efforts are aimed at easing cost pressures. Leaders from Renton, Wash.-based Providence, for example, highlighted how a three-year long effort has resulted in $1 billion in operational improvements. But we know that delivering on the promise of transformation initiatives is not easy. So much of it comes down to execution. For both payers and providers, we expect artificial intelligence (AI) to be even more prominent in efforts to drive efficiencies. Like other transformation efforts though, AI rollouts must be well designed and engrained in the organization’s overarching strategy.
Momentum building in key therapeutic areas
We are keeping our eyes on cardiovascular, dermatology/inflammation, neurology, and oncology. Each of these represents significant areas of growth.
For cardiovascular disease, new therapies have shown promise in treating high cholesterol, specifically lipoprotein(a) and we continue to see a push for GLP-1s, as evidenced by Verdiva Bio announcement of $410 million in funding to advance development of a once-weekly oral dosing.
Dermatology and inflammation got a boost when Gilead Sciences and Leo Pharma announced a $1.7 billion collaboration to develop a small molecule drug benefiting patients with atopic dermatitis, asthma, and COPD, among other things. In neurology, J&J’s acquisition of Intra-Cellular, along with Sanofi’s partnership with Alloy Therapeutics could spur developments for therapies targeting the central nervous system. In oncology, we expect to see greater focus on personalized immunotherapy. BioNTech, for instance, touted work on therapies building off mRNA.
Emerging modalities of care
Just as important as drug development, innovative treatment modalities are emerging. Antibody-drug conjugate (ADC) continue to be an emphasis in oncology. There’s ongoing research for cell and gene therapies targeting solid cancer tumors as well as Parkinson’s disease and autoimmune conditions. And we expect radiopharmaceuticals — the safe use of radioactive drugs to treat certain cancers — to gain momentum. There were a handful of market-shaping deals in the area over the past few months.
Beyond these market trends, policy decisions around the globe will be a factor. The shape and magnitude of the geopolitical risks facing healthcare companies is a moving target and could impact a range of areas, including labor, supply chain, and access to capital. As such, leaders at this year’s J.P. Morgan Healthcare Conference said that focusing on operational efficiencies is key creating an agile organization.