2025
Jefferies Healthcare Temperature Check
Foreword
Tommy Erdei
Global Joint Head of Healthcare Investment Banking
I am pleased to share the eighth edition of the Jefferies Healthcare Temperature Check, our annual research report capturing sentiment, priorities, and expectations across the global healthcare ecosystem. Each year, this study draws on the perspectives of senior leaders, investors and innovators whose insights shape how capital, conviction, and strategic focus are directed across the sector.
The 12 months since our last report have been defined by complexity and transition. Interest rates have remained elevated across most advanced economies, and geopolitical uncertainty continues to influence supply chains, trade, and investor sentiment. Policy changes in key markets have further contributed to a sense of caution. Yet despite these headwinds, healthcare once again stands out for its resilience and adaptability.
2025 has been a year of recalibration. After a period of sustained caution, both corporates and investors are showing green shoots of renewed activity. Healthcare valuations have steadied and strategic dealmaking is re-emerging, particularly in mid-cap pharma, healthcare services, specialty pharma and biopharma/biotech. Biopharma/biotech in particular has seen major pick-up in 2025. Since the follow-on market reopened after Labor Day, Jefferies has been the most active bookrunner, having bookrun 25 of 58 underwritten transactions, serving as lead-left bookrunner on 19 deals, and facilitating a total of $4.6bn in capital raised. Jefferies has also been fortunate to have worked on several of the most important multi-billion dollar transactions of 2025 across many of the key subsectors of healthcare, including the sale of Merus to Genmab, the sale of Blueprint to Sanofi, the sale of Intra-Cellular to Johnson & Johnson, the sale of Clario to Thermofisher, the sale of Stada for Bain Capital and Cinven to a consortium led by CapVest, and the CVC sale of Mehilainen to Hellman & Friedman.
Private equity looks set to play a major part in dealmaking again next year, with GPs facing both pressure to sell assets and return capital to their LPs, whilst also deploying their dry powder. For assets where the most likely exit is an IPO, Jefferies believes there has been a significant dislocation in the valuations new investors are assuming for their eventual IPO exit because of the recent challenging IPO environment. We are confident the IPO headwinds are temporary and done in the right way, these deals can achieve terrific outcomes. Shares in Galderma, for instance, are up c. 170% since listing in May 2024. This has allowed multiple selldowns for EQT, where Jefferies served as global coordinator, at very attractive valuations while providing investors with strong gains as well; trading in Diagnostyka, the largest CEE healthcare IPO in the past two years, has also seen upward momentum, up c.80% since IPO; and Ottobock, the first IPO in Frankfurt in twelve months, has similarly seen positive trading since pricing in October.
Taken together, a continued recovery in capital markets presents an attractive opportunity for investors and a catalyst for accelerated M&A across the sector in 2026.
Innovation continues to be healthcare’s defining constant. GLP-1s have evolved from a breakthrough therapy into a structural growth engine, reshaping chronic disease management and attracting sustained investment from the world’s largest pharmaceutical companies. Conversations around artificial intelligence have moved from “if” to “how much” it will reshape the industry, with tangible gains in diagnostics, trial design and operational efficiency starting to become evident and excite the industry.
As we look to the year ahead there remain significant challenges and opportunities. Pricing pressure, capital efficiency and regulatory complexity continue to test decision-makers, while macroeconomic fragility and political uncertainty could continue to weigh on confidence. Still, leaders across the industry are showing their ability to adapt, successfully identifying the differences between headlines and reality, while pursuing innovation with greater discipline and sharpening their focus on long-term value creation. This is resulting in cautious optimism around the sector.
The 2025 Jefferies Healthcare Temperature Check reflects that tone: one of measured confidence. Healthcare’s fundamentals remain sound, its capacity for innovation undiminished, and its role in the global economy more essential than ever. We hope this year’s findings provide valuable perspectives as we navigate the opportunities and challenges that lie ahead, and act as a reminder of the resilience, creativity, and purpose that continue to define our industry.
Key Findings
Cautious Optimism
Market confidence has softened, with 50% of respondents expecting the FTSE 100 to rise by end-2026, down from 66% in 2024, and 58% forecasting gains in the MSCI World Health Care Index, down from 73%. Meanwhile, cautious optimism prevails, with 60% of respondents still planning to increase healthcare allocations in 2026, matching last year’s level.
Key findings
Capital Conditions Showing Improvement
43% of respondents say macro conditions are severely impacting capital raising, down from 48% in 2024. However, 51% of private equity respondents face major challenges, an increase vs 38% last year. Institutional investors are more upbeat, with only 30% reporting major impact and 68% expecting better fundraising conditions in 2026.
Key findings
North America Leads
North America remains the top region for healthcare investment. Europe now shares second place with China, which has overtaken the UK, driven by strong biopharma growth and policy support.
Key findings
Innovation Drives Momentum
72% of respondents say AI is already reshaping healthcare. 2025 also marks a shift to diversification in obesity and metabolic drugs. 21% say metabolic treatments will have the biggest impact in 2026. Emerging areas like cell & gene therapy (9%), platform tech (6%), and nucleic therapies (6%) are gaining ground.
Key findings
Strategic M&A Dominates
Dealmaking is expected to increase in 2026, led by corporates (50%) and private equity (13%). Fewer respondents expect equity financing to lead, reflecting caution in capital markets. Still, 49% believe IPO activity will return by 2026.
Key findings
Risk Awareness Remains
Despite optimism, risk awareness is high. Geopolitical instability remains the top concern, highlighted by 45% of respondents, followed by funding and pricing pressures (31%) and regulatory uncertainty (15%).
Detailed Findings
The Market Outlook
Cautious Optimism
Respondents to this year’s survey are broadly positive on market movements going into 2026. However, fewer respondents expect the FTSE 100 (50%) and MSCI World Health Care (58) to finish higher next year than previously. Given equity markets have enjoyed a well-documented bull-run, it is perhaps not surprising that some are calling the top of the market and expecting a market correction.
0%
Expect the FTSE 100 to be higher at the end of 2026
0%
of institutional investors believe that the MSCI World Health Care Index will be higher at the end of 2026
With the benefit of hindsight, investors’ predictions for 2025 have had a mixed track record. The two-thirds of respondents who expected the FTSE 100 to end 2025 higher than it did in 2024 have, so far, proven correct. However, the 73% who said the same for the MSCI World Health Care Index missed the mark.
Detailed Findings
Capital Markets and Financing Conditions
Respondents to this year’s survey present a cautiously optimistic outlook for capital markets and financing conditions across global healthcare. While macroeconomic uncertainty and elevated borrowing costs continue to weigh on sentiment, there are clear signs that confidence is stabilizing. For instance, a smaller number of respondents pointed to the economic environment and broader market outlook as a “major” barrier to healthcare companies’ ability to raise funds this year – 43% in 2025 versus 48% last year. This partly disguises fundraising challenges for private equity in particular, with over half of private capital respondents saying macro conditions are having a “major adverse impact”.
Exemplifying this cautious optimism, a majority of respondents (60%) expect their exposure to healthcare to be higher in 2026 than in 2025 reaffirming the industry’s appeal as a defensive and innovation-led asset class. Institutional investors remain the most bullish cohort, with 57% planning to increase allocations. Despite the fundraising challenges they’re facing, private equity investors remain optimistic about the healthcare sector, with 46% indicating plans to expand allocations, similar to the 50% who said so in 2024.
Elsewhere, hopes for a resurgence in the IPO market continue to focus on the medium term. 49% of respondents believe that listing activity will recover in 2026, though this marks a deterioration in conviction compared with the 64% who took this view last year.
0%
expect their exposure to the healthcare sector to be higher in 2026
Detailed Findings
Regional Dynamics
0%
believe North America poses the greatest value opportunity in 2026
North America: Remains Market-leader
North America remains the market of choice, continuing to be ranked first overall for offering the greatest value opportunity in 2026, despite market uncertainty. However, America has lost the confidence of private equity investors, who now rank it second to Europe.
Europe Facing Competition from China
Europe has maintained its second position, with investors, particularly private capital, welcoming recent life sciences funding initiatives under the EU Life Sciences Strategy. However, persistent regulatory fragmentation and pricing controls are undermining Europe’s its relative competitiveness, with China moving up into joint second place. China itself has also been bolstered by support for government incentives for biopharma innovation.
UK’s competitiveness declines
The UK has fallen from third place, ahead of China, to joint fourth, alongside the Middle East and Africa, as the location offering opportunities for healthcare investing. The outcome of the UK government’s ongoing negotiations with the life sciences sector over drug pricing is likely to be pivotal for its position next year.
Detailed Findings
Sectoral Outlook
Continued Diversification Growth
When asked which healthcare sub-sectors they expect to perform best in the year ahead, respondents were clear that biotech and pharma will continue to grow.
- Mid and Small-Cap Pharma & Biotech remain top-ranked, with 53% seeing them as the strongest performers, benefiting from capital re-engagement and renewed M&A appetite
- Healthcare IT (10%) continues to gain traction as digital transformation and AI integration accelerate, particularly in data management, diagnostics and care delivery efficiency
- Medtech and Diagnostics remain small but steady at 5% and 6% respectively
- Large-Cap Pharma & Biotech remain defensive, 18%, versus 15% last year, but are no longer expected to outperform; the asset class is increasingly viewed it as a consolidator rather than a growth engine
0%
expect mid and small cap pharma and biotech to perform best in 2026
Detailed Findings
Innovation and Therapeutic Focus
0%
believe that AI is already producing tangible benefits
Innovation remains the industry’s core growth engine. This year’s responses highlight a diverse and accelerating pipeline of scientific and technological progress.
GLP-1 and Metabolic Therapies
21% of respondents identify GLP-1 drugs and metabolic treatments as the innovation most likely to shape healthcare through 2026. Clinical data released in early 2025 demonstrate efficacy across multiple chronic disease categories, extending well beyond weight management – a point reflected in the survey with 47% citing expansion of these drugs into new therapeutic areas as a key growth driver. Additionally, 52% believe the development of new drug delivery methods (e.g. into oral formulations) will drive growth in the GLP-1 market.
Artificial Intelligence
72% believe that AI is already producing tangible benefits, up from 69% last year. Adoption is most pronounced in health monitoring and predictive analytics (58), administrative efficiency (41%), triaging and virtual health assistants (28) and genomics and personalised medicine (28%).
Gene Editing and Advanced Therapeutics
Interest in targeted therapies remains strong, with 20% citing the category as the area of innovation that will deliver the most impactful outcomes in biopharma in 2026, behind only anti-obesity medication, which was identified by 21% of participants.
Overall, 2026 is being viewed as a turning point for innovation: a transition from concentrated breakthroughs to a multi-front acceleration across science, data, and technology.
Detailed Findings
Dealmaking in 2026
Confidence Remains
Respondents remain confident in their outlook for healthcare dealmaking. A significant proportion (65%) expect M&A activity to be higher in 2026 than in 2025, comparable to the 72% in last year’s survey. When asked who will dominate transactional activity in the sector, 50% of respondents believe corporates will, followed by 13% who point to M&A led by private equity. Of those who expect M&A to be led by corporates, institutional investors are more confident in this (68%) than corporates (50%).
Beyond M&A and equity financing, licensing and royalty transactions (10%) are expected to play a more prominent role in shaping deal activity in 2026.
0%
expect M&A activity to be higher in 2026 than in 2025
Detailed Findings
Risk & Regulation
0%
believe that the greatest risk to healthcare in 2026 is geopolitical
Respondents continue to identify a complex risk environment, with a shifting view amongst private equity, institutional and corporate representatives.
- 45% of respondent identify Geopolitics as the top operation risk, reflecting concerns over trade and supply chains. Corporates are the most concerned, with over half (52%) citing this as the biggest risk, compared with only 28% of institutional investors and 39% of private equity
- 31% identify funding and pricing pressures as key risks, as fiscal constraints lead governments to re-evaluate reimbursement models. Private Equity are less concerned than last year, with Institutional Investors more concerned than in 2024. Corporates expressed the least concern about this risk
- Regulatory complexity and compliance costs are highlighted by 15%, driven by uncertainties around AI, data privacy, and advanced therapeutics.
- The majority of respondent (42%) believe these risks will only cause ‘short term disruption’ before returning to normal.
Conclusion
The 2025 Jefferies Healthcare Temperature Check captures an industry navigating a complex and uncertain landscape. After a period of recalibration, sentiment across global healthcare is steady. Respondents recognise the sector’s enduring strengths – its innovation engine, long-term demand fundamentals, and proven resilience – and approach the year ahead with a sense of cautious optimism.
Capital access, while improving, remains uneven; financing costs and investor selectivity continue to shape how deals are structured and which innovations are funded. Pipelines are broadening, yet pricing scrutiny remains a crucial factor. Respondents also note that policy and geopolitical dynamics are increasingly influencing strategic decision-making.
Still, there are clear signs of forward movement. Technology integration is deepening, M&A appetite is returning, and private markets remain active and well-capitalised. This momentum underscores healthcare’s ability to adapt and advance even amid uncertainty.
Ultimately, the sector is underpinned by excitement in new areas and recalibrating for the next phase of growth. For investors and corporates alike, opportunity lies in selectivity, innovation, and long-term conviction. Healthcare’s blend of scientific progress, structural demand, and capacity for reinvention continues to position it as a cornerstone of global investment strategy.
Video Interviews
Q&A with Tommy Erdei
Global Joint Head of Healthcare
Investment Banking
Q&A with Gil Bar-Nahum
EMEA Head of Biotechnology
Investment Banking
Jefferies: A Leader in Global Healthcare Investment Banking
- Jefferies is a global full-service investment banking and capital markets firm offering M&A advisory, equity and debt capital markets, and equities and fixed income sales, trading and research across North & South America, EMEA, Asia, and Australia
- Jefferies has one of the largest healthcare investment banking groups in the world with over 130 healthcare bankers worldwide
- Jefferies is the #1 advisor across global healthcare M&A, equity transactions and LBO financing (1)
- In the last five years, Jefferies has announced over 650 M&A advisory, bookrun equity and leverage finance healthcare transactions (2)
Sources: (1) Dealogic. (2) Dealogic, transactions completed since 2019.
Number of Global Transactions Announced (LTM September 2024)
300+
Across M&A, DCM and ECM
Number of EMEA Transactions Announced (LTM September 2024)
90+
Across M&A, DCM and ECM
Jefferies Financial Group Inc. is the largest independent, global, full-service investment banking and capital markets firm headquartered in the United States. Focused on serving clients for nearly 60 years, Jefferies is a leader in providing insight, expertise and execution to investors, companies and governments. Our firm provides a full range of investment banking, advisory, sales and trading, research and wealth management services across all products in the Americas, Europe and Asia. www.jefferies.com
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