• Volumes up 56% to EUR 40bn in 1H26, but fewer deals
• Decent M&A activity, despite more negative sentiment in 2Q
• Pharma, radiology, digital and social care are subsectors to watch

European healthcare M&A is going reasonably strong, in spite of Groundhog Day-style geopolitical uncertainty.

“Generally, the pipeline is full. The problem is visibility for the buyers,” said Franck Noat, managing partner at Alantra. He pointed to the Middle East conflict, inflation, and upcoming elections in France as key uncertainties.

The healthcare sector in Europe recorded 522 deals worth EUR 39.9bn in the first half of 2026, a 56% increase in volumes from EUR 25.5bn, split on 572 deals, in 1H25, Mergermarket data shows.

As JPMorgan’s Healthcare Conference customarily kicked off the dealmaking year in San Francisco in January, spirits were high, just as they were one year earlier. Even the IPO market was firing on all cylinders.

“At the start of 2026, expectations were high: the strategic drivers were there and economic fundamentals looked good. Inflation and interest rates had stabilised, and stock markets were performing well. It was a conducive market to M&A,” HSF Kramer Partner Alan Montgomery said.

Then, the end of February saw the start of the Middle East conflict, which triggered oil price surges, inflation and uncertainty. For dealmakers, it was déjà vu from 2025, when everyone was ready to rock’n’roll at the start of the year, before Liberation Day pulled the amplifier plug at the start of April.

“The sentiment in 2Q26 was down. But it hasn’t been a bad 1H26 after all,” said Paul Tomasic, head of European Healthcare at Houlihan Lokey.

Crystal ball gazing 

Given the current state of affairs, Tomasic is not expecting a booming second half.

“I’m more positive on 2027. There are a lot of assets in PE portfolios that need to be sold,” he said.

Barring any more unexpected geopolitical events, and if the Iran conflict settles down, the expectation is that activity in the sector will continue to gain momentum, Montgomery said, adding that the strategic imperatives for M&A remain.

Pharma innovators are focused on building their pipelines, generic drug companies are investing in higher margin, complex therapeutics to drive growth, and private equity need exits and fresh deployment of cash. The healthcare sector in particular also continues to benefit from positive M&A macro drivers, such as growing demand due to an ageing population, a growing middle class and a new age of innovation, he said.

“Conditions at the beginning of 2026 were ripe for significant, sustained activity, and this could be the start of a multi-year boom,” Montgomery said. “But you have to brace for uncertainty – the war in the Middle East has shown this. People are understandably still a little cautious.”

Strategics drive deal activity

Strategic M&A outperforming sponsor deals is the main trend, Tomasic said, pointing to corporate carveouts like Orifarm’s sale of its VMS portfolio to Stada, and take-privates such as H.B. Fuller’s agreed USD 942m (GBP 715m) enterprise value takeover of UK-based Advanced Medical Solutions, as well as large-cap pharma players making significant acquisitions.

With 337 deals worth EUR 22.9bn, strategics accounted for 58% of total recorded deal volumes in 1H26, up slightly from 56% in 1H25. In euro terms, strategic volume increased by 61%, however.

“Strategics are able to weather the uncertainty and take longer term bets. It’s more difficult in this environment for the sponsors, who are more sensitive to short- to medium-term volatility,” Montgomery said.

Private equity firms are at the point in their lifecycle when it’s time to exit high-valuation investments made in 2020 and 2021. They are now attempting to create value in portfolio companies through acquisitions and synergies to be able to exit, Alantra’s Noat said. The continuation vehicle trend is still going strong, Noat and Tomasic both noted.

And even if private equity only participated in 42% of deals in 1H26, either on the sellside or buyside, total sponsor deal volumes rose 50% versus 1H25, to EUR 16.9bn, the Mergermarket data shows.

Deals are clearly taking longer to get done and require more attention, Noat said. Rather than taking a few months, it’s now very common for transactions to take up to 12-14 months, Noat and Tomasic concurred.

There are fewer formal, structured auction processes, and it is more common to choose perhaps a handful of potential buyers and only target those, Tomasic said.

“These days, it is not unusual to go bilateral and use the threat of the auction as leverage,” agreed HSF Kramer’s Montgomery.

Active subsectors

Among subsectors, drugs and pharmaceuticals has remained healthy, accounting for 40% of total healthcare deal volumes. A main driver here is the expiry of a number of patents for blockbuster drugs – expected to wipe out around USD 300bn in prescription drug revenues between 2025 and 2030 – which is spurring big pharma to acquire pipeline products to secure revenues, as widely reported.

Six of the 10 largest deals in 1H26 involved companies producing or developing medicines, of which four were strategic deals.

According to Montgomery, oncology, immunology, rare diseases, neurology, and cardiometabolic diseases continue to be attractive areas.

Within the pharma sector, there has been strong activity in generics, and the generics pipeline in Europe is looking interesting for 2H26 and early 2027, he said. Generics companies have ambitious growth targets, and want to move into high-margin spaces like biosimilars and specialty pharma, he added.

The largest announced healthcare deal in 1H26 was CVC and GBL’s EUR 12.6bn enterprise value offer to acquire full control of listed Italian pharmaceutical company Recordati, which has a large proportion of generic drugs.

The radiology, radiotherapy, and nuclear medicine space has also seen high activity, especially in France, Noat pointed out.

In France, imaOne has appointed ODDO BHF to find a new investor, and the same advisor is running an auction for a minority stake in Evesio, while in Germany, Goldman Sachs has been mandated to manage a sale process for Oyora later this year, as recently reported by this news service.

There is increasing interest in digital healthcare, as it is clearly helping governments to reduce public funding, and it is less expensive than inpatient or outpatient care, Noat said.

UK-based, tech-enabled homecare unicorn Cera Care has appointed Citi to explore strategic options, which could lead to a sale process in 2H26, as recently reported.

The AI risk to businesses has become even more evident in 1H26, and in healthcare M&A we may see a resurgence in care businesses that are not exposed to AI, Tomasic said. In 2H26 and beyond, there could be a renewed interest in social care platforms, he predicted.

“Sure, there is still a political and regulatory risk here, but if you see where mandates are handed out, it’s being more explored,” Tomasic said.

The pharma services space continues to struggle with the headwinds it has faced in the past few years, as reported, but according to Rusty Ray, also a managing partner at Alantra, high-quality and growing businesses are changing hands.

Generally, the healthcare M&A market is looking more positive compared to last year, his colleague Noat added.