The disclosed value of healthcare corporate M&A rose by 25% in 2019, to a new high of $541 billion. Two megamergers—namely, Bristol-Myers Squib acquired Celgene, and AbbVie bought Allergan—totaled $182 billion. We expect brisk deal activity to continue in the near future as public healthcare companies use acquisitions to grow revenue, which public markets continue to reward differentially relative to profit margin expansion. New Bain & Company analysis of S&P Capital IQ data shows that revenue growth accounts for 62% of total shareholder returns over the past five years, a far more important factor than profit margin expansion, which accounts for only 9%.
Nirad Jain and Kara Murphy colead Bain & Company’s Healthcare Private Equity practice.