Martin Anderson, Director and Co-Founder of Carrot Recruitment, considers the factors that have shaped the challenging market conditions over the past 18 months, and discusses how an uprise in investment could bring a brighter future to Life Sciences in 2024.
The calendar year 2023 was certainly a challenging one for the Life Sciences (LS) industry, and we’ve all had to navigate stormy seas for the best part of 18 months. But what were the key factors at play here and importantly how do we believe the market will react as we move into 2024?
Should we be optimistic about an upturn in activity and a return to the good times?
Looking Back at the last 18 months in Life Sciences
It is widely accepted that the LS industry benefited from an unexpected boom during and for some time following the COVID-19 pandemic. Investment was quickly redirected to where it was needed, and much activity was generated as a result. A consequence of that though, was that other investment streams in life science were put on hold at that time. Business activity was initially quite strong once the pandemic was assumed to be under control, however, investment has not returned to pre-pandemic levels. Several national and global factors have destabilised confidence. Post-Brexit market adjustments and caution, the invasion of Ukraine in Feb 2022, and the UK’s tumultuous mini-budget in September 2022. Macroeconomic instability ensued.
Inflation and interest rates rose to levels that have not been seen for many years which discouraged investment, that all but stopped into early-stage companies in the LS industry. Merger & Acquisition (M&A) activity dropped and the whole eco-system suffered.
Looking Forward to the future of Life Sciences
What of the next 12-24 months? Can we be confident of a return to healthier investment and business activity within the Life Science Industry?
Our Non-Executive Director, Geoff Dobson, a seasoned LS professional has attended several industry and investor conferences in the past 3 months. From his experience and from the connections that we have as a business within the investor community on both sides of the Atlantic, we have gathered some useful insights into what is predicted might happen from here.
Investors and large corporates are now sitting on substantial amounts of capital. Many are looking at opportunities to deploy this as we move into 2024 with a more stable economic outlook and importantly interest rates have stabilised. There is something of a consensus among the investors we have spoken with that Q1 of the 2024 calendar year will remain quiet, but some movement is expected to build in Q2 as more Private Equity backed M&A activities commence.
Big Pharma may look to expand pipelines by acquiring Biotech businesses, negotiating licensing deals, and exploring other ways to develop or acquire innovative technology and well-developed intellectual property. More venture capital investment is anticipated in the second half of 2024. And we may see the types of significant deals that will help to inspire further confidence in the market and the general ecosystem.
All of this suggests that as investor confidence returns, activity should increase across the sector and demand for consultancy services and other suppliers across the product lifecycle will increase.
I’m not sure about you, but I will certainly be glad to get my feet back on dry land!
Key Areas for Discussion
- What is your opinion on the outlook for 2024?
- What do you feel are the game changers with the biggest impact on the buoyancy of LS?
- What would you control or change if you could?
- Will the 2024 election impact recovery in any way within LS?
Further Reading
Our sister company, Compass Executives recently sponsored an investors’ event in London hosted by the EHIA (European
Healthcare Investors Association) – at which there were over 50 leading investment firms present.
If you would like a copy of the EHIAs latest report, please email me directly.
Furthermore, Geoff Dobson is compiling a report to summarise findings from the various investor conferences which he has
attended - again I’d be happy to share this with you when completed if you let me know if that is of interest.
Contact:
martin@carrotpharma.co.uk | +44 (0)7786 024 142
