2024 Diagnostic M&A Market Trends with Expectations for 2025
The diagnostics industry is gearing up for a potentially busier year in 2025 after a relatively quiet 2024 in terms of mergers and acquisitions. The past year saw only 20 full-company mergers or acquisitions, a significant drop from the heights of M&A activity seen during the COVID-19 pandemic in 2020 and 2021. Notably, no deals in 2024 exceeded $1.0 billion in value, although there were a couple of significant transactions, such as Quest Diagnostics’ acquisition of Canadian firm LifeLabs for about $937 million and Tempus AI’s $600 million purchase of Ambry Genetics.
When factoring in asset acquisitions, the total number of transactions in 2024 increased to 37, with companies like Laboratory Corporation of America and Quest Diagnostics acquiring various laboratory assets. Despite the impact of COVID-19 on the market, there is optimism for the year ahead.
Christoph Brandenberger, a managing director at investment bank Brown Gibbons Lang & Company, noted that the diagnostics industry has had to adapt post-pandemic. Investors now focus on profitability and sustainability, rather than just revenue growth. This shift comes after a period of high valuations and venture capital activity during the peak of the pandemic.
Looking ahead to 2025, Brandenberger is hopeful for increased activity in the diagnostics M&A market. Companies have taken steps to position themselves for growth, with some undergoing management changes and strategic shifts in their business plans. New CEOs at companies like Agilent Technologies, Bio-Techne, and QuidelOrtho may drive further dealmaking in the coming year.
While expectations are tempered for 2025, industry experts believe there will be a moderate increase in M&A activity as the market continues to recover from the impact of the pandemic. Regulatory changes under the new administration and advancements in technology, particularly in artificial intelligence, are expected to influence dealmaking in the diagnostics sector. As companies adapt to a post-COVID world, the stage is set for a potentially more active year in 2025.
