Vital Signs: A Pulse Check on the Healthcare Market
DNB // Back Bay | Investment Banking Division
With Contributions by Greg Benning, James Cirenza, Jonathan Gertler, MD, Anne Grabe,Dan Hochstadt, Vasilios M. Kofitsas
Vital Signs: A Pulse Check on the Healthcare Market
Political Economy Update – Markets, Policy and Deal Activity
This report from our investment banking team provides an overview of the current macroeconomic environment in the US markets, highlighting recent policy and regulatory updates. It focuses on the current administration's overhaul of US healthcare policies and its impact on the life sciences ecosystem. Additionally, it examines healthcare market activity and how these factors influence deal-making in both the US and Europe.
Executive Summary
MACRO
US markets enter Q2 2025 recalibration phase amid policy constraints and global de-risking
April opened with market dysfunction as trade war headlines challenged optimistic forecasts for 2025 US growth and S&P 500
Treasury Secretary Bessent’s proposed 90-day pause helped stabilize sentiment and reopen capital markets
Business activity and inventories were front-loaded in anticipation of potential tariffs
US economic growth is normalizing following four years of strong consumer demand, five years of aggressive fiscal policy, and persistent inflation above target
Global investors, including European institutions and US hedge funds, sharply reduced US equity exposure, reversing most Q4 2024 inflows
Institutional liquidity has improved, and a lighter equity issuance calendar supports a more constructive outlook for Q2 2025
REGULATORY
Current administration is driving a full-spectrum overhaul of US healthcare policy, reshaping the life sciences ecosystem through budget cuts, leadership churn, tariffs, and pricing reform
Budget cuts: Layoffs and budget cuts to the FDA, NIH, and CDC may delay regulatory timelines and dampen scientific innovation
Tariffs: Experts warn that pharma and medical device import tariffs could disrupt supply chains, pressure earnings, and raise prices
Development: Policy efforts aim to accelerate rare disease R&D, streamline generics approvals, and integrate AI into drug reviews
Pricing: Executive orders aim to reduce drug prices, but timelines, implementation, and impact remain uncertain
Outlook: Policy shifts have made institutional investors more cautious, while big pharma stays active in deal making—albeit with greater selectivity and discipline
HEALTHCARE MARKET ACTIVITY
US & Europe healthcare deal making in 2025 started the year on a promising note due to a renewed sense of optimism for the sector; however, activity soon faded in the face of tariffs, budget cuts, and regulation uncertainty
M&A: Rebounded vs. lows of H2 2024 with fewer but larger transactions as acquirors focused on commercial-stage companies
Licensing: Skewed toward discovery / pre-clinical assets with lower upfront payments
IPO: Raised $2.5B across 13 offerings (half of which were commercial) with mixed post-listing performance before the market stalled
Follow-on and PIPE/RDO: Proceeds declined ~38% (follow-ons) and ~37% (PIPEs / RDOs) in Q1 2025 vs. Q4 2024, highlighting the challenges in raising capital in this environment
Venture: Remained flat on a YoY basis at $5.4B thanks to larger average round sizes but seed financing plummeted to record lows
Greg Benning
Head of Investment Banking
Back Bay Life Science Advisors
Jonathan Gertler
Chief Executive Officer
Back Bay Life Science Advisors
Vasilios Kofitsas
Managing Director
Investment Banking
Back Bay Life Science Advisors
James Cirenza
Managing Director
Equity Capital Markets
DNB Markets, Inc.
Anne Grabe
Global Head of Healthcare
DNB Corporate Banking
Dan Hochstadt
Managing Director
Head of IBD Americas
DNB Markets, Inc.
Crystal Hsu
Associate Director, Investment Banking
Back Bay Life Science Advisors
Andrew Davis
Senior Analyst, Investment Banking
Back Bay Life Science Advisors
Ethan Boultinghouse
Associate
DNB Markets, Inc
Krishna Kandala
Senior Associate
Back Bay Life Science Advisors
Nilay Neelaveni
Associate
DNB Markets, Inc.
About the DNB // Back Bay Partnership:
The DNB//Back Bay Partnership was created to drive global healthcare growth and innovation. The DNB-Back Bay Partnership provides a full range of strategic advisory and financing capabilities along the full continuum of life science and healthcare company development. The DNB-Back Bay Partnership is a marketing term referring to a strategic agreement between DNB Markets, Inc. and Back Bay Life Science Advisors. More information about the DNB-Back Bay Partnership can be found here.
Securities products and services are offered in the U.S. through DNB Markets, Inc., a U.S. registered broker-dealer and a separately incorporated subsidiary of DNB Bank ASA. DNB Markets, Inc. is a member of the Financial Industry Regulatory Authority (“FINRA”) and the Securities Investor Protection Corporation (“SIPC”). Securities products and services are offered in the European Economic Area through DNB Carnegie.