Healthcare and life sciences predictions: what will drive success in 2025?

Our Head of Healthcare, Suneel Gupta, and Head of NHS, Clive Makombera, highlight the key themes dominating the healthcare sector in 2025.

Funding and investment 

The average deal value of private equity buyouts in the healthcare industry was £68m in 2024, over double the average of £32m in 2023, according to Pitchbook. But while deal values jumped from £3.5bn in 2023 to £6.8bn in 2024, the number of deals fell from 110 to 99 in the same period.

The healthcare industry has long been viewed as a robust option for investors, but high interest rates, rising costs of debt, and uncertainty have made investors more risk-averse, favouring larger, established businesses with a proven track record. With immense pressure on the NHS, it is clear that support from the private sector is needed to ease the burden. As interest rates slowly come down, there’s renewed optimism that we will see an increase in investment activity in 2025 and beyond, but with greater focus on robust due diligence. As high-quality data is increasingly important during the deal process to drive value and build investor confidence, deals may take longer to complete.

Tighter margins and workforce pressures 

A significant headwind for the healthcare sector is the increase in employers’ National Insurance contributions (NIC) from April 2025 announced in the Autumn Budget, along with a 6.7% rise in the National Living Wage (NLW). As health and care organisations often depend heavily on staff paid the NLW, this places heavy strain on squeezed margins, and businesses will need to consider strategies to mitigate rising costs.

To address the skills shortage in the sector, healthcare leaders will need to consider transforming their care models and redesigning jobs. Train, reform and retain are key pillars of the NHS Long Term Workforce Plan. The sector will need to continue to work on improving culture, leadership and wellbeing along with significantly expanding domestic education, training and recruitment.

Increased collaboration

in Q2 2024, the second highest total on record. The NHS already collaborates with the independent sector, which will only increase further as the government seeks to reduce waiting lists. The private sector plays a huge role in supporting the NHS, delivering care and investing in new products and technologies. With resources in the NHS significantly constrained, harnessing the skills, innovation, and capacity of the private sector will be key in easing this pressure. But investment and collaboration within the sector must be done carefully, so patient outcomes are not compromised.

Healthcare providers are increasingly partnering with technology companies to develop tools that can better predict clinical outcomes, enhance radiological imaging, and optimise resources. AI and other technologies offer the potential to personalise patient interactions, streamline administrative and care processes, and free up clinicians to focus on complex procedures. Sustained collaboration will be crucial in harnessing the potential of AI to transform healthcare delivery.

Data and AI

Advanced data sharing and increased digital maturity are crucial in making the NHS fit for purpose. AI also has the potential to transform healthcare by optimising both administrative functions and care delivery with improved care quality, enhanced patient experience, and greater clinician satisfaction. Technology can be hugely powerful in driving down costs while improving productivity and diagnostic capability and quality. However, as more collaboration and data sharing takes place between the NHS and private sector, and the rise in cyber-attacks across the sector, it is more important than ever that organisations adopt solid cyber security foundations.

Social care

The lack of clear plans for social care will impact the government’s planned shift from hospital to community and hospitals will remain overwhelmed. Government reforms should focus on funding, improving the use of data and technology in the sector, better integration with the NHS, and making adult social care a more attractive career.

To discuss the impact for your healthcare organisation, please contact Suneel Gupta or Clive Makombera.

UK life sciences industry: funding, collaboration and AI adoption

Our co-leads of life sciences, Laragh Jeanroy and Graham Bond, highlight three key themes dominating the sector in 2025: funding, collaboration and AI adoption.

Tighter funding in UK life sciences

The value of private equity (PE) buyouts in the UK life sciences sector jumped from £778m in 2023 to £5.3bn in 2024, according to Pitchbook. However, the number of deals has remained fairly steady over the years, increasing from 10 in 2023 to 13 in 2024. A large proportion of PE and venture capital (VC) investment in the sector focused on traditional pharmaceuticals last year.

High interest rates over the past year, and therefore, the higher cost of debt, has meant PE and VC have been more risk-averse and opted for larger businesses that are further along in the life cycle with a proven track record. Investors are carrying out thorough due diligence so they can be certain the business is robust, which is highly dependent on the quality of data available. With positive direction from the government as it looks to set out an Industrial Strategy, prioritising high-growth sectors including life sciences, plus interest rates likely to fall further, this points towards a more positive funding and investment environment, which earlier-stage life sciences businesses should benefit from.

When looking at public markets, Q3 2024 was the ninth consecutive quarter with since 2022. The continued lack of IPO activity highlights clear challenges in accessing public markets, albeit we may start to see early signs of recovery in the latter part of 2025.

Partnering and collaboration

Partnerships and alliances with external organisations have always been a vital route to growth for the life sciences sector. We expect collaboration to be key in the coming year, as this can bridge the gap in funding and enable biotech companies to develop a number of additional assets. The pharmaceutical industry in particular is increasingly on the hunt for drugs that can be widely deployed, but this requires undertaking larger trials which need more funding, resource and technological capabilities. A common route to access these resources is to partner with experts in these areas that share similar objectives.

Data and AI

As life sciences businesses grow and evolve, so too does the complexity and use of data. Carrying out larger trials means handling larger data sets, so many businesses are (and will) inevitability turn to AI to help efficiently analyse and process data. But to ensure long-term success, it’s essential that they implement the necessary measures to protect research and safeguard investor funds and confidence. The life sciences sector holds a wealth of intellectual property and sensitive patient data, making it a prime target for cyber-attacks. This risk will almost certainly grow, particularly as businesses in the sector increasingly collaborate with third parties, and as cyber criminals become more sophisticated.

To discuss the impact for your life sciences business, please contact Graham Bond or Laragh Jeanroy.