Nelson Advisors partners interviewed by Mergermarket - 'AI fuels European MedTech M&A despite regulatory uncertainty'

Nelson Advisors partners Lloyd Price and Paul Hemings interviewed by Mergermarket for their 'AI fuels European medtech M&A despite regulatory uncertainty' story (https://mergermarket.ionanalytics.com/content/1004331406?source=news)

Europe’s medtech M&A activity is making a comeback as buyers clamour for artificial intelligence (AI) assets amid regulatory fragmentation and uncertainty.

“With AI as the enabler, there’s a feeling companies don’t want to get left behind. You can’t sit on your laurels,” Lloyd Price, partner at the European healthtech M&A advisor Nelson Advisors, told Mergermarket.

One crucial consideration is the EU’s recent Medical Device Regulation and In Vitro Diagnostic Regulation, Paul Hemings, also partner at NelsonAdvisors, said. These measures have tightened requirements for clinical evidence, documentation, and post-market surveillance compared to before, often making development more costly and slower, he said.

Despite the challenges, European medtech is attractive for M&A as healthcare is seen as more resilient against macroeconomic headwinds compared to other industries, Price said.

Sector end customers, which include insurers and public health systems, are generally reliable to work with, and M&A is often the best way to enter the rigid world of procurement of equipment by national healthcare services, Price added.

Cardiovascular disease therapies, robotics and AI drive dealmaking

One of the top killers in the world, cardiovascular disease is one of the hottest therapeutic areas for medtech M&A, Price said, adding that wearables and remote monitoring devices are booming with an increasing focus on prevention.

Another high-interest area is the use of robotics in pharmacies and remote surgery, Price said.

The pipeline of expected deals in this space includes UK remote surgery developer CMR Surgical, which has reportedly engaged advisers to manage a potential sale of the business.

The main buyers in Europe’s medtech scene include strategics such as Medtronic, Johnson & Johnson, and Philips, which aim to diversify their core revenue streams, Hemings said. Private equity (PE) firms active in the space include Gilde Healthcare and Apposite Capital, he added.

AI-powered startups have also become a big focus for investors, accounting for 65% of total equity funding in 1H25, even though only 40% of global healthcare startups currently deploy AI, according to Hemings.

Strategics, including imaging specialists Siemens and Philips, have an appetite for AI to enhance image analysis and clinical workflows, Price said. Other buyers are tempted by the potential of AI to speed up the processing of notes and recordings in a clinical environment, he said.

One recent example of the increasing AI focus is the buyout of the UK ophthalmology company Optegra by the French eyewear company EssilorLuxottica in May this year as part of a mission to power its procedures with AI, Hemings said.

Meanwhile, PE buyers have previously aimed to merge companies into AI-based platforms or acquire next- generation software-as-a-service (SaaS) platforms, Hemings said.

String of pearls approach amid tougher regulations

Large buyers in medtech are increasingly branching out from big deals with late-stage companies to a series of smaller acquisitions in a “string of pearls” strategy, Hemings said.

Examples include the US giant Johnson & Johnson MedTech’s acquisitions of Abiomed (US), Laminar (US), Shockwave Medical (US) and V-Wave (Israel) in 2022, 2023, 2024 and 2024, respectively, according to a report by Nelson Advisors.

This trend reflects a desire to avoid the risks of a huge buyout, including the costs of integration, rising staffing costs, uncertainties from fluctuating tariff policies, and regulatory fragmentation between different geographies, Price said.

While the EU is attempting to streamline its regulatory and reimbursement processes, this has not yet been achieved and overseas players are thinking twice about operating in Europe, Pashazadeh said.

However, these changes also drive M&A demand for targets with expertise and a proven track record in navigating Europe’s regulatory environment, Price said.

“At the end of the day, we're not really in the technology business; we're really in the business of behaviour change and trust,” he said.

by Jonathan Smith with analytics by Kunal Samnani, Mergermarket

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