On September 25, hundreds of healthcare professionals, investors, and industry changemakers gathered in London for McDermott Will & Schulte’s annual Healthcare Private Equity (HPE) Europe conference.

Keynote speakers Steph McGovern and Robert Peston, hosts of the hit UK podcast The Rest Is Money covering money, politics, and the markets, kicked off a high-impact event with remarks from the main stage at the Hyde Park-adjacent Peninsula hotel. Additional insights on European healthcare investing trends flowed from panels throughout the day, including industry leaders’ thoughts on life sciences developments, value creation, and developing exit strategies.

As HPE Europe’s official knowledge partner, McKinsey & Company delivered sharp insights into the position of private capital in 2025 and the outlook for healthcare deal activity. The teams at McKinsey and McDermott Will & Schulte have compiled the following key takeaways from the event.

Shifting pressures in European life sciences

• Manufacturing and R&D pipelines: European life sciences business have faced significant cost pressures and shifting global market dynamics over the past 12 months, impacting manufacturing and research and development (R&D) pipelines.
• Biotech innovation: Attendees noted that global competition in this space continues to intensify, with significant innovation emerging from multiple markets. This dynamic is influencing European strategies, particularly in areas such as oncology and cell therapy, where cost pressures and the pace of discovery are creating a more competitive environment.
• Investor areas of interest: Despite shifting pressures, there are strong companies coming out of Europe. Panellists noted that investors are focusing on rare diseases and the supporting pharma services, along with cardiometabolic diseases, oncology, and neuroscience. Immunology and inflammation, and particularly autoimmune disorders, also continue to see meaningful early-stage investment.
• Biosimilars and generics: Given the constraints on budgets and pace of global innovation, attendees noted that biosimilars and generics are increasingly interesting to European investors, along with pharma services companies that service generics. In uncertain times, many European life sciences companies are looking to diversify portfolios as a means of derisking.

Opportunities in the next generation of European healthcare

• Outpatient care: This is an area of healthcare investment that attendees noted has many positive drivers. For example, despite population growth, US hospitals have half the number of beds than they did 50 years ago. Outpatient surgery use has grown across specialties, most notably cataract surgery, with huge potential savings for the healthcare system. In the right context, private capital can help deliver more affordable and efficient care in outpatient settings.
• Staffing shortage solutions: Staffing shortages are a critical factor in the European healthcare market, with Europe currently short of 1.2 million medical staff, almost 20% of the total. Solutions that address these shortages can create value, with opportunities for investment in emerging technologies like AI and automation to make systems more efficient and free up workers to focus on patient care or other key priorities.
• Overcoming regulatory and reimbursement barriers: In a poll of HPE Europe attendees, 72% felt that regulatory and reimbursement barriers were the biggest challenge to healthcare investments across Europe today, followed by talent and workforce shortages (18%).
• Specialists and niche areas: Some of the most attractive investment hotspots today are in emerging niches like mental health, women’s health, AI-enabled care, and home care, according to 49% of the HPE Europe audience, followed by specialist clients like ophthalmology, fertility, orthopaedics, and dermatology (29%).

“European healthcare continues to draw strong interest from private capital. Investors seem especially focused on the growing importance of consumer-driven models and AI as a tool to spark innovation, improve care, and enhance portfolio efficiency.” – Michael Morley, partner in the London office of McKinsey

Financing: Creativity, certainty, and portability are front of mind

• Refinancing: So far, 2025 has been a busy year for the European financing markets, with a focus on refinancing activity. As we move towards Q4, more deals are starting to come to market, though processes are generally taking longer as the bid-ask spread remains an issue.
• Credit quality: For private credit funds, there is pressure to deploy and a need to find opportunities, but the overriding consideration is credit quality. Lenders are focused on documentation, structuring, amortisation, and getting to the table early in the event of difficulties. Truly understanding creditworthiness often comes down to having deep sector knowledge.
• Portability: In healthcare investment deals, portability from one deal to another has become a major point of negotiation. And those with the ability to commit to a deal faster than others often have a competitive edge.
• Private credit: This may continue to offer a more flexible solution to borrowers. Private credit is expanding its product suite to offer financing tools such as securitisation, equipment financing, or royalty financing. There is a growing focus on products that look to both cashflows and assets as collateral, and there may be yield to be found in lending into complexity.

“The current mood among healthcare investors and CEOs is one of cautious optimism. Financial conditions are improving, cost pressures are there, regulatory hurdles are there, but deals are getting done. We have been particularly active in Q3 and are excited about what is next.” – Ira Coleman, chairman of McDermott Will & Schulte

Conclusion

Conversation at HPE Europe was wide-ranging and diverse, reflecting the breadth and depth of the healthcare private equity opportunity set and the trends impacting capital flows.

We look forward to continuing these conversations with our clients and partners in the months ahead. Please reach out if you would like to explore any of these themes further.