PwC: AI and Digital Innovation to Transform Healthcare

The healthcare sector is experiencing a technological revolution that is fundamentally altering how companies approach mergers and acquisitions (M&A).

According to PwC's healthcare M&A outlook report, dealmakers are entering 2026 with a renewed focus on digital capabilities, artificial intelligence (AI) and tech-enabled care models that could transform the industry's future.

After two years of economic uncertainty and regulatory changes, the M&A environment is preparing for acceleration.

Buyers are increasingly prioritising resilient assets and consumer-centric, technology-driven care solutions, while global innovation centres are reshaping competitive dynamics across the sector.

Leading organisations are making strategic portfolio decisions that position them for a rapidly evolving healthcare ecosystem increasingly defined by digital innovation and AI integration.

Digital transformation drives deal strategy

By 2035 more than US$1tn of global healthcare spending is expected to pivot towards prevention, personalised care, home-based services and digital ecosystems, according to PwC's report. This shift is fundamentally transforming value pools across every sector.

"M&A remains the fastest and most effective way to modernise operations, accelerate scientific and digital innovation and build the capabilities required for prevention-led, personalised and care-anywhere models," the company states.

Successful deals will leverage differentiated data, evidence-based innovation, AI-driven productivity and clear pathways to long-term value creation.

In this competitive and globalised landscape, early and decisive action could prove critical for positioning in the next era of healthcare.

Companies that delay strategic investments risk falling behind competitors which are already building integrated digital platforms and AI capabilities. The window for securing premium assets with established technology infrastructure is narrowing as competition intensifies.

"In 2026, the most successful deals will be the ones that seek to shape the future of healthcare, creating a more resilient, tech-enabled, affordable and patient-centred health system," says Jaymal Patel, Global Health Industries Deals Leader, PwC UK.

AI-powered innovation accelerates development

Digital health, including AI-driven drug discovery, ambient scribing and virtual care, is becoming essential for efficiency and addressing workforce shortages.

China is increasingly reshaping the pharmaceutical innovation map, now hosting roughly one-third of global clinical trials and ranking as the world's second-largest developer of new medicines.

Regulatory reforms there have helped to accelerate approvals, lower research and development costs and enable rapid transitions from discovery to human trials. This is attracting Western firms seeking partnerships and licensing opportunities.

This has fuelled cross-border deal activity, with traditional licence-out agreements and NewCo structures allowing Chinese biotechs to access global development while retaining domestic value. This is exemplified by Pfizer's PD-1/VEGF bispecific deal with 3SBio and Hengrui Pharma's partnership with Braveheart Bio.

In 2025 China's outbound licensing activity for innovative drugs reached unprecedented levels, with total disclosed deal value climbing to US$135.6bn (USD). This included US$7bn in upfront payments across 157 transactions, according to PwC's report.

Technology enables strategic megadeals

Global health industries M&A rebounded strongly in 2025, with total deal values rising 46% year on year despite a 5% decline in overall volumes, according to PwC's report. This underscores a shift towards larger, more strategic transactions.

The surge was driven by 11 megadeals valued at more than $5bn, up from just three in 2024. This highlights renewed confidence in transformative scale plays.

According to PwC's report, while each region accounted for roughly one-third of global deal volumes, Asia Pacific grew the most, up 12% in 2025. This compared to a 5% increase in Europe, the Middle East and Africa and a drop of 23% in the Americas.

Much of the growth in Asia Pacific's M&A activity was due to a 53% increase in China dealmaking. Investors were attracted to the country's innovative drug development landscape.

The Americas continued to dominate in terms of deal value, representing nearly two-thirds of total deal value and nine megadeals.

Looking ahead to 2026, M&A is predicted to serve as a catalyst for business model reinvention across biopharma, medtech, health services and digital health. This will enable companies to unlock digital capabilities, accelerate innovation and reposition around consumer-centred care.

Cross-border partnerships are likely to become increasingly important, with divestitures complementing acquisitions as portfolios are reshaped for a tech-driven future.