Due to an aging population, longer life expectancy, and rising instances of chronic illnesses, more people around the world need new and lifesaving drugs, therapies, vaccines, and diagnostics.

To better care for these patients, pharmaceutical companies and research institutions continue to innovate—from developing novel treatments that address increasingly complex conditions to creating advanced equipment that can diagnose more medical disorders and diseases. As a result, multiple business models supporting these endeavors are seeing heightened demand.

The life science tools and diagnostics segment is a prime example, offering a substantial opportunity to invest in the growing pharmaceutical and diagnostic and research value chains. Below, senior professionals in our Healthcare & Life Sciences Group share what’s driving investor interest in life science tools and diagnostics and the sector’s key areas capturing attention.

Ongoing Innovation, Increasing Demand

Several factors are generating long-term demand across the life science tools and diagnostics ecosystem. “Pharma companies and research groups require ongoing R&D to develop the specialty therapeutics today’s aging patient population needs,” says Paul Hepper, a managing director.

Meanwhile, evolving biomedical research and AI technology are uncovering new targets and breakthrough drug modalities. These treatments, therapies, and inputs—such as cell and gene therapy, oncology, biologics, and GLP-1s—are all growing quickly and use a variety of consumables and equipment to develop.

In addition, increasingly common chronic diseases, expanding access to care, and a need for more personalized medicine are causing a greater demand for clinical diagnostic products that can identify the causes of more conditions and monitor patients during treatment.

“Combined, these themes support life science tools and diagnostics businesses that provide the necessary equipment, consumables, and services for drug development, testing, and research,” says Tyler Bradshaw, a managing director. In fact, the $160 billion market for life science tools and diagnostics is projected to grow at 11% CAGR through 2026.¹

“The sector’s broad range of in-demand solutions—from custom proteins and antibodies to lab products and analytical instruments—appeals to many different investors with expertise in bioscience, manufacturing, and more,” says Taylor Will, a director. “And rather than trying to identify the next high-growth drug or diagnostic device, investors can put their dollars behind the products and services used every day by pharmaceutical and research laboratories.”

Key Categories to Watch

Life science tools and diagnostics encompass a wide breadth of solutions needed by multiple appealing end markets, including pharmaceutical, clinical and healthcare, academic and government, and industrial and technology. Each of the sector’s core categories offers several in-demand products, strong growth opportunities, and significant M&A potential.

To discuss actionable opportunities across these areas, please contact our senior professionals at LifeScienceToolsandDiagnosticsInsights@HarrisWilliams.com.

Investing in Powerful Tailwinds

The life science tools and diagnostics market offers an opportunity to invest in powerful healthcare and demographic growth drivers, including an aging population, longer life expectancy, and rising incidence and diagnosis of chronic diseases.

“Increased healthcare spending and ongoing biopharma R&D activity are driving steady demand for life science tools and diagnostics, and we’re excited about the sector’s outlook,” says Bradshaw. “The pharmaceutical and diagnostic and research sectors will continue to grow and innovate, and they'll require a wide range of products, equipment, and services to develop new treatments and run critical tests.”

“Investors also have a substantial opportunity to build platforms with an expanded range of products and services that do more for end customers and capture a larger share of market demand,” adds Will.

To discuss the M&A potential across life science tools and diagnostics, please contact our senior professionals.

1. LEK, Avantor, IQVIA