Global Healthcare Private Equity soars to US$115B in 2024

UAE – The global healthcare private equity (PE) market witnessed a remarkable resurgence in 2024, with total deal value reaching an estimated US$115 billion, the second-highest figure on record.

This growth was fueled by a rise in large-scale transactions, with five deals exceeding $5 billion, compared to just two in 2023 and one in 2022.

A new report from Bain & Company highlights this strong rebound, emphasizing the critical role of biopharma and healthcare IT in driving investment activity.

North America maintained its dominance, accounting for 65% of total deal value, while Europe (22%), and Asia-Pacific (12%) followed.

Europe saw a surge in healthcare PE activity, with deal volumes surpassing 2021 levels.

This uptick was largely due to smaller transactions in the year’s first half and a growing focus on scalable assets in biopharma and medtech.

A more stable economic environment has also fueled optimism for continued momentum.

In contrast, deal volume in Asia-Pacific declined 49%, mainly due to a slowdown in China.

However, investment is shifting to other regional powerhouses like India, Japan, and South Korea, where economic expansion and demographic shifts are driving healthcare demand.

Biopharma emerged as the top-performing sector, driven by several megadeals. However, while total deal value increased, the number of transactions declined due to challenges such as pricing disagreements and reduced spending in pharma services.

Middle Eastern sovereign wealth funds are showing growing interest in the sector, as it aligns with national healthcare strategies.

Meanwhile, healthcare IT experienced a major resurgence, with investments flowing into efficiency-boosting provider solutions, advanced analytics for payers, and upgraded IT infrastructure for biopharma companies.

The sector’s strong performance reflects the industry’s push toward digital transformation and regulatory compliance.

Hatim Jamal, Chief Financial Officer of Bupa Arabia, emphasized the positive shifts in global healthcare PE, particularly in mid-market funds and increased investments in pharmaceuticals and health IT.

He highlighted the growing role of Middle Eastern sovereign wealth funds, which see healthcare as a strategic sector aligned with national economic goals.

In Saudi Arabia, rising demand for private healthcare services is being driven by population growth and health insurance sector reforms.

Additionally, the country’s Vision 2030 initiative is accelerating efforts to modernize hospitals, improve infrastructure, and expand digital healthcare solutions.

Bupa Arabia is committed to supporting innovation and digital transformation to ensure long-term sustainability in the sector.

Mid-market healthcare-focused funds have continued to outperform, raising $59 billion since 2022, a 40% increase compared to the previous three years.

These funds have broadened their investment strategies, expanding beyond biopharma and medtech to include healthcare IT and provider services.

Another notable trend is the rise of carve-outs, where PE firms acquire divested assets from public companies looking to boost shareholder value.

 This strategy has allowed investors to unlock hidden potential in underutilized healthcare assets.

Despite strong investment activity, exit deal volumes have dropped by 41% from their 2021 peak. Factors such as longer holding periods and high interest rates have made exits more challenging.

As a result, PE firms are embedding value-creation strategies into their investment approach to maximize returns.

Experts predict sustained growth in healthcare PE, driven by continued interest in scalable assets and emerging opportunities in biopharma, healthcare IT, and carve-outs.

Kara Murphy, Bain’s Co-Leader of Healthcare Private Equity, noted that the market made a strong comeback in 2024.

Mid-market funds and European investments are expected to remain key areas of focus in the coming year.

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