In 2023, India emerged as the leading contributor to deal value in the healthcare sector within the Asia-Pacific region, as highlighted by a recent report. The country witnessed 22 healthcare deals with a cumulative value of $4.6 billion, slightly below the $4.7 billion recorded in 2022. The Asia-Pacific region, as a whole, saw an announced deal value of approximately $14 billion.
The annual Global Healthcare Private Equity and M&A report by Bain & Company pointed out that India attracted significant investments due to factors such as robust economic growth, a business-friendly government, a flourishing pharmaceutical manufacturing landscape, and a growing middle class. The report noted that India's expanding middle class is driving increased healthcare spending, fueled by rising disposable incomes, the prevalence of insurtech platforms, and the presence of private payers. Projections suggest a sustained growth trajectory in healthcare expenditure.
India's pharmaceutical sector, supported by government policies and skilled talent, holds a prominent global position in small molecule and generic manufacturing, satisfying half of the world's vaccine needs. The report acknowledged the potential shift in the sector with the emergence of biologics as impending generics, although China's expertise in microbiology gives it a competitive edge in generics.
Globally, the healthcare sector remained a focal point for private equity (PE) deal activity in 2023, reaching an announced deal value of $60 billion. Biopharma dominated the dealmaking landscape, accounting for 48% of global deal value, including six deals exceeding $2 billion.
Looking ahead to 2024, investors are expected to focus on transformative technologies like generative Artificial Intelligence (AI), innovative therapies such as glucagon-like peptide-1 agonists (GLP-1s), and continued investment in India as a significant healthcare capital destination.
India, traditionally a backend support for healthcare data and analytics companies targeting the US and Europe, has experienced a surge in direct-to-consumer digital health firms, particularly in fitness, wellness, telemedicine, and insurtech. Despite reduced deal activity, these Indian firms at the healthcare-tech intersection benefit from robust fundamentals, driven by a digitally-enthusiastic youthful population.
In conclusion, the report emphasized that successful investors in 2024 will need to evaluate a broader set of factors early in the process to establish higher confidence in value creation opportunities beyond traditional commercial diligence.
(With Agency Inputs)
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