reached around $ 14 billion . Investors seeking to manage geopolitical risk began to broaden their horizons , with India representing the largest share of announced deal value and continuing to see a longterm rise in biopharma-related activity . The nation is expected to host 22 healthcare deals in 2023 , with deal value reaching $ 4.6 billion , just below the $ 4.7 billion in ���� . India ’ s economic growth , businessfriendly government , pharmaceuticals manufacturing landscape , and thriving middle class continue to propel investment .
Within North America , 2023 deal values landed around ��� billion , with biopharma accounting for 25 % of deal activity and 54 % of deal value . Activity in provider businesses , which historically account for a large share of �S deals , slowed due to in�ationary and labor market pressures . Nonetheless , several provider deals closed across specialties such as oncology , orthopedics , and cardiology with the opportunity to drive ancillary expansions relatively insulated from broader healthcare and macroeconomic pressures .
In Europe , announced deal value fell approximately 44 % year over year from $ 25 billion in 2022 to $ 14 billion in ���� . Constrained credit markets and continued disruption from labor and cost in�ation dampened activity in the retail health and provider sectors . Europe also saw several announced processes that did not result in a transaction , as buyers and sellers failed to align on valuations .
“ Despite the slower start to 2023 , we see green shoots in the buyout market ,” said Nirad Jain , colead of Healthcare �rivate ��uity at Bain � Company . “ In 2024 , sponsors will need to establish higher confidence in value creation opportunities earlier and think beyond pure commercial diligence . Successful investors will evaluate a wider set of factors early in their process to create value quickly .”
Looking ahead to 2024 Across regions , investors will keep a few common themes in mind .
• �enerative A� to transform t�e �ealt�care sector . Generative AI promises to drive significant productivity gains , improve patient and provider experience , lower administrative costs , speed biomedical research and drug development , and help develop next-generation diagnostic equipment . Big technology companies are partnering with healthcare organizations to apply generative AI , and investors are deploying capital in nascent companies built around the tool . Bain found that about half of the top �� biopharmaceutical firms published press releases about generative AI in 2023 .
While traditional , analytical AI has been used in healthcare for many years , generative AI is distinguished by its ability to create new content , summarize and translate existing content , and , ultimately , to “ reason and plan .” Among investors , venture capital and growth equity funds have been deploying capital in companies built around generative AI as a core competency . Investors need to consider generative AI ’ s disruptive potential on portfolio companies and new investments and identify opportunities to take advantage of the technology .
• �ealt�care �� provides attractive upside potential �it� lo�er do�nside ris� . Despite deal volume dropping around 23 % from 2022 and buyout activity slowing , healthcare information technology ( HCIT ) continues to attract investment due to its ability to drive innovation and offset macro factors such as in�ation , labor shortages , and reimbursement headwinds .
Excitement around digitalization , following the outbreak of Covid-�� , resulted in a slew of portfolio companies still early in their holding periods . �espite the decline in transactions , HCIT represents 10 % of healthcare sector deal volume , seeing sizeable deals in 2023 . Looking ahead , providers will prioritize increasing their returns on investment , with revenue cycle management , clinical work�ow optimization , and patient engagement as top priorities for new investments .
• �ife sciences� navi�atin� t�e demand for �luca�on�li�e peptide�� a�onists ���P��s ). Sales in the GLP-1 class of medications surged in 2023 . Looking ahead , three implications confront PE investors , given the potential market for these drugs . First , demand for inputs or services supporting the manufacturing of GLP-1 therapies will likely increase . Second , an expanded ecosystem to support patients will be needed , including services to identify , qualify , and enroll eligible patients , as well as physical or digital health platforms to support patients on these therapies . Finally , investments with business models based on high rates of obesity could see long term growth projections decline .
The press release was provided by Bain & Company .
We suspect 2024 will be a year of playing catch up , as buyers and sellers work toward bridging the valuation gap .
GlobalHealthAsiaPacific . com ISSUE 6 | 2023
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