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An optimistic growth outlook in Asia-Pacific
An evolving macroeconomic and geopolitical landscape has fueled investment diversification to India, Japan, and South Korea
Private equity( PE) firms are expanding their investments beyond China into the broader Asia-Pacific region, where deal value rose at a roughly 21 % compound annual growth rate( CAGR) since 2016( see Figure 1). However, deal volume in the region has declined significantly since 2023, due to a variety of factors: a slowdown in dealmaking in China( which accounted for 44 % of the Asia-Pacific region’ s healthcare PE deal volume last year), a shift in volume to India, Japan, and South Korea( see Figure 2), and increased competition from strategic players with an appetite to pursue mergers and acquisitions( M & A).
India, in particular, is emerging as a compelling alternative to China for dealmaking, given its expanding middle class fueling healthcare demand and its strong economic growth. Japan and South Korea are also seeing accelerating deal volume boosted by favorable macroeconomic factors and aging populations with growing healthcare needs. Together, these three markets present PE firms with prime opportunities to diversify portfolios and ride stronger underlying conditions in the region’ s evolving healthcare landscape.
India continues its ascent In 2024, India emerged as the largest market in the region by volume, accounting for 26 % of the Asia-Pacific region’ s total deal volume. India also appears more resilient to deal downturns than other countries in the region, with buyout volumes dipping only 18 % from 2023, vs. a nearly 49 % drop across Asia-Pacific overall. India’ s buoyant capital markets and favorable economic growth outpaced expectations at about 7 % GDP growth in 2024. Successful PE exits with strong returns, such as Advent International’ s $ 1.6 billion sale of BSV Group to Mankind Pharma, have also validated India’ s buyout market, making it more attractive for future investment.
India’ s strong growth is projected to continue, with healthcare spending expected to reach $ 320 billion by 2028. Investments have focused on the provider and related services space and biopharma and related services, with a sharper focus on provider deals over the past two years( see Figure 3). In the provider space, investments have gravitated to hospitals, clinics, and supporting services. Among some of the notable examples are Morgan Stanley’ s acquisition of a minority stake in the Hyderabad Institute of Oncology; Blackstone’ s longerterm buy-and-build strategy with Care Hospitals( acquired in 2023), which will include multiple tuck-in acquisitions; and Advent’ s investment in Apollo Hospital Enterprise’ s digital health platform, Apollo 24 | 7. Meanwhile, in biopharma, investors have centered on contract development and manufacturing organizations( CDMOs), contract manufacturing organizations( CMOs), and generic pharma manufacturers.
SOURCES: DEALOGIC; AVCJ; BAIN ANALYSIS
68 ISSUE 2 | 2024 GlobalHealthAsiaPacific. com