India’s healthcare sector attracts $4.6 billion in deals, leads Asia-Pacific growth: Bain & Company report

India is emerging as a key player in the healthcare sector in the Asia-Pacific, attracting significant investments and driving growth across various sectors, per global consultancy Bain & Company’s 13th annual Global Healthcare Private Equity and M&A report. 

The Asia-Pacific region witnessed deals worth about $14 billion, with India representing the largest share of the announced deal value. The country continues to experience a long-term surge in biopharma-related activity, according to the report. 

The nation is set to host 22 healthcare deals in 2023, with deal value reaching $4.6 billion, closely trailing the $4.7 billion recorded in 2022. This robust performance highlights India’s economic strength, business-friendly government policies, and a pharmaceutical manufacturing landscape that holds a top-three global position in small molecule and generic manufacturing, per the report. 

The report states that the burgeoning middle class in India is playing a pivotal role in catalysing a significant surge in healthcare expenditure. This uptick is fuelled by rising disposable incomes, the proliferation of insurtech platforms, and the active presence of private payers, the report said. Projections indicate a sustained trajectory of growth in healthcare spending, reflecting the increasing importance of the sector in India's evolving economy, it said. 

India’s pharmaceutical sector, strengthened by government policies and a pool of skilled talent, stands at the forefront of global pharmaceutical manufacturing. The country satisfies 50% of global vaccine needs and holds a strategic position in small molecule and generic manufacturing, the report pointed out. 

Private equity investors, including Advent International, Carlyle, and PAG, have seized opportunities in this growth, expanding into pharma services like Contract Development and Manufacturing Organizations (CDMOs) and Active Pharmaceutical Ingredients (APIs), the report further said. 

The emergence of biologics as impending generics indicates a potential shift in the sector. However, China's dominance in generics, leveraging expertise in microbiology, remains a competitive edge for the region, the report said. 

While historically serving as the back end for US- and Europe-focused healthcare data and analytics companies, India has witnessed a recent surge in direct-to-consumer digital health enterprises, the report said. The growth is particularly notable in fitness, wellness, telemedicine, and insurtech. Despite a temporary reduction in deal activity, Indian firms at the healthcare-tech nexus are benefiting from robust fundamentals, driven by a digitally enthusiastic youthful population, it said. 

The report also mentioned that in 2023, the global healthcare sector remained a focal point for private equity (PE) deals, reaching a substantial $444 billion in buyout value. Despite challenges like higher global interest rates, inflationary pressures, and geopolitical uncertainty, biopharma dominated dealmaking, contributing to 48% of the global deal value. It is pertinent to note, six deals exceeded $2 billion. Looking ahead to 2024, investors are expected to focus on the transformative potential of generative AI, new therapeutic modalities, including glucagon-like peptide-1 agonists (GLP-1s), and positioning India as a significant destination for deploying healthcare capital at scale. 

“Compared to private equity dealmaking globally, we saw relative resilience in healthcare deal making last year. We suspect 2024 will be a year of playing catch up, as buyers and sellers work toward bridging the valuation gap. Innovation and technology will continue to be at the forefront of investment themes across the value chain. Investors should carefully consider the evolving role of AI, the impacts of GLP-1, and the growth of value-based care on their portfolio companies and new investments,” said Kara Murphy, co-lead of Healthcare Private Equity at Bain & Company. 

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