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Private Equity and Venture Capital Investments in Global Healthcare Industry

  • February 2014
  • 64 pages
  • Frost & Sullivan
Report ID: 2043233


Table of Contents

Regulations and Returns are Key Determinants of Investor Activity

Executive Summary

Key Trends in Pharmaceutical and Biotechnology Industry The global healthcare industry is witnessing many trends that can affect the industry significantly. The increasing aging population in developed countries and the shift in disease pattern in developing countries are key trends that are likely to change the business model of healthcare. The increasing power of middle class in developing countries and increasing consumerism in healthcare are expected to change the way healthcare is delivered in the near future. Key Trends in PEVC Investment
- The healthcare industry witnessed a decline in global private equity and venture capital (PEVC) deals, which is reflected variedly among the sectors comprising healthcare.
- There was global shift in the focus of investors toward healthcare providers sector.
- The deal value analysis showed a preference for mid-sized deals in both PE and VC investment among most of the sectors in healthcare.
- Geographic analysis revealed the United States representing the largest share of deals followed by Europe.
- The PE-backed mergers and acquisitions occupied the largest share among exit routes. Sponsor-backed deals increased between 2012 and 2013.
- The strong comeback of Initial Public Offering (IPO) in 2013 presents a positive outlook for investment in the healthcare industry.

Objectives of the Study

To analyze the PEVC trends in the global healthcare industry (Pharma & Biotech).
To identify the key PEVC trends in the industry based on deals across sectors and nature of buyers
To conduct a financial analysis of the deals with respect to investment characteristics
To identify, compare, and assess sectors that are current and potential hubs for PEVC activity
To arrive at strategic conclusions on the basis of the key trends observed

Analysis Includes

- Across sectors*
- Type of buyers
- Type of sellers
- Stages of investment
- Key therapeutic areas
- Key geographies*

Who Will Benefit?

- Healthcare providers
- PE
- VC investors
- Fund managers
- Retail investors
- Sovereign wealth funds
- Hedge funds
- Insurance funds and other members in the investing community

Key Trends in Global Healthcare Industry

Aging Population
The steadily increasing aged population in developed countries will directly affect the increase in healthcare utilization. The incidence of non-communicable diseases increases with age; moreover, these life style diseases requires life-long medications. Expensive treatments such as cancer therapies will be more frequent because the cancer risk increases with age. This increased burden of healthcare costs has made governments across the world, especially in the developed countries, to go for reforms in legislation to contain healthcare costs.

Growing Power of Middle Class
The growth of middle class and the purchasing power of this class in emerging economies will have a great affect on the healthcare industry. The global investors are seeing the emerging economies as opportunities for real growth drivers for both innovation and sales. The increase in purchasing power of middle class will increase the demand for quality healthcare. As the public healthcare system is far behind private providers in terms of quality, the share of private sector spending on healthcare is higher than the public sector counterpart in most of these emerging countries. This is a great boon for investors looking for avenues with greater patient demand.

Consumerism in Healthcare
The increasing awareness among patients, along with increasing power of payers, has set in motion the trend of consumerism among the patients receiving healthcare. Though this trend has been aggressive in the developed economies, the developing economies are not far behind. The regulators are making reforms to make the healthcare industry more transparent to appease the new consumers who demand more quality in the care. Moreover, the providers are increasingly taking measures to promote and make themselves more appealing to consumer class of patients.

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