1、Global Healthcare Private Equity Report 2024 Copyright 2024 Bain&Company,Inc.All rights reserved.This work is based on secondary market research,analysis of financial information available or provided to Bain&Company and a range of interviews with industry participants.Bain&Company has not independe

2、ntly verified any such information provided or available to Bain and makes no representation or warranty,express or implied,that such information is accurate or complete.Projected market and financial information,analyses and conclusions contained herein are based on the information described above

3、and on Bain&Companys judgment,and should not be construed as definitive forecasts or guarantees of future performance or results.The information and analysis herein does not constitute advice of any kind,is not intended to be used for investment purposes,and neither Bain&Company nor any of its subsi

4、diaries or their respective officers,directors,shareholders,employees or agents accept any responsibility or liability with respect to the use of or reliance on any information or analysis contained in this document.This work is copyright Bain&Company and may not be published,transmitted,broadcast,c

5、opied,reproduced or reprinted in whole or in part without the explicit written permission of Bain&Company.1Global Healthcare Private Equity Report 2024ContentsHealthcare Private Equity Market 2023:Year in Review and Outlook .2Generative AI Will Transform Healthcare .12Healthcare IT Hits a Speed Bump

6、.17Life Sciences:Navigating Shifts in the Innovation,Regulatory,and Operational Terrains .24Indias Healthcare Industry Comes of Age .312By Nirad Jain,Kara Murphy,Dmitry Podpolny,Franz-Robert Klingan,Vikram Kapur,and Alex BoultonMacroeconomic challenges have exacted a toll on healthcare buyouts,but g

7、reen shoots in deal activity reflect the industrys strong fundamentals.Healthcare Private Equity Market 2023:Year in Review and OutlookAt a Glance Investors continue trying to unlock liquidity and raise capital for healthcare deals,in a challenging fund-raising environment.Biopharma deals represent

8、the biggest share of healthcare buyouts,while new modalities and innovative therapies such as GLP-1s transform the investment landscape.As investors look to diversify their Asia-Pacific buyout activity,India is viewed as a place to deploy healthcare capital at scale.Private equity investors continue

9、 to pursue healthcare IT deals,with rising competition from tech specialists and corporate investors.The healthcare sector continued to be a hub of private equity(PE)deal activity in 2023,relative to all PE deals across the world,despite higher global interest rates,inflationary pressures,and broade

10、r geopolitical uncertainty(see Figure 1).3Global Healthcare Private Equity Report 2024Figure 1:Healthcare held its own in a tepid overall deal marketNotes:Excludes spin-offs,add-ons,loan-to-own transactions,special purpose acquisitions,and acquisitions of bankrupt assets;based on announcement date;i

11、ncludes announced deals that are completed or pending,with data subject to change;deal value does not account for deals with undisclosed values;values updated based on Dealogic 2020 sponsor classifications;values include net debt where relevant;2023E annualized assuming the average ratio of JanuaryN

12、ovember to December from 2019 to 2022,based on data through November 30,2023Sources:Dealogic;AVCJ;Bain analysisGlobal buyout deal value,$billions(excluding add-on deals)2010$22211230122191329514300153721633917430184841948020501211,0122265423E4449%1521201515891089111315Healthcareas percentageof total

13、deal countHealthcare buyoutsOther buyouts Dec 2023 forecastAcross all regions,a number of common themes emerged.To start,biopharma deals along with transactions involving related services,such as contract research organizations(CROs)and contract development and manufacturing organizations(CDMOs),mad

14、e up the largest share of global deal value at 48%(see Figure 2).Meanwhile,in the healthcare information technology(HCIT)space,deals for electronic medical and health record providers underscored the importance of next-generation IT in healthcare.We also tracked the continued rise of glucagon-like p

15、eptide-1 agonists(GLP-1s),which will have implications across the sector,including supporting continued growth in the sterile fill finish market,where the leader,Baxter BioPharma Solutions(now Simtra),was acquired by Warburg Pincus and Advent International.4Global Healthcare Private Equity Report 20

16、24Figure 2:Biopharma composed the largest share of healthcare dealsNotes:Excludes spin-offs,add-ons,loan-to-own transactions,special purpose acquisitions,and acquisitions of bankrupt assets;based on announcement date;includes announced deals that are completed or pending,with data subject to change;

17、deal value does not account for deals with undisclosed values;values updated based on Dealogic 2020 sponsor classifications;values include net debt where relevant;2023E annualized assuming the average ratio of JanuaryNovember to December from 2019 to 2022,based on data through November 30,2023;2010

18、value includes$1 billion of uncategorized dealsSources:Dealogic;AVCJ;Bain analysisPercentage of global healthcare buyout deal value(excluding add-on deals)020406080100%2001 02030405060708091011121314151617181920212223EProvider and related servicesBiopharma and related servicesMedtech and related ser

19、vicesPayer and related servicesLife sciences tools and related servicesThe year saw six deals in excess of$2 billionthe largest being the taking private of Syneos Health by Elliott Investment Management,Patient Square Capital,and Veritas Capitalcompared with 13 in 2022 and 14 in 2021,though with som

20、e large deals in flux.There have also been around 375 deals below the$2 billion mark,a testament to high levels of activity at the middle and small levels.Within North America,announced deal values came in around$29 billion,with biopharma accounting for 25%of deal activity and 54%of deal value(see F

21、igure 3).Activity in provider businesses(historically a large share of US deals)slowed as those businesses experienced inflationary and labor market pressures.Nonetheless,a number of provider deals closed across specialties such as oncology,orthopedics,and cardiology with the opportunity to drive an

22、cillary expansions relatively insulated from broader healthcare and macroeconomic pressures.Case in point:TPG and Cencoras(formerly known as AmerisourceBergen)acquisition of OneOncology from General Atlantic for$2.1 billion.In Europe,announced deal value fell approximately 44%year over year from$25

23、billion in 2022 to$14 billion in 2023.Excluding EQT/Luxinvas acquisition of Dechra Pharmaceuticals,the announced deal value would have declined by about 70%.Constrained credit markets and continued disruption from labor and cost inflation dampened activity in the retail health and provider sectors.E

24、urope also saw several announced processes that did not result in a transaction,as buyers and sellers failed to align on valuations.5Global Healthcare Private Equity Report 2024Figure 3:North America still hosts the highest value of healthcare dealsNotes:Excludes spin-offs,loan-to-own transactions,s

25、pecial purpose acquisitions,and acquisitions of bankrupt assets;based on announcement date;includes announced deals that are completed or pending,with data subject to change;deal value does not account for deals with undisclosed values;values updated basedon Dealogic 2020 sponsor classifications;val

26、ues include net debt where relevant;2023E annualized assuming the average ratio of JanuaryNovember to December from 2019 to 2022,based on data through November 30,2023Sources:Dealogic;AVCJ;Bain analysisHealthcare buyout deal value,201822,$billions(excluding add-on deals)Healthcare buyout deal value,

27、2023E,$billions(excluding add-on deals)North AmericaEuropeAsia-PacificRest of worldNorth AmericaEuropeAsia-PacificRest of worldProvider and related servicesBiopharma and related servicesMedtech and related servicesPayer and related servicesLife sciences tools and related services$263103791$2914142Di

28、versification of investments in the Asia-Pacific regionIn the Asia-Pacific region,deal activity was slightly lower than 201822 levels,with announced deal value at around$14 billion(see Figure 4).China remains very relevant for investment,while India represented the largest share of announced deal va

29、lue.That said,investors seeking to manage geopolitical risk began to broaden their horizons to other Asia-Pacific countries.India,in particular,has seen a long-term rise in biopharma-related activity(for example,in generics and active pharmaceutical ingredient manufacturing),albeit with a slowdown y

30、ear over year,while also seeing growth in domestic demand driven by an expanding middle class and government insurance programs(see Figure 5).These macroeconomic dynamics,coupled with a number of successful exits from early investors in Indiasuch as TPGs sale of a controlling stake in Care Hospitals

31、 to Blackstonehave propelled private equity sponsors to regard India as a place to deploy healthcare capital at scale.6Global Healthcare Private Equity Report 2024Figure 4:Deal activity has proved to be more resilient in Asia-Pacific relative to other regionsNotes:Excludes spin-offs,add-ons,loan-to-

32、own transactions,special purpose acquisitions,and acquisitions of bankrupt assets;based on announcement date;includes announced deals that are completed or pending,with data subject to change;deal value does not account for deals with undisclosed values;values updated based on Dealogic 2020 sponsor

33、classifications;values include net debt where relevant;2023E annualized assuming the average ratio of JanuaryNovember to December from 2019 to 2022,based on data through November 30,2023Sources:Dealogic;AVCJ;Bain analysisGlobal healthcare buyout disclosed deal value,$billions(excluding add-on deals)

34、North AmericaEuropeAsia-PacificRest of worldDec 2023 forecast2010$15113012211316143015231636174318631979206621151228723E60Figure 5:India has taken an increasingly important role in Asia-Pacifics healthcare marketNotes:Excludes spin-offs,loan-to-own transactions,special purpose acquisitions,and acqui

35、sitions of bankrupt assets;based on announcement date;includes announced deals that are completed or pending,with data subject to change;deal value does not account for deals with undisclosed values;values updated basedon Dealogic 2020 sponsor classifications;values include net debt where relevant;2

36、023E annualized assuming the average ratio of JanuaryNovember to Decemberfrom 2019 to 2022,based on data through November 30,2023Sources:Dealogic;AVCJ;Bain analysisHealthcare buyout deal value,$billions(excluding add-on deals)Healthcare buyout deal count(excluding add-on deals)IndiaChinaRest of Asia

37、020406080100%2015$51631771816191120172118221723E14020406080100%20152316521761188819682015621179229223E128Responses to liquidity challenges:value creation and secondary transactionsSponsors faced a challenging fund-raising environment in 2023,at a time when overall exit volume was decreasing and comp

38、etition for fresh capital was increasing.In line with the overall PE markets,sponsor exits in healthcare declined in 2023,setting up PE funds for a conflict in 2024 between prolonging holding periods and the desire among limited partners for liquidity.Fund sponsors have been strategizing about how t

39、o offset the impact on the internal rate of return from longer holding periods via two mechanisms:first,by investing in incremental value-creation opportunities,with an emphasis on commercial excellence,pricing,and margin expansion,and second,by exploring alternative avenues for liquidity,both for t

40、he funds and their limited partners.The latter approach has triggered a rise in the exploration of secondary transactions(partial/early exits)including continuation vehicles.In 2023,many buyout funds initiated secondary-dedicated funds;notably,Blackstone raised$24.9 billion,$2.7 billion of which is

41、earmarked to its inaugural GP-led continuation fund strategy.In addition,Ardian,Lexington Partners,and Goldman Sachs collectively fund-raised more than$50 billion for their secondary vehicles.Several factors make these instruments attractive:secondaries provide GPs an early,often partial exit opport

42、unity,allowing them to secure liquidity to finance growth ambitions or return capital to investors,and boosting a funds distributions to paid-in capital.Continuation funds,another form of secondary transaction,buy time until the market appropriately prices a holdings potential.Moreover,bid-ask sprea

43、ds for secondary market continuation funds,where the seller is often a partial buyer,tend to be narrower than the bid-ask spreads in primary markets.PE firms have also sought to navigate the current environment by joining with other firms to tackle larger targets,in addition to seeking partnerships

44、with and capital from sovereign wealth funds(as in the acquisition of Dechra Pharmaceuticals).PE firms are not immune to broader fund-raising challenges:Preqin estimates that in 2023 there has been$3.3 trillion of global private capital targeted by funds,but only$1 trillion raised.Large funds are ca

45、pturing a greater share of allocations,benefiting from strong fund strategies,commercial motions,differentiated pitches,and sector-specialized investment teams.7Global Healthcare Private Equity Report 20248Global Healthcare Private Equity Report 2024Corporate M&A:Strategics access to lower-cost capi

46、tal enabled sustained biopharma deal activityHealthcare corporate M&A value was up from 2022,bucking headwinds on biopharma from the Inflation Reduction Act(IRA)in the US.Pfizer announced its acquisition of Seagen for just under$45 billion in the largest acquisition in biopharma since Abbvies acquis

47、ition of Allergan for$63 billion in 2019.Strategics,especially large-cap biopharmas,have retained access to lower-cost capital,which has fueled higher levels of activity compared with buyout funds.This level of activity occurred despite intensified scrutiny from the Federal Trade Commission(FTC),as

48、seen in suits over Amgens acquisition of Horizon,a deal announced in 2022 and closed recently.In reaction to heightened FTC scrutiny,strategics appear to be prioritizing more modest acquisitions that advance specific strategic goals and are less likely to arouse antitrust scrutiny for example,Mercks

49、 acquisition of Prometheus Biosciences(see Figure 6).That said,corporate healthcare M&A has seen 19 deals in excess of$2 billion in the first three quarters of 2023.Figure 6:The value of deals by strategic buyers edged up in 2023,as strategics access to financing allowed them to do deals large enoug

50、h to move the needleNotes:Q4 2023 deal value is a straight-line extrapolation using Q1Q3 data;strategic M&A includes corporate M&A deals(which include PE exits)and add-ons,excludes special purpose acquisition companies/blank check companies defined by deal technique(SPAC acquisition),excludes ventur

51、e capital/corporate venturecapital defined by deal technique(funding round)or acquirer business description(venture capital),excludes other strategic PE buyers deals classified as strategicbut having the acquirers specific industry group as defined by Dealogic:finance-acquisitions/restructurings,fin

52、ance-capital pool companies,or finance-governmentsponsored entities/credit agenciesSource:DealogicGlobal healthcare and life sciences strategic deal value,$billionsTotal activityQ4 2023 forecast2010$20311198121481327514417154461625317315184181954320305213932227223E2749Global Healthcare Private Equit

53、y Report 2024Macroeconomic headwinds buffet healthcareHealthcare PE has outperformed other sectors across multiple market cycles and recessionary periods;however,the reasons for this resilience have varied from cycle to cycle.Over the past decade,deal returns were driven by revenue growth and multip

54、le expansionthe latter a byproduct of low interest rates and abundant credit.By contrast,the current inflationary climate has taken a heavy toll on labor-intensive businesses,as labor shortages challenge many healthcare sectors.Still,we see positive momentum generated from innovation triggered by th

55、e pandemic,which has led to a range of new healthcare delivery models and modalities(such as remote physiologic and therapeutic monitoring and at-home care),and new life-sciences capabilities(such as CDMOs supply expansion and Covid vaccine distribution).Segments propelled by this innovation have co

56、ntinued to power deals,while segments with a more challenging cost structure look for ways to improve margin profile.No two cycles are the same,but there are reasons for optimism about the future of healthcare investing.We see positive momentum generated from innovation triggered by the pandemic,whi

57、ch has led to a range of new healthcare delivery models and modalities(such as remote physiologic and therapeutic monitoring and at-home care),and new life-sciences capabilities(such as CDMOs supply expansion and Covid vaccine distribution).10Global Healthcare Private Equity Report 2024Figure 7:Heal

58、thcare deal value clustered in the middle of 2023Notes:Excludes spin-offs,add-ons,loan-to-own transactions,special purpose acquisitions,and acquisitions of bankrupt assets;based on announcement date;includes announced deals that are completed or pending,with data subject to change;deal value does no

59、t account for deals with undisclosed values;values updatedbased on Dealogic 2020 sponsor classifications;values include net debt where relevant;2023E annualized assuming the average ratio of JanuaryNovember to December from 2019 to 2022,based on data through November 30,2023Sources:Dealogic;AVCJ;Bai

60、n analysisGlobal healthcare buyout deal value 2023,$billions(excluding add-ons)Global healthcare buyout deal count 2023(excluding add-ons)Provider and related servicesBiopharma and related servicesMedtech and related servicesDeal countPayer and related servicesLife sciences tools and related service

61、sJanuaryFebruaryMarchAprilMayJuneJulyAugustSeptemberOctoberNovember010203040$3111213265363What to look for in 2024 and beyondFollowing a slow start to 2023,growth signals have reemerged in the buyout market(see Figure 7).In many geographies,inflation is cooling as the impact of higher interest rates

62、 take effect;at the same time,elevated material and labor costs are showing up as higher reimbursements for healthcare goods and services.In credit markets,rates are projected to remain elevated through 2024.As investors adjust to these realities,we expect sponsor-to-sponsor and secondary transactio

63、ns to increase in 2024.Meanwhile,take-privates,carve-outs,and secondaries will continue to represent an elevated share of deal activity as investors seek to unlock value.Following a slow start to 2023,growth signals have reemerged in the buyout market.11Global Healthcare Private Equity Report 2024Gi

64、ven an improving macroeconomic backdrop,investors should consider these questions for 2024 and beyond:When will generative AI transform the healthcare sector?Current pilots of generative AI tools have focused on repetitive or expensive tasks such as documentation.When these tools move to widespread

65、rollouts that touch on the core competencies of organizations,the effects will be significant and widely felt.How will the HCIT landscape shake out?HCIT remains an important lever for healthcare and life sciences organizations seeking to offset macro headwinds and make better use of data and analyti

66、cs.In this environment,both providers and biopharma companies are striking a balance between adopting platforms vs.best-of-breed solutions.Within HCIT,Epic continued its expansion in several offerings,such as its payer platform.The competition for assets is intensifying,with traditionally nonhealthc

67、are investors entering the space,underscoring the need for strong playbooks in HCIT.How will life sciences innovation continue to affect investing?During the past few years,we saw strong growth in new modalities such as mRNA and therapeutic classes such as GLP-1s.While the direct implications of gro

68、wth are clear,there are significant downstream effects of increased GLP-1 agonist uptake within pharma,healthcare,and beyond.How will Indias role in Asia-Pacific play out?Investments in and strategies focused on Asia-Pacific are evolving,and Indias favorable macro tailwinds have made it a leading de

69、stination for capital.India has traditionally seen investments in biopharma and providers,and it is still too soon to know whether green shoots in other areas such as health insurance technology firms achieve comparable prominence,and whether these firms can parlay their success in India to expand a

70、cross Asia-Pacific.How can financial sponsors effectively respond to liquidity pressures from their investors?Sponsor-led secondary transactions,especially continuation funds,have increased dramatically in the past decade.However,the record amount of capital raised for secondaries is likely to incre

71、ase competition in this space as well.Given the mountain of capital waiting on the sidelines,competition for in-market deals is expected to remain strong.Internal rates of return historically have been driven by revenue and multiple expansion,which will be more challenging to achieve.PE sponsors wil

72、l need to establish higher confidence in value creation opportunities earlier,such that they can commit greater capital.It is critical for sponsors to think beyond pure commercial diligence and evaluate a wider set of operational,technological,and other factors such as environmental,social,and gover

73、nance considerations early in their process to create value quickly.Only a clear fund strategy paired with strong investment screening,integrated diligence,focused teams,and post-acquisition value creation plans will set the most successful investors apart in the year ahead.12By Eric Berger,Nirad Ja

74、in,Kara Murphy,Dmitry Podpolny,Franz-Robert Klingan,Vikram Kapur,and Alex BoultonA once-in-a-generation technology surges into a centuries-old industry.Generative AI Will Transform HealthcareAt a Glance Generative AI promises to drive significant productivity gains,improve patient and provider exper

75、ience,and ultimately lead to better clinical outcomes.The technology could lower administrative costs,speed biomedical research and drug development,improve claims management,and help develop next-generation diagnostic equipment.Big technology companies are partnering with healthcare organizations t

76、o apply generative AI,and investors are deploying capital in nascent companies built around the tool.Investors need to consider generative AIs disruptive potential on portfolio companies and new investments,and identify opportunities to take advantage of the technology.Foundation models,large langua

77、ge models(LLMs),and generative artificial intelligence(AI)captured the attention of providers,biopharmas,payers,and investors over the past year,driven by the promise of making healthcare delivery more efficient,innovative,and effective(see Figure 1).While traditional,analytical AI has been used in

78、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.”13Global Healthcare Private Equity Report 2024The technology has potential across many use cases,including these:For providers and

79、 in care delivery,it promises to cut the time spent on documenting patient visits and reimbursement-related communications,which would reduce clinician burnout and lower administrative costs.Indeed,organizations such as HCA Healthcare are pursuing these opportunities via partnerships with tech compa

80、nies such as Google,in part because patients may already be changing their behavior,using off-the-shelf tools to understand and inform their interactions with clinicians.In biomedical research and drug development,generative AI is speeding innovation,as evidenced by the strategic alliance between Sa

81、nofi and BioMap,where Sanofi will use BioMaps AI platform to optimize the process of drug discovery.Molecular biology-specific LLMs are also supporting predictive modeling of protein structure and target-binding affinity,in addition to the creation of therapeutic candidates themselves.Insurers and o

82、ther payers have long made use of AI in data analytics,claims management automation and adjudication,and quality and risk management.Now,they are implementing generative AI for member navigation,an example being UnitedHealth Groups virtual assistant for patient communication.Medtech companies,meanwh

83、ile,are focusing their investments on next-generation diagnostic equipment to detect diseases via AI-enabled hardware,surgical robots with AI-powered systems,or smart remote-monitoring devices.For example,Philips is partnering with Amazon Web Services to develop generative AI to advance the companys

84、 PACS image processing and enhance radiology workflows,as part of its broader AI efforts in diagnosis and treatment,connected care,and personal health.As foundation models,computer vision,and other areas continue to mature,all types of healthcare organizations will find opportunities to apply genera

85、tive AI to support operations across the value chain(such as supply chain management and back-office activities).Ultimately,generative AI may reshape healthcare institutions core functional areas,presenting an opportunity for investors to serve changing markets and adjust operations within existing

86、portfolio companies.14Global Healthcare Private Equity Report 2024Figure 1:News headlines about generative AI in healthcare surged in 2023Notes:Left-hand side represents results from a Factiva search for press releases with the keywords“Generative AI”or“Gen AI”or“Generative artificial intelligence”o

87、r“GenAI,”in“Healthcare/Life Sciences”as industry from Oct.1,2022,through Nov.30,2023,manually scrubbed to remove duplicates and irrelevant results;right-hand side reflects publicly available information from 2023 on generative AI use by the top 20 biopharmas by 2022 revenue,including company events,

88、pressreleases,and other announcements(e.g.,company blog posts)Sources:Factiva;desktop research;Bain analysis Number of press releases on generative AI in healthcareTop 20 biopharmaceutical firms associated with generative AI press releases in 2023020406080100%ChatGPTbecomesavailable forpublic useOct

89、20221Nov2Dec 2Jan20232Feb5Mar 11Apr12May26Jun26Jul16Aug32Sep32Oct42Nov45Has press releasesNo press releasesA nascent stage of investmentHealthcare investment in generative AI has just begun.Technology companies are collaborating with major healthcare organizations to apply generative AI tools.For in

90、stance,Microsoft and Epic have teamed up to reduce the time clinicians spend documenting or replying to patient messages.Google is working with Bayer to automate drafting of clinical trial communications in multiple languages and is partnering with iCad to integrate AI tools in the companys devices

91、to detect breast cancer.IBM is working with Microsoft Azure to analyze complex medical records.Ultimately,healthcare information technology vendors are at the forefront of using generative AI,marrying the technology with their extensive networks of providers and users.Among investors,venture capital

92、 and growth equity funds have been deploying capital in companies built around generative AI as a core competency.For example,Hippocratic AI,a healthcare-focused LLM company,raised$50 million in a seed round co-led by General Catalyst and Andreessen Horowitz.Genesis Therapeutics,a drug discovery pla

93、tform that uses generative AI to pinpoint novel drug candidates,closed a$200 million series B round,with participation from Andreessen Horowitz,Fidelity,and BlackRock.15Global Healthcare Private Equity Report 2024Mature private equity(PE)-backed companies are also investing in LLMs to drive operatio

94、nal improvement in various areas including better clinician or patient engagement and lower cost structures.For example,Syneos Health,taken private by Elliott,Patient Square,and Veritas,entered into a multiyear deal with Microsoft to leverage OpenAIs ChatGPT in clinical trials and commercial program

95、s.Similarly,Advent-backed Iodine Software has partnered with OpenAI to infuse LLMs into its AwareCDI product suite to improve the softwares accuracy and efficiency.The effects on portfolio companies and new investments To get ahead of this rapidly evolving technology,PE investors must carefully cons

96、ider the impact of generative AI on their portfolio companies.Primarily,they need to assess the exposure of their portfolio companies markets to generative AI disruption,paying attention to both the magnitude and timing of any potential threats or opportunities.Bain has developed a framework to gaug

97、e disruption risk,which assesses labor intensity,level of knowledge required to perform tasks,the type and frequency of interactions with humans,and the value of augmented pattern recognition,among other variables.Businesses where the following are core elements of the value proposition face greater

98、 risk:creative content generation,labor-intensive administrative processes and call center work,and text-writing and summarization.For example,business process outsourcers that employ low-skilled labor to generate communication for medical claims and denials may be places where generative AI can aut

99、omate or accelerate the processes.On the other hand,in healthcare businesses that rely on expert guidance,such as physicians providing clinical recommendations,the technology poses less of a risk for disruption,but instead may be viewed as an opportunity to democratize access and improve quality.In

100、deploying generative AI at portfolio companies,investors should develop a focused strategy with three key elements:identifying opportunities to leverage commercially available generative AI tools;consider building proprietary generative AI software where there is an opportunity to establish competit

101、ive differentiation;and defining generative AI governance and guardrails to ensure its proper use,such as update policies and data security.Similarly,investors should consider the implications of generative AI for new investments deal theses,determining the disruption risk of generative AI and the p

102、otential for generative AI to unlock value,as part of due diligence and value-creation planning.16Global Healthcare Private Equity Report 2024The long-term potential of generative AIGiven the complexity and uniqueness of patient situations,much of the work in healthcare requires human labor and judg

103、ment.Even areas where less discretion is needed,such as coding,charting,and registry extracts,have seen limited impact from AI models due to relatively small data sets available to train the algorithms.Generative AI promises to address some of these challenges,and experiments will likely proliferate

104、 in the year ahead.These efforts and early use cases have the potential to trigger strong labor efficiency gainsaddressing the financial pressures on organizations,improving the patient and provider experience,and leading to better clinical outcomes.We expect progress over the next year to come in s

105、elect and focused use cases.Over a longer time frame,the breadth and depth of generative AIs impact on healthcare may well be transformative across workflows,applications,and ways of working.Investors who are thoughtful about generative AIs impact on their existing portfolio companies and new invest

106、ments will be able to harness this technological change to generate returns and accelerate the transformation of the healthcare sector.Over a longer time frame,the breadth and depth of generative AIs impact on healthcare may well be transformative across workflows,applications,and ways of working.17

107、By Caitlin Dowling,Nirad Jain,Kara Murphy,Dmitry Podpolny,Franz-Robert Klingan,Vikram Kapur,and Alex BoultonDespite the slowdown in dealmaking in 2023,healthcare IT retains its appeal to private equity investors.Healthcare IT Hits a Speed BumpAt a Glance Despite a drop in deal volume in 2023,healthc

108、are IT attracts investment due to its ability to drive innovation and offset macro factors such as inflation,labor shortages,and reimbursement headwinds.Providers use IT to focus on revenue cycle management,clinical workflow optimization,and patient engagement;biopharma on clinical trial digitalizat

109、ion,analytics,and real-world evidence;and payers on member engagement and value-based care.Increasingly,organizations must balance software integration,vendor management optimization,tech stack simplification,and interoperability with best-of-breed solutions.Artificial intelligence and the move towa

110、rd platforms are transforming the healthcare IT landscape.Healthcare information technology(HCIT)sits at the intersection between the steady resilience of the healthcare sector to recession and the high returns of the software and broader IT sector.The result:an attractive upside potential with lowe

111、r downside risk(see Figure 1).18Global Healthcare Private Equity Report 2024Figure 1:Healthcare IT delivered strong upside returns from 2011 to 2019Notes:Deal universe includes only fully and partially realized buyout and growth deals with initial investments in 2011-2015,2016-2019 globally;all deal

112、 sizes.Multiple on invested capital is the ratio of total distributed capital and remaining unrealized value to total investment cost;pooled MOIC is derived by computing the sum of all investments in a given data set and then calculating the MOIC based on the aggregation of cash flows associated to

113、that set of investments(similar to a weighted average,weighted by deal size)Source:DealE(data pulled October 2023);use of DealEdge data outside this context requires permission of Bain&Company Multiple on invested capital for global buyout and growth deals All other industries1.8XHealthcare2.1XHCIT2

114、.2XDeal volumeDeal entry years 2011155,151522.670466.21278.0Invested equity capital,$billions Top quartileMedianBottom quartileAll other industries1.6XHealthcare1.6XHCIT2.1XDeal entry years 2016191,824238.231229.98012.4In 2023,HCIT buyout activity slowed,with deal volume falling by a projected 23%fr

115、om 2022,driven mainly by a falloff in provider HCIT transactions(see Figure 2).Excitement around digitalization,following the outbreak of Covid-19,resulted in a slew of portfolio companies that are still early in their holding periods.Despite the decline in transactions,HCIT represents 10%of healthc

116、are sector deal volume and has seen some sizable deals,including EngageSmart,Nextech,NextGen,and CorEvitas.Macroeconomic factors including inflation,labor shortages,and reimbursement headwinds continue to push healthcare operators toward greater automation to raise labor productivity,resulting in in

117、vestments around workforce management,revenue cycle management(RCM)solutions,drug development workflows,and payer-workflow support.This impetus comes at a time of emerging generative artificial intelligence(AI)models that could unlock process efficiencies and outcome improvements for the industry.19

118、Global Healthcare Private Equity Report 2024Figure 2:Healthcare IT deal volume has declined dramatically since its 2021 high39Notes:Excludes spin-offs,add-ons,loan-to-own transactions,special purpose acquisitions,and acquisitions of bankrupt assets;based on announcement date;includes announced deals

119、 that are completed or pending,with data subject to change;deal value does not account for deals with undisclosed values;values updated based on Dealogic 2020 sponsor classifications;values include net debt where relevant;2023E annualized assuming the average ratio of JanuaryNovember to December fro

120、m 2019 to 2022,based on data through November 30,2023Sources:Dealogic;AVCJ;Bain analysisAnnualchange20129132214241524162417331849194920482175225123E2%56%32%23%144%9%0%0%38%48%0%Provider and related servicesMedtech and related servicesBiopharma and related servicesPayer and related servicesLife scien

121、ces tools and related servicesDec 2023 forecast36 buyout deals as of November 30,2023Global healthcare IT buyout deal volume(exluding add-on deals)Providers still seeking HCIT to improve their businessRecent Bain-KLAS analysis highlights that IT has become critical to providers as they navigate chal

122、lenges,accelerating investment in some pockets of the market.RCM,clinical workflow optimization,and patient engagement are top priorities for new investments given that they all deliver measurable return on investment(ROI)(see Figure 3).Macroeconomic factors including inflation,labor shortages,and r

123、eimbursement headwinds continue to push healthcare operators toward greater automation to raise labor productivity.20Global Healthcare Private Equity Report 2024Figure 3:Providers priorities involve improving their return on investment AcademicmedicalcenterHealth systemsand hospitalsOther nationalor

124、 regionalhealth systemFreestandinghospitalPhysiciangroupSecond priorityThird priority Top prioritySource:Bain-KLAS 2023 Provider Executive Survey(n=201)Percentage of respondents citing IT as an area of priorityRevenue cycle managementClinical workflow optimizationPatient engagementTelehealth and vir

125、tual careElectronic health recordsIT infrastructure and servicesClinical tools and departmentsolutionsData platforms and interoperabilityPatient accessGovernance,risk,security,and compliance18202425262828293439%1516382425203138314523221726262830263132824162428441616524821242112422730273036Revenue cy

126、cle management.RCM creates value by enhancing collections and streamlining labor-intensive processes,thus generating an ROI for providers.No wonder that providers cite RCM as a top priority,anticipating higher spending for software across a broad set of subsegments including revenue integrity,charge

127、 capture,and complex claims management.Select activity in 2023including TA Associates investment in Alpha II and Alpines acquisition of Medusinddemonstrated private equity(PE)investors interest in this space.Clinical workflow optimization.Providers are leaning on tools that improve workflow efficien

128、cy,such as LeanTaaSs expanded offerings with the AI tool iQueue Autopilot,or that enhance remote patient monitoringas in the case of the merger between LAMF,a special purpose acquisition company,with Nuvo,a digital pregnancy care solution.Solutions that save clinicians time while improving patient o

129、utcomes present valuable opportunities.Patient engagement.Academic medical centers and health systems are focusing on enhancing patient engagement as well as using data platforms to further address value-based care and data monetization.Importantly,the benefits of improved patient engagement extend

130、beyond provider-patient relationships into clinical trial applications,improving retention and compliance and ultimately ensuring respect of trial timeline and better outcomes.21Global Healthcare Private Equity Report 2024Biopharma and payers taking the next steps on HCITThe role of HCIT in achievin

131、g efficiencies for providers is well known,but HCIT offers multiple benefits to biopharma and payers,too.Biopharma HCIT continues to focus on the role of clinical trial enablement and digitalization in the wake of regulatory changes.Given rising R&D costs,biopharma companies look for solutions that

132、cut costs.As a result,some large e-clinical platforms could be interesting near-term targets.In addition to e-clinical platforms,biopharma HCIT has opportunity to capitalize on real-world evidence(RWE)and real-world data(RWD)trends.RWE and RWD have grown more popular in recent years,as pharmaceutica

133、l companies become more sophisticated in analyzing data across clinical and commercial use cases.Thermo Fishers acquisition of CorEvitas and the announcement of CMS to require patient registry enrollment to access Alzheimers drugs under Medicare coverage are examples of how critical real-world evide

134、nce and data will continue to be in the future.Payers,meanwhile,have aimed their investments at technology that affects member engagement,ranging from performance and quality to value-based care,including enablement such as care coordination and patient engagement/navigation.The merger of HealthComp

135、,a benefits and analytics platform,with Virgin Pulse,a health and wellness company,exemplifies how payers are integrating with patient platforms to drive care outcomes.Other pressing issues include risk adjustment to payment integrity.Payers continue to look for ways to optimize these payment-relate

136、d functions,which directly affect their bottom line.Three themes to guide new investmentsInvestors should keep three themes in mind when evaluating HCIT opportunities.Role of large tech companies and generative AI.Large,generalist technology companies such as Amazon,Microsoft,and Google are expandin

137、g into HCIT,either through core services such as Amazon Web Services and Microsofts Azure cloud computing platforms,or via AI capabilities such as Microsoft partnering with health systems to use Azure OpenAI.Historically,large tech companies lagged HCIT-focused firms due to lack of customization aro

138、und healthcare workflows,but some of their recent investments are targeting healthcare.Consequently,more than half of the providers responding in a recent Bain-KLAS survey said they expect to accelerate IT spending with large tech firms,a 12-percentage point increase from the prior year.The exposure

139、 level presented by large tech players varies by HCIT subsegment.22Global Healthcare Private Equity Report 2024HCIT businesses use generative AI as a tool to develop new products or improve existing ones,although many of the applications remain in a nascent stage.That said,certain trends have emerge

140、d.Among providers,for example,generative AI is helping to increase efficiency and improve workflows,particularly when built into RCM solutions.And while just 6%of health systems have a generative AI strategy today,about 50%are developing one or are planning to.In biopharmaceuticals,generative AI is

141、supporting and accelerating drug-development workflows and enhancing commercialization capabilities(see“Generative AI Will Transform Healthcare”).Platforms role in integrating IT solutions.From provider to biopharma,organizations are looking to maximize software integration,optimize vendor managemen

142、t,simplify their tech stack,and enhance interoperability(see Figure 4).Tighter integration remains a key purchasing criterion for companies evaluating IT solutions.Consequently,Epic is taking a greater share of the hospital and health system space(more than 60%of US hospital market share by net pati

143、ent revenue),given its expanding network effects.Investors should carefully consider Epics offerings and development roadmap,as Bain-KLAS research shows that most providers prefer native electronic health record(EHR)offerings.In the biopharma e-clinical space,many companies are trying to reorganize

144、their tech stack and provide a simpler access point for patients and clinicians.As a result,hub offerings such as Veeva and Medidata that connect multiple stakeholders,digitize,and streamline steps in the clinical trial and patient engagement/communication value chains will continue to play a critic

145、al role.Biopharma companies are striking a fine balance between platforms and point solutions,optimizing for the need of interconnectivity and decision-makers and users desire to seek best-of-breed tools.Investors integrated due diligence and post-acquisition playbook.As the market becomes more comp

146、etitive and risks evolve,integrated due diligence and post-acquisition playbooks become critical for assessing and underwriting sources of value and winning deals.HCIT due diligences have evolved from pure penetration and attach-rate analysis,toward integrating commercial excellence,pricing,R&D opti

147、mization,product functionality assessment,tech-stack fit for purpose,engineering teams ability to innovate,cybersecurity gaps,and other operational and tech levers.Moreover,as HCIT platforms grow and offer less opportunity for bolt-on acquisitions,the role of M&A becomes more nuanced as there will b

148、e fewer transactions capable of meaningfully moving the needle.23Global Healthcare Private Equity Report 2024Figure 4:Providers confront cost and interoperability issues2023prioritize existing vendorsstreamline tech stacklook to EHR vendor first202272%81%64%67%73%79%Percentage of providers citing th

149、eir organization will(next 12 months)Source:Bain-KLAS 2023 Provider Executive Survey(n=201)The competitive landscape for PE firms Healthcare PE investors face increased competition from specialized,tech-focused PE firms such as Vista Equity Partners,Francisco Partners,and Thoma Bravo that are aggres

150、sively pursuing healthcare with their software expertise,as well as increasing interest from strategics such as Thermo Fisher.On the other hand,this increased competition also creates attractive exit pathways for PE investors.Questions remain around which segments of the market may be played out,wha

151、t the next tech trend is,and how to manage risk:Is specialty HCIT insulated from Epic?What value-based care technologies are scalable?What pharma IT solutions can become platforms?Given the speed at which HCIT is evolving,and the presence of new competitors,the importance of a clear fund strategy,in

152、tegrated diligence,and ability to underwrite post-acquisition value creation levers will be ever more important in the near future.24By Matt Sullivan,Nirad Jain,Kara Murphy,Dmitry Podpolny,Franz-Robert Klingan,Vikram Kapur,and Alex BoultonPrivate equity funds must be nimble given the effects of new

153、therapies and sweeping Medicare drug negotiation provisions.Life Sciences:Navigating Shifts in the Innovation,Regulatory,and Operational TerrainsAt a Glance Although the life sciences sector continues to attract buyout activity,private equity deal value in 2023 struggled to match the levels of 2022.

154、While the biotech funding slowdown is still a hurdle,investors began displaying more comfort putting money to work in early-stage therapies and precommercial medical devices.The ripple effects of the Inflation Reduction Acts drug negotiation provisions,coupled with greater investment in cell,gene,an

155、d RNA therapies,will have broad implications for services providers.Demand for glucagon-like peptide-1 agonists(GLP-1s)such as Wegovy,Ozempic,Mounjaro,and Zepboundis boosting the need for ingredients or services that support GLP-1 manufacture.25Global Healthcare Private Equity Report 2024Figure 1:Li

156、fe sciences deal value struggled in 2023 to match the levels of 2022307Notes:Excludes spin-offs,add-ons,loan-to-own transactions,special purpose acquisitions,and acquisitions of bankrupt assets;based on announcement date;includes announced deals that are completed or pending,with data subject to cha

157、nge;deal value does not account for deals with undisclosed values;values updatedbased on Dealogic 2020 sponsor classifications;values include net debt where relevant;2023E annualized assuming the average ratio of JanuaryNovember to December from 2019 to 2022,based on data through November 30,2023Sou

158、rces:Dealogic;AVCJ;Bain analysisGlobal biopharma and life sciences buyout deal value,$billions(excluding add-on deals)Global biopharma and life sciences buyoutdeal count(excluding add-on deals)0501001502002010$3114121381412151216817201820194520232144224323EBiopharma and related servicesLife sciences

159、 tools and related servicesDeal countDec 2023 forecastThe life sciences sector has assumed a growing importance to private equity(PE)funds as investors look for innovative,recession-resistant businesses.From 2018 through 2022,PE investments into the biopharma,life-sciences tools,and diagnostics sect

160、ors surged,with approximately 650 buyout deals consummated globally.Pharma servicesincluding contract research organizations(CROs)and contract development manufacturing organizations(CDMOs)continued to be an active vertical within life sciences,with deal value above 2022 levels.However,in the face o

161、f economic uncertainty and continued high interest rates,overall life sciences deal value in 2023 struggled to maintain last years pace(see Figure 1).That said,continued success will require expertise on the part of funds,including operational and commercial excellence,in addition to scientific prof

162、iciency.Pharma servicesincluding contract research organizations(CROs)and contract development manufacturing organizations(CDMOs)continued to be an active vertical within life sciences.26Global Healthcare Private Equity Report 2024Four themes shaping life sciences investmentsFour key forces are shap

163、ing the life sciences investment landscape and innovation:the rise of the class of medications known as glucagon-like peptide-1 agonists(GLP-1s);the Inflation Reduction Acts(IRA)drug negotiation provisions and its ripple effects;increased investment in advanced modalities such as cell,gene,and RNA t

164、herapies and the implications for services providers;and growing private equity interest in making investments in early-stage therapies and precommercial medical devices.Coupled with those forces,the rise of artificial intelligence(AI)and its ability to accelerate product development and commerciali

165、zation will continue to transform life sciences(see“Generative AI Will Transform Healthcare”and“Healthcare IT Hits a Speed Bump”).The promise and potential of GLP-1s Over the past year,sales in the GLP-1 class of medications surged.Indeed,sales of Novo Nordisks semaglutidemarketed under the brand na

166、mes of obesity drug Wegovy and diabetes drug Ozempicand Eli Lillys tirzepatidesold under the brand names of Mounjaro for diabetes and Zepbound for obesityhave been limited only by the ability of manufacturers to produce them.Initially used to treat Type 2 diabetes,the ability of semaglutide and tirz

167、epatide to reduce weight and evidence of their positive effect on cardiovascular and renal health have increased the appetite for GLP-1s among prescribers and patients.Given the potential market for these drugs,three implications confront PE investors:Demand for inputs or services supporting the man

168、ufacturing of GLP-1 therapies will likely increase.Firms that supply these goodssuch as contract development and manufacturing organizations(CDMOs)focused on peptides and biologics and manufacturers of delivery device components such as autoinjectorsare poised to benefit from the growing demand and

169、current supply constraints.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

170、of obesity could see their long-term growth projections decline.Given the novelty of GLP-1s,their ultimate effect for now is unclear.Still,investors should evaluate the implications for returns under a scenario in which obesity rates decrease materially.27Global Healthcare Private Equity Report 2024

171、Ripple effects of the Inflation Reduction Act have begun The direct drug price negotiation provisions of the IRA could affect global biopharmaceutical companies profoundly given the outsize contribution of the US market to biopharma revenues and profits.The first round of products subject to negotia

172、tion has now been announced,and by early 2024 pharmaceutical companies will have a clearer idea of the negotiated maximum fair prices that go into effect in 2026 to participate in Medicare.PE investments in the biopharmaceutical sector have tended to focus on derivative plays such as services and su

173、pporting IT,and the impacts of drug negotiations look to be nuanced for investors.For example,biopharmaceutical companies are expected to focus even more on biological molecules such as antibodies,given the longer period between FDA approval and price negotiation the IRA provides(13 years for biolog

174、ics vs.9 years for small molecules).Biopharmaceutical companies will seek to be strategic,conducting multiple drug trials for the same molecule in concert so as to maximize its use and application.For example,a molecule with the opportunity to be used in psoriasis and rheumatoid arthritis may underg

175、o trials on both simultaneously so that in the event that the drug is approved for both conditions,the pharmaceutical company can get the most out of its time window before Medicare negotiations.Understandably,this is the domain of the biopharmaceutical giants that have the financial and commercial

176、wherewithal to coordinate multiple trials simultaneously and scale up manufacturing quickly.In that case,more biologic assets may change hands during development,from smaller biotech companies to biopharma giants.Indeed,there may be increased appetite among firms of any size to partner with capital

177、providers to support the development of promising molecules.This effect,in turn,would be expected to flow through into supporting infrastructure,such as contract development and manufacturing organizations(CDMOs)(see Figure 2).The direct drug price negotiation provisions of the IRA could affect glob

178、al biopharmaceutical companies profoundly given the outsize contribution of the US market to biopharma revenues and profits.28Global Healthcare Private Equity Report 2024Figure 2:2023 brought a larger share of deals in CROs,CMOs,and CDMOs than in previous yearsIVD OEMResearchInstrumentsOther*Notes:E

179、xcludes spin-offs,add-ons,loan-to-own transactions,special purpose acquisitions,and acquisitions of bankrupt assets;based on announcement date;includes announced deals that are completed or pending,with data subject to change;deal value does not account for deals with undisclosed values;values updat

180、edbased on Dealogic 2020 sponsor classifications;values include net debt where relevant;IVD OEM is in vitro diagnostics original equipment manufacturers;Other*includes categories with fewer than 10 deals;Other*includes categories with fewer than 2 deals;2023E annualized assuming the average ratio of

181、 JanuaryNovember to December from 2019 to 2022,based on data through November 30,2023 Sources:Dealogic;AVCJ;Bain analysisDeal count by subsector 201822Deal count by subsector 2023 to date020406080100%020406080100%Biopharma and related servicesActive pharmaceutical ingredientsBiosimilarBiotechCROs/CM

182、Os/CDMOsGenericsHCITOver the counterOtherPharmaOther*Life sciences toolsCROs/CMOs/CDMOs DiagnosticIVD OEMResearchinstruments Other*BiotechCROs/CMOs/CDMOsPharmaOther*HCITAnimalGenericsBiosimilarVaccinesBiocompositesCommercializationEducationEarly innings of growth in advanced modalities Next-generati

183、on modality therapeutics such as cell therapies,gene therapies,mRNA and other RNA therapies,and antibody drug conjugates are riding a long-term growth trend.Growth has stemmed from leaps in fundamental research as well as regulatory and commercial dynamics such as the Inflation Reduction Act.Each mo

184、dality has unique discovery,development,and manufacturing processes that require discrete inputs and services to support the advancement of products.Investment opportunities in this space are tricky to source and win given the requirement to find technical niches and invest ahead of the derisking of

185、 the modality.But for those prepared to compete here,the payoffs can be huge.This year,for example,ArchiMed and Warburg Pincus exited Polyplus in a sale to Sartorius Stedim Biotech for$2.6 billion.29Global Healthcare Private Equity Report 2024The disruption brought about by innovation in advanced mo

186、dalities has led big pharmaceutical companies and small independent biotechs alike to turn to outsourced service providers to complement in-house investmentswitness Bayers$250 million investment in a Parkinsons Disease cell therapy manufacturing facility.In turn,investors have sought to invest in co

187、ntract research organizations(CROs),contract manufacturing organizations(CMOs),and CDMOs with deep ties to pharma sponsors(see Figure 3).Two of the years three largest deals were contract organizationsthe taking private of Syneos Health and the carve-out of Baxter BioPharma Solutions(now known as Si

188、mtra Biopharma Solutions).Investors had the strongest appetite for contract organizations with specialized capabilities and expertise,such as Simtras strength in sterile fill/finish,and smaller preclinical-focused CROs in Europe.Next-generation modality therapeutics such as cell therapies,gene thera

189、pies,mRNA and other RNA therapies,and antibody drug conjugates are riding a long-term growth trend.Figure 3:Outsourced services organizations have become more attractiveNotes:Excludes spin-offs,add-ons,loan-to-own transactions,special purpose acquisitions,and acquisitions of bankrupt assets;based on

190、 announcement date;includes announced deals that are completed or pending,with data subject to change;deal value does not account for deals with undisclosed values;values updated based on Dealogic 2020 sponsor classifications;values include net debt where relevant;includes only deals in the life sci

191、ences tools and biopharma sectors;2023E annualized assuming the average ratio of JanuaryNovember to December from 2019 to 2022,based on data through November 30,2023Sources:Dealogic;AVCJ;Bain analysisAnnounced global healthcare CRO,CMO,and CDMO buyout deal value,$billions(excluding add-on deals)Anno

192、unced global healthcare CRO,CMO,and CDMO buyout deal count(excluding add-on deals)201314151617181920212223E Total deal countDec 2023 forecastNorth AmericaEuropeAsia-PacificRest of world01020304050$224180.312611141730Global Healthcare Private Equity Report 2024PE interest in early-stage therapies and

193、 precommercial devices has grown Historically,activity involving early-stage therapies and precommercial medical devices has been uncommon given the event-driven nature of these investments.But the evolving macro environment and deal market is making some investors increasingly comfortable with eval

194、uating and underwriting such investments.For example,in November TPG led an$85 million series B investment into MBrace Therapeutics,a preclinical antibody-drug conjugate player,via the TPG Life Sciences Innovations Fund(TPG LSI)and The Rise Fund.Competition with strategics for these assets raises th

195、e bar for technical and operations due diligence on the part of private equity.Additionally,its essential to assess value creation opportunities during due diligence to determine whether private equity ownership offers greater growth potential than strategic ownership.To do this,private investors ar

196、e building expertise in many ways including upskilling technical investment teams,acquiring smaller life sciences-focused funds(such as Carlyles acquisition of Abingworth in 2022),raising life sciences-focused investment vehicles,and partnering more closely with professional services firms and opera

197、ting experts.Investors look past the sound and the furyLooking ahead,life sciences innovation appears to be robust and well positioned to deliver pioneering products that solve long-standing health needs and generate economic and societal value.While the biotech sector ran into difficulties with fun

198、d-raising in 2023,investors appear to be looking past the short-term noise and are prepared to invest in promising life science innovations and in the services,products,and IT solutions to support those advances.As a result,this domain has the potential to create attractive returns for their limited

199、 partners while improving patient outcomes.While the biotech sector ran into difficulties with fund-raising in 2023,investors appear to be looking past the short-term noise and are prepared to invest in promising life science innovations and in the services,products,and IT solutions to support those

200、 advances.31By Homer Paneri,Vikram Kapur,Nirad Jain,Kara Murphy,Dmitry Podpolny,Franz-Robert Klingan,and Alex BoultonEconomic,regulatory,and demand factors converge to create a new investing hub in Asia-Pacific.Indias Healthcare Industry Comes of Age At a Glance Private equity deal volume in Asia-Pa

201、cific remained robust in 2023,bucking the slowdown seen in North America.Investors are looking to diversify their geographic presence within Asia-Pacific,which is now experiencing multiple engines of growth.Indias economic growth,business-friendly government,pharmaceuticals manufacturing landscape,a

202、nd thriving middle class are driving investment.Spending on private healthcare,growing pharma manufacturing and services,and an evolving healthcare technology ecosystem are turning India into a private equity hub.Healthcare markets in the Asia-Pacific region are maturingand in parallel,private equit

203、y(PE)deal volume is bucking the slowdown seen in North America(see Figure 1).Asia-Pacifics share of global healthcare PE deals continues to rise,growing from 26%of global deal activity in 2022 to a projected 34%in 2023.32Global Healthcare Private Equity Report 2024Figure 1:Asia-Pacific bucked the de

204、al slowdown found in North America in 202335%*28%*34%*383Notes:Excludes spin-offs,add-ons,loan-to-own transactions,special purpose acquisitions,and acquisitions of bankrupt assets;based on announcement date;includes announced deals that are completed or pending,with data subject to change;deal value

205、 does not account for deals with undisclosed values;values updatedbased on Dealogic 2020 sponsor classifications;values include net debt where relevant;2023E annualized assuming the average ratio of JanuaryNovember to December from 2019 to 2022,based on data through November 30,2023;*percentages ref

206、lect the year-to-date share of volume by regionSources:Dealogic;AVCJ;Bain analysisGlobal healthcare buyout deal volume(excluding add-on deals)North AmericaEuropeAsia-PacificRest of worldDec 2023 forecast20121951320914188151991620617265183161931320380215152247%26%26%35323EThe Asia-Pacific region has

207、seen intensified deal activity outside of Chinahistorically the main engine of transactions in the areaand is being transformed into a region with multiple engines of growth.Buyouts increasingly occurred across the geography,from the high-income economies like Australia and South Korea to budding mi

208、ddle-income nations such as India.About two-thirds of the deals in India were executed by funds with less than$50 billion in assets under management(AUM),illustrating the wealth of activity outside of megacap funds.In China,many investors have stayed on the sidelines as the country navigates an evol

209、ving healthcare policy,Covids impact on public budgets,and a softening economy.Nonetheless,Chinese activity has begun to rebound,rising from 21 deals in 2022 for a total of$1.6 billion in value,to a projected 58 deals in 2023,reaching around$3.4 billion in value(see Figure 2).Overall,Asia-Pacific bu

210、yout activity declined,from$17.1 billion in 2022 to$14.2 billion in 2023,though it held up well compared with other regions.33Global Healthcare Private Equity Report 2024Figure 2:Chinas rebound in deal volume during 2023 largely accounts for the overall rise in volume in Asia-Pacific7058Notes:Exclud

211、es spin-offs,add-ons,loan-to-own transactions,special purpose acquisitions,and acquisitions of bankrupt assets;based on announcement date;includes announced deals that are completed or pending,with data subject to change;deal value does not account for deals with undisclosed values;values updated ba

212、sed on Dealogic 2020 sponsor classifications;values include net debt where relevant;2023E annualized assuming the average ratio of JanuaryNovember to December from 2019 to 2022,based on data through November 30,2023Sources:Dealogic;AVCJ;Bain analysisAsia-Pacific healthcare buyout deal volume excludi

213、ng China(excluding add-on deals)China healthcare buyout deal volume(excluding add-on deals)20193920582161227123E16%1%9%49%5%Annualchange201929209821118222123E82%177%36%238%20%Annualchange South KoreaAustralia/New ZealandIndiaOtherSE AsiaJapanDec 2023 forecastDec 2023 forecastMany biopharma and medte

214、ch companies have shifted toward a“China plus one”strategy:diversifying beyond China and creating opportunity for input and final product manufacturers in countries with deep talent pools,low labor costs,and business-friendly environments.Moreover,private spending on healthcare is on the rise across

215、 Asia-Pacific,as economic growth lifts millions of people into the middle class and health takes on new importance in the wake of the pandemic.India stands out as the main force expanding Asia-Pacifics share of global deal activity,accounting for roughly 30%of the regions deal value from 2022 to 202

216、3(see Figure 3).Resilient economic growth,a business-friendly government,a maturing pharmaceutical manufacturing landscape,and a burgeoning middle class eager to pay for quality healthcare have resulted in many investment opportunities.In 2023,India is expected to host 22 healthcare deals,a slight d

217、ecline from the 26 in 2022.Deal value is expected to come in at$4.6 billion in 2023,just below the$4.7 billion in 2022,with India remaining the leader in deal value across the region.34Global Healthcare Private Equity Report 2024Figure 3:India leads the Asia-Pacific region in deal value3.44.62.92.31

218、4.2Notes:Excludes spin-offs,add-ons,loan-to-own transactions,special purpose acquisitions,and acquisitions of bankrupt assets.Based on announcement date;includes announced deals that are completed or pending,with data subject to change;deal value does not account for deals with undisclosed values;va

219、lues updated based on Dealogic 2020 sponsor classifications;values include net debt where relevant;2023E annualized assuming the average ratio of JanuaryNovember to December from 2019 to 2022,based on data through November 30,2023Sources:Dealogic;AVCJ;Bain analysisAsia-Pacific healthcare buyout deal

220、 value,$billions(excluding add-on deals)020406080100%2019$11.52016.92117.8221.64.73.82.83.617.123E4%17%27%48%5%AnnualchangeChinaIndiaSE AsiaJapanSouth KoreaAustralia/New ZealandOtherImportantly,exits for investors in India have been strong,validating the countrys significant upside potential.Deal se

221、lection was still critical to generate returns during this period,as demonstrated by notable exits such as TPGs 2023 sale of a controlling stake in Care Hospitals to Blackstone.Global PE investors have grown more comfortable putting larger amounts of capital to work in India,making the market more c

222、ompetitive.Moreover,more transactions are becoming controlling deals,as the perceived risk of making large investments in India diminishesincluding for owners,who are often founders of the healthcare asset,and who are becoming more comfortable handing over the reins to investors.Three forces behind

223、Indias rise Indias rise as a new hub of healthcare PE deal activity stems from three factors:greater expenditure on private and public healthcare,booming pharma manufacturing and services,and an evolving healthcare technology ecosystem.35Global Healthcare Private Equity Report 2024Figure 4:Private a

224、nd public spending on healthcare have been rising in IndiaSources:S&P Household Income Projections;Fitch Solutions Health ExpenditureHealth spending in India,$billionsAnnual changeAverage household income in India,$thousandsGovernmentspendingPrivatespendingAveragehouseholdincome05102013$771479158216

225、861787188719842089211062210823119Household income Private spending8%4%11%3%16%3%4%2%4%3%0%13%4%2%11%12%12%27%3%1%0%6%7%20%16%3%13%14%17%22%Government spending Spending on private and public healthcare:Indias fast-growing middle class is spending more on healthcare.With disposable incomes rising and

226、an explosion of insurance technology(insurtech)platforms and private payers(such as Digit and Acko),private healthcare has become more accessible.Moreover,Covid served to reset consumers attitudes about their own spending on healthcare,as a large share of the population personally witnessed Covid-re

227、lated tragedies,shoring up the importance of health in their minds.Meanwhile,government health expenditures have risen significantly over the past decade(from around 29%of total health expenditure in 201415 to approximately 39%in 202122S&P Global data),and healthcare spending is expected to grow fur

228、ther(see Figure 4).Demand for high-quality healthcare has been met with supply as more investors enter the market.Multi-specialty hospitals have seen a flurry of activity over the past decade,including deals in 2023,such as Temaseks acquisition of an additional 41%of Manipal Health Enterprises(bring

229、ing its ownership to 59%)for around$2 billion,and Blackstones acquiring a controlling stake in Care Hospitals for some$800 million from TPG.More recently,single-speciality clinics have seen a surge in activity,most notably with BPEA EQTs acquisition of a controlling stake in Indira IVF,an in vitro f

230、ertilization clinic chain,valued at$1.1 billion.36Global Healthcare Private Equity Report 2024Booming pharma manufacturing and services:Indias stature in small molecule manufacturing has risen.Supportive government policy(including the Production Linkage Incentive program),a vast pool of chemistry a

231、nd engineering talent,a strengthening pharma ecosystem,and a push to diversify supply chains from China have propelled Indias rise to a top-3 global manufacturer of pharmaceuticals by volume,and the top global generics manufacturer.Covid further boosted India to the top position in vaccine manufactu

232、ring,supplying 50%of global vaccine demand.For PE investors,Indias emergence as a leading pharma hub has created an opportunity in pharma services,especially manufacturing services,such as contract development and manufacturing organizations(CDMOs)and active pharmaceutical ingredient(API)producers.G

233、lobal PE fundsincluding Advent International under its Cohance Lifesciences brand,Carlyle via drugmaker Viyash,and PAG via Sekhmet Pharmaventurescontinued to grow their API/CDMO platforms started in 202122 with a number of add-ons.While small molecules have been the focus to date,there are early sig

234、ns that large molecules,especially biologics,may be the next frontier as many such therapies start to go off patent,creating opportunity for generics.But China may have the leg up in generics,given its deeper talent pools in key areas of expertise such as microbiology.Evolving healthcare technology

235、ecosystem:India has historically served as the back end for many US-and Europe-focused healthcare data and analytics companies,such as revenue cycle outsourcers.However,in recent years,digital health companies serving the Indian market directlyespecially in fitness and wellness,such as HealthifyMe,t

236、elemedicine,such as Mfine,and insurtech,including Turtlemint and Evenhave seen brisk activity.While dealmaking in digital health has slowed,long-term fundamentals,notably a young population eager to engage digitally,remain strong for Indian companies operating at the intersection of healthcare and t

237、echnology.Investors vie over opportunitiesIndias share of global deal activity remains on an upward trajectory.Private providers (both multispecialty and single specialty)present significant long-term opportunity,given the fragmentation and underpenetration in healthcare currently.Investors that can

238、 scale up to deliver high-quality care that meets the surging demand in the Indian market have the potential to replicate the generous returns seen in recent years.Similarly,pharma manufacturing will continue to present opportunity for private equity,given the sectors fragmentation,supportive govern

239、ment policies,and potential in biologics and generics.The past few years have proved that the risk-return profile of investing in healthcare in India is very favorable:For relatively small incremental risk above higher-income markets,the potential for strong return is significant.38Global Healthcare

240、 Private Equity Report 2024Key contacts in Bains Healthcare Private Equity teamHealthcare Private Equity team leadersNirad Jain in New York(Nirad.J)Kara Murphy in Boston(Kara.M)Franz-Robert Klingan in Munich(Franz-Robert.K)Dmitry Podpolny in London(Dmitry.P)Alex Boulton in Singapore(Alex.B)Vikram Ka

241、pur in Singapore(Vikram.K)Healthcare and Life Sciences practice leadersTim van Biesen in New York(Tim.vanBiesenB)Vikram Kapur in Singapore(Vikram.K)Loc Plantevin in Paris(Loic.P)Joshua Weisbrod in New York(Joshua.W)Healthcare Private Equity team membersIshaan Anand in San Francisco(Ishaan.AnandB)Mar

242、ia Arnaoudona in New York(Maria.A)Roch Baranowski in Warsaw(Roch.B)Slavena Bardarova in London(Slavena.B)Jon Barfield in New York(Jon.B)Alan Barnes in New York(Alan.BarnesB)Eric Berger in Boston(Eric.B)Patrick Biecheler in Paris(Patrick.B)Pierre-Antoine Bodin in Paris(Pierre-Antoine.B)Michael Brooks

243、hire in Dallas(Michael.B)Kevin Chang in Hong Kong(Kevin.C)James Cleary in Boston(James.C)Benjamin Cooke in San Francisco(Benjamin.C)Cira Cuberes in Madrid(Cira.C)Evan Dadosky in Chicago(Evan.DadoskyB)Valerio Di Filippo in Rome(Valerio.DiF)Justin Doshi in Atlanta(Justin.D)Caitlin Dowling in New York(

244、Caitlin.D)Jason Evers in Chicago(Jason.E)Aaron Feinberg in New York(Aaron.F)Lorenzo Ferroni in Rome(Lorenzo.F)39Global Healthcare Private Equity Report 2024Sharon Fry in New York(Sharon.F)Parijat Ghosh in New Delhi(Parijat.G)Kai Grass in Dsseldorf(Kai.G)Justas Grigalauskas in London(Justas.G)Jeff Ha

245、xer in Chicago(Jeff.H)Sarah Hershey in Boston(Sarah.H)Junya Ishikawa in Tokyo(Junya.I)Sarwar Islam in London(Sarwar.I)Todd Johnson in New York(Todd.J)Kalyan Jonnalagadda in New York(Kalyan.J)Laila Kassis in Boston(Laila.K)Tom Kidd in Singapore(Tom.K)Fabio La Mola in Singapore(Fabio.LaM)Christian Lan

246、gel in Zurich(Christian.L)Jeremy Martin in Atlanta(Jeremy.M)Lachlan McMurdo in Melbourne(Lachlan.McM)Dieter Meyer in Zurich(Dieter.M)Giovanni Battista Miani in London(GiovanniBattista.M)Alexander Mitscherlich in Munich(Alexander.M)Kenji Mitsui in Tokyo(Kenji.MitsuiB)Erin Ney in Boston(Erin.N)Dave Ni

247、erenberg in Boston(Dave.N)Homer Paneri in Mumbai(Homer.P)Christoffer Precht in Stockholm(Christoffer.P)Anshul Rana in Boston(Anshul.RanaB)Derek Riesenberg in Boston(Derek.R)Arathi Sasidharan in Singapore(Arathi.S)Christoph Schlegel in Frankfurt(Christoph.S)Ben Siegal in Boston(Ben.S)Jason Slocum in

248、Boston(Jason.S)Quinn Solomon in San Francisco(Quinn.S)Monika Sood in New Delhi(Monika.SoodB)Dale Stafford in Washington,DC(Dale.S)Dhruv Sukhrani in Dubai(Dhruv.SukhraniB)Matt Sullivan in San Francisco(Matt.S)Simon Sun in Shanghai(Simon.S)Mike Vandenberg in Denver(Michael.VandenbergB)Daphn Vattier in

249、 Paris(Daphne.V)Jim Verbeeten in Tokyo(Jim.VerbeetenB)James Viles in Sydney(James.V)Jon Webber in Atlanta(Jon.W)40Global Healthcare Private Equity Report 2024Eli Weinberg in New York(Eli.W)Jeff Woods in Boston(Jeff.W)Grace Wynn in Boston(Grace.W)Sarah Yanes in New York(Sarah.Y)Sungwon Yoon in Seoul(

250、Sungwon.Y)Bold ideas.Bold teams.Extraordinary results.Bain&Company is a global consultancy that helps the worlds most ambitious change makers define the future.Across 65 cities in 40 countries,we work alongside our clients as one team with a shared ambition to achieve extraordinary results,outperfor

251、m the competition,and redefine industries.We complement our tailored,integrated expertise with a vibrant ecosystem of digital innovators to deliver better,faster,and more enduring outcomes.Our 10-year commitment to invest more than$1 billion in pro bono services brings our talent,expertise,and insig

252、ht to organizations tackling todays urgent challenges in education,racial equity,social justice,economic development,and the environment.Since our founding in 1973,we have measured our success by the success of our clients,and we proudly maintain the highest level of client advocacy in the industry.For more information,visit