Spurred by megadeals, global healthcare private equity deal value soared to $115 billion in 2024, the second-highest total on record

    --  Despite high borrowing costs and extended hold times in 2024, dealmaking
        roared ahead for healthcare private equity with a heavy focus on
        biopharma
    --  North American and European deal activity surged in 2024, offsetting a
        49% decline in deal volume in Asia-Pacific since 2023

NEW YORK, Jan. 9, 2025 /PRNewswire/ -- Global healthcare private equity (PE) soared in 2024 to an estimated $115 billion, reaching the second-highest deal value total on record. This surge was propelled by an increase in the number of large deals. In total, five transactions exceeded $5 billion, compared with two deals in 2023 and one in 2022. North America continues to be the largest market, representing 65% of global deal value, with Europe and Asia-Pacific accounting for 22% and 12%, respectively. Deal volumes remained steady relative to historical levels, with a wave of activity in North America and Europe offsetting a 49% decline in deal volume in Asia-Pacific since 2023.

These are among the findings of Bain & Company's Global Healthcare Private Equity Report 2025, published today.

"The healthcare private equity market came roaring back last year, due in large part to an influx of large-scale transactions, especially in biopharma," said Kara Murphy, partner at Bain & Company and co-leader of its Healthcare Private Equity team. "We also saw a rebound of dealmaking in healthcare IT. Looking ahead to 2025, we expect LPs to continue to embrace mid-market fund managers for their strong returns and industry expertise. Smart investors will keep an eye on opportunities brought about by carve outs, and they will bake value creation principles into their diligences."

European dealmaking rebounds to record highs
In Europe, deal volume has surged past its 2021 peak, boosted by a focus on smaller deals in the first half of the year. Biopharma and medtech were two of the leading sectors in 2024, as firms that purchased assets in these sectors can easily scale up across the region. Bain is optimistic about the European market, given the strong growth in buyout volume and a stabilizing macroenvironment. The firm anticipates the uptick in deal activity will continue, with the potential for more megadeals.

Large deals drive biopharma value
The biopharma sector continues to lead healthcare deals in value, fueled by several major transactions in 2024. Despite the record buyout deal value in biopharma, overall volume in the biopharma and life sciences tools sectors dropped by 5% and 10%, respectively, since 2020 in terms of compound annual growth rate (CAGR). There are several reasons for this, including the struggle between buyers and sellers to align on sale prices and reduced spending in pharma services following a sharp decline in venture capital funding for US biopharma.

A resurgence of healthcare IT deals
Healthcare IT dealmaking rebounded in 2024 due to several factors. First, providers, facing financial pressures and shifting reimbursement models, are investing in core systems to boost efficiency. In response, PE firms are increasingly investing in assets supporting workflow improvements. In addition, payers, looking to improve payment integrity, are investing in advanced analytics. At the same time, biopharma companies are upgrading clinical trial IT infrastructure to accelerate and improve drug development amid tighter funding and regulatory demands.

Four trends reshaping the healthcare PE landscape

    --  Mid-market funds continue to innovate. Mid-market healthcare-focused
        funds have historically outperformed the broader market, benefiting from
        continued innovation and evolution of their investment strategies. They
        have also been able to maintain buyout deal activity and exits since
        2020 even as the broader healthcare buyout market struggled. This
        performance has translated into strong fund-raising. Mid-market funds
        with healthcare exposure have raised about $59 billion since 2022,
        exceeding fund-raising in the previous three years by about 40%. While
        historically more concentrated in provider assets, mid-market PE firms
        have expanded their focus in healthcare IT and provider services while
        maintaining a strong presence in biopharma and medtech.

    --  Carve-outs open up value in a tight deal market. Despite annual
        variability in deal activity, healthcare carve-outs have been on an
        upward trajectory since 2010, propelled by a mix of public companies
        trying to improve shareholder value and PE firms eager to acquire
        sizable assets. Successful carve-outs allow public companies to improve
        margins and focus on revenue growth, reducing leverage and complexity.
        They enable PE funds to buy overlooked assets with strong potential for
        value creation under new ownership. Given reduced sponsor-to-sponsor
        deal activity since the peak in 2022, the combination of carve-outs and
        public-to-sponsor deals has drawn a variety of investors seeking to
        deploy capital in scalable assets across all healthcare sectors with
        value-creation potential.

    --  Exit value maximization is a strategic imperative. Healthcare private
        equity exit deal volume remained low in 2024--down 41% from its 2021
        peak--as high interest rates and misalignment between buyers and sellers
        prolonged hold periods and strained funds' ability to return capital to
        their limited partners (LPs). While multiple expansion propelled almost
        half of total deal returns historically, this lever is unlikely to power
        returns in the years ahead to the same degree. To develop a successful
        exit strategy, sellers must take an unbiased view of the asset's
        performance and progress and have a plan for future value creation.
        Buyers that bake value creation principles into their pre-acquisition
        diligence gain a competitive edge.

    --  Asia-Pacific investment has evolved. PE firms are expanding their
        investments beyond China into the broader Asia-Pacific region, where
        deal value rose at a roughly 21% CAGR since 2016. However, deal volume
        in the region has declined significantly since 2023, due to a slowdown
        in dealmaking in China; a shift in volume to India, Japan, and South
        Korea; and increased competition from strategic players with an appetite
        to pursue 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.

"We are optimistic about the outlook for healthcare private equity in the year ahead, particularly as deal multiples begin to plateau--paving the way for better bid-ask alignment--and a growing base of tradable assets presents new opportunities," said Nirad Jain, partner at Bain & Company and co-leader of its Healthcare Private Equity team. "Lower interest rates in the U.S., and stable economic growth in regions like Japan and India, indicate favorable investment conditions. Looking ahead, asset buildup in PE portfolios, together with increased pressure from LPs to provide liquidity, suggests an imminent increase in sponsor exits."

Media contacts

To arrange an interview or for any questions, please contact:

Katie Ware (New York) -- Email: katie.ware@bain.com

Gary Duncan (London) -- Email: gary.duncan@bain.com

Ann Lee (Singapore) -- Email: ann.lee@bain.com

About Bain & Company

Bain & Company is a global consultancy that helps the world's 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, outperform 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 insight to organizations tackling today's urgent challenges in education, racial equity, social justice, economic development, and the environment. We earned a gold rating from EcoVadis, the leading platform for environmental, social, and ethical performance ratings for global supply chains, putting us in the top 2% of all companies. 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.

View original content to download multimedia:https://www.prnewswire.com/news-releases/spurred-by-megadeals-global-healthcare-private-equity-deal-value-soared-to-115-billion-in-2024-the-second-highest-total-on-record-302346240.html

SOURCE Bain & Company