Press release

Healthcare private equity deal value in asia pacific scales new heights in 2015, toppling previous records

Healthcare private equity deal value in asia pacific scales new heights in 2015, toppling previous records

According to Bain & Company, investors interested in deepening and broadening their portfolios in Asia Pacific are flocking to the region’s developing markets, especially China and India, where activity in the healthcare sector continues to surge

  • April 20, 2016
  • min read

Press release

Healthcare private equity deal value in asia pacific scales new heights in 2015, toppling previous records


According to Bain & Company, investors interested in deepening and broadening their portfolios in Asia Pacific are flocking to the region's developing markets, especially China and India, where activity in the healthcare sector continues to surge

Shanghai – April 20, 2016 – Healthcare private equity (PE) investments in Asia Pacific again broke new records in 2015. For the second year in a row, vigorous activity in China and India amplified the region's performance, representing the majority of deal value relative to Asia Pacific's developed markets and demonstrating the changing pattern of capital flows across the region. Yet, as opportunity abounds so too does mounting competition, requiring investors to remain nimble and creative in their deal-making strategies.

According to the fifth annual Global Healthcare Private Equity and Corporate M&A Report from Bain & Company, buyout deal value in Asia Pacific's healthcare sector rose to $4.9 billion last year, besting records set in 2013 and 2014.  Private investments in public equities (PIPEs) also surged, bringing nearly $1 billion of additional capital into the region – almost double the $575 million total in 2014. Yet, even as deal value rose, the number of buyout deals fell from 45 in 2014 to 23 in 2015.  Bain suggests this was largely due to a shift toward PIPEs, not a change in investors' appetites, as evidenced by the large amount of capital deployed in the region and a marked growth in the average deal size.  The year's largest healthcare buyout globally was the take-private of U.S. listed, China-domiciled WuXi Pharmatech.

"The healthcare private equity market in Asia Pacific was, up until recently, fairly nascent, characterized by small deals in limited sub-sectors within healthcare," said Vikram Kapur, a partner in Bain's Global Healthcare and Private Equity Practices and co-author of the report. "Last year, we saw investors looking for opportunities to deepen and broaden their exposure in the region, viewing healthcare as the right prescription to navigate economic turbulence and deliver big returns."

Geographic and Sector Trends 

  • China:  China's 13th Five-Year Plan – which calls for building domestic medtech capabilities, expanding access to healthcare providers, and using digital health to lessen the cost of, and improve access to, healthcare – and the popularity of take-privates of U.S.-listed Chinese assets spurred much of the activity in China last year and contributed to a shift in focus from biopharma to provider and digital health assets. 
    Taken together, these trends fueled substantial Chinese deal activity across several assets: provider, healthcare IT, and biopharma services. They also attracted corporate interest, raising the level of competition for assets – specifically fostering more partnerships between corporate and PE buyers. For example, the three "Internet champions" of China—Baidu, Alibaba and Tencent—are investing in a mix of online and offline healthcare assets, sometimes partnering with PE firms. Medtech was notably quiet (relative to other segments), but activity will likely pick up in the coming years as more assets reach threshold scale.
  • India:  Bain sees several drivers responsible for invigorated healthcare PE activity in India. First, amid expansion of the country's middle class, demand for healthcare has outpaced supply.  Next, many segments remain highly fragmented.  Finally, the regulatory environment is supportive of the private sector to take an active role in the industry.
    PE investors continue to be quite active in India's provider sector, despite increased competition from corporate buyers.  Additionally, pharma assets proved to be popular with activity in the biopharma sector picking up in 2015.  This was true for both investments targeting global demand for pharmaceuticals and those focused on the expected growth of local demand for pharmaceuticals.

"With more PE funds on the healthcare hunt in Asia-Pacific, investors are looking for ways to diversify their portfolios and get an edge on intensifying competition for assets," said Kapur.  "As a result, they are testing the waters in new industry sub-sectors.  In China, investors are focusing more on the provider sector and digital health rather than biopharma, and in India, biopharma is capturing attention."

  • Southeast Asia: The region had strong PE interest in the provider sector, which materialized into some deal activity. However, investors continued to struggle to find the right growth model for assets—scale or scope—that would justify the high valuation expectations and overcome the constrained infrastructure that has dampened activity.
  • Asia-Pacific's developed markets:  Deal activity in the region's developed markets continued to be opportunistic, with a few midsize deals in the provider and biopharma sectors. Interestingly, some emerging-market corporate buyers acquired assets in the region's developed markets, which heightened competition for assets in the sweet spot for PE. 

Across the board, both valuations and competition were high, underscoring the growing need for sector expertise in Asia.  This environment also forced investors to think more creatively about how to bring value to their assets via new products, channels, or geographies.  It also spurred more opportunities for financial investors and corporates to partner on deals.

A Look Ahead:  2016 and Beyond
Healthcare will continue to grow in importance as a key component of Asia Pacific portfolios for major global and local funds, driven by: regulations that encourage investment; more assets reaching threshold scale; and more investors building the required expertise to diligence and manage healthcare assets.  In addition, concerns about slowing growth in China and a potential global recession will likely turn more APAC-based investors to healthcare because of its benign fundamentals and resilience to variable economic cycles. 

Bain has identified the four ‘needs' that investors must address as they evaluate new opportunities and shore up their existing portfolios against the backdrop of increasingly turbulent macro conditions and intensifying competition for assets in the region:

  1. Develop a very clear investment thesis centered around the differential "value add" the investor can bring to the asset relative to other investors 
  2. Execute a more robust due diligence process with a balanced focus on top and bottom line drivers and, in some cases, conducting "re-diligence" with existing portfolio companies to re-validate if the initial investment thesis still holds 
  3. Pivot the traditional growth playbook to one that balances growth with more active engagement in operational improvement – and have an explicit plan to navigate a potential downturn 
  4. Put the right team in place to be a partner on the journey

To receive a copy of report or arrange an interview with Mr. Kapur, contact:  Dan Pinkney at or +1 646 562 8102

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