Private equity (PE) firms are expanding their investments beyond China into the broader Asia-Pacific region, where deal value rose at a roughly 21% compound annual growth rate (CAGR) since 2016 (see Figure 1). However, deal volume in the region has declined significantly since 2023, due to a variety of factors: a slowdown in dealmaking in China (which accounted for 44% of the Asia-Pacific region’s healthcare PE deal volume last year), a shift in volume to India, Japan, and South Korea (see Figure 2), and increased competition from strategic players with an appetite to pursue mergers and acquisitions (M&A).

Figure 1

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. Together, these three markets present PE firms with prime opportunities to diversify portfolios and ride stronger underlying conditions in the region’s evolving healthcare landscape.

India continues its ascent

In 2024, India emerged as the largest market in the region by volume, accounting for 26% of the Asia-Pacific region’s total deal volume. India also appears more resilient to deal downturns than other countries in the region, with buyout volumes dipping only 18% from 2023, vs. a nearly 49% drop across Asia-Pacific overall. India’s buoyant capital markets and favorable economic growth outpaced expectations at about 7% GDP growth in 2024. Successful PE exits with strong returns, such as Advent International’s $1.6 billion sale of BSV Group to Mankind Pharma, have also validated India’s buyout market, making it more attractive for future investment.

Figure 2

India’s strong growth is projected to continue, with healthcare spending expected to reach $320 billion by 2028. Investments have focused on the provider and related services space and biopharma and related services, with a sharper focus on provider deals over the past two years (see Figure 3). In the provider space, investments have gravitated to hospitals, clinics, and supporting services. Among some of the notable examples are Morgan Stanley’s acquisition of a minority stake in the Hyderabad Institute of Oncology; Blackstone’s longer-term buy-and-build strategy with Care Hospitals (acquired in 2023), which will include multiple tuck-in acquisitions; and Advent’s investment in Apollo Hospital Enterprise’s digital health platform, Apollo 24|7. Meanwhile, in biopharma, investors have centered on contract development and manufacturing organizations (CDMOs), contract manufacturing organizations (CMOs), and generic pharma manufacturers.

Additionally, India has consistently delivered favorable returns and has enabled a range of successful exits for PE firms through initial public offerings (boosted by strong public markets), strategic acquisitions (bolstered by acquirers’ strong balance sheets), and sponsor-to-sponsor deals (such as KKR’s $839 million acquisition of Healthium Medtech from Apax Funds). With a proven track record, favorable macroeconomic conditions, and a diverse healthcare landscape, India is expected to remain a prime investment location for PE firms.

Figure 3

A strengthening Japanese market

Healthcare PE investments in Japan are rising fast, growing at a 20% CAGR since 2019. Improved corporate governance, including the increased focus on price-to-book ratios and recent M&A code revisions that emphasize “market checks,” allows PE firms to find more opportunities for carve-outs and privatizations. As capital flows redirect as a result of China’s economic slowdown, Japan’s high returns are drawing in limited partners (LPs) and contributing to a wave of acquisitions across industries.

These dynamics, which have boosted PE activity overall, are pronounced in healthcare because of Japan’s aging demographics and emphasis on pharmaceutical innovation. With nearly 30% of the population aged 65 and older and 10% over 80, demand for healthcare and senior-care services is soaring. This trend underpins J-STAR’s 2024 investment in nursing home and home-care operator Caregiver Japan. At the same time, the focus on pharmaceutical innovation is propelling interest in Japanese biopharma and services assets. Looking ahead, Japan’s stable market, demographic trends, and opportunities for partnering with large conglomerates to accelerate value creation will continue to attract healthcare investment.

Growing interest in South Korea medtech

South Korea is emerging as a major center for deals in Asia-Pacific, led by several large investments. South Korea’s share of regional deal value rose to 26% in 2024—an eight-percentage-point jump from 2023 (see Figure 4). This growth echoes trends seen in India and Japan, such as slowing inflation, an aging population seeking more healthcare services, and regulatory reforms designed to attract foreign investment, especially within the medtech sector.  

Many medtech companies attracting PE investors in the region typically focus on offerings with global markets in segments such as aesthetic skincare and dental health. For example, aesthetic device maker Jeisys Medical was recently taken private by Archimed. South Korea’s healthcare landscape is also opening up for investments in derivative and adjacent businesses. For example, MBK Partners acquired Geo-Young—a pharmaceutical wholesaler serving pharmacies, hospitals, and medtech companies—from Blackstone.

Figure 4

Growing interest in the broader region

In 2024, a lineup of major healthcare deals reshaped the Asia-Pacific region’s investment landscape. China, in particular, has become a unique hotbed for strategic carve-outs, as global multinationals spin off local operations to enable a more targeted approach to Chinese markets. A prime example is UCB Pharma’s divestiture of its neurology and allergy portfolio in China to Mubadala and CBC Group, which also underscores the growing influence of Chinese and Middle Eastern capital.

A similar trend is evident in Southeast Asia, where regional players seek lucrative exit and carve-out opportunities. For example, Affinity Equity Partners recently closed a near-billion-dollar sale of Island Hospital in Malaysia to IHH Healthcare, a Kuala Lumpur-based healthcare group. Australia, meanwhile, remains a magnet for healthcare infrastructure investments, with several large sponsor-owned assets expected to enter the market soon, indicating significant transactions on the horizon.

We are optimistic about the future of healthcare PE investment in Asia-Pacific. India continues to exhibit robust growth opportunities in dealmaking, particularly in the provider space, supply-chain management, and CDMOs. Simultaneously, the more mature markets of Japan and South Korea provide a balance to the growth investments in China and India. The rest of the region, including Australia, holds great promise, with numerous assets expected to re-enter the market in coming years. That said, the issue of how domestic and international investors adjust to the region’s evolving economic landscape—notably, the question of how China’s economy recovers—remains central to future deal strategies.