Healthy returns The life sciences and healthcare sector, meanwhile, has delivered consistent deal flow over time. Big pharma companies have regularly turned to M&A to fill their drug pipelines and push back patent cliffs, presenting buyout investors with a reliable channel for exits. PE will continue investing in healthcare and healthcare-adjacent businesses due to demand growth driven by aging populations and chronic diseases; resilient payer-backed cash flows; and fragmented markets that present attractive opportunities to create efficiencies and better patient experience. In tech- enabled lower-cost care settings and biopharma services, there are opportunities for investors to scale platforms, drive operational efficiencies, and capture value despite heightened regulatory and reimbursement scrutiny. PE firms have also jumped at newer opportunities to invest in certain life sciences services companies. Contract development and manufacturing organizations (CDMOs), which provide drug development and manufacturing services to pharmaceutical companies on a contract basis, provide one example of a market segment that has attracted significant buyout investment. The diversity of drivers in the sector is demonstrated in two of the deals in which Dechert had an advisory role. In August, PE health specialist ARCHIMED announced a carve-out of ARK Diagnostics, which valued the target at US$428 million; and, three months later, Morgan Stanley Capital Partners (MSCP) sold Clarity Software Solutions, a provider of health plan member communication services, to health experience and insights company mPulse. Healthcare and life sciences also continue to present a broad range of assets into which PE can lean. Of those expecting to invest in the sector, three-quarters are planning to invest in its industry-specific technologies and care service lines, while 71% are planning to invest in biomed/genetics. Home health, home care, and hospice also remain in the sights of a majority of respondents (57%), even with U.S. federal reimbursement uncertainties at present. From a long list of macro-trends, 57% of respondents planning to invest in the life sciences and healthcare sector point to issues surrounding global trade as having a top- three significant impact on their industry-specific investment thesis and business strategies. This is in addition to the macro-trends associated with unmet patient needs and value-based care and alternative reimbursement models, each selected by 48% of respondents. Concierge medicine (e.g., wellness, innovation, private/cash-pay patient care), a first-time survey choice, was selected by 41% of respondents as a top-three macro-trend for this sector. As the population ages, this sector could prove very attractive for PE managers in the coming years.
[If Life sciences & healthcare selected] Which of the following healthcare subsectors are you considering/planning to invest in? (Select all that apply)
HȃǸlth IT/HȃǸlth Tȃch/AI in hȃǸlthcǸrȃ
76%
Biomȃd/Ȍȃnȃtics
71%
Homȃ hȃǸlth, homȃ cǸrȃ, Ǹnd hospicȃ
57%
PhǸrmǸ sȃrvicȃs (includinȌ spȃciǸlty phǸrmǸ)
51%
MȃdicǸl instrumȃnts/products/dȃvicȃs
48%
HospitǸls Ǹnd hȃǸlth systȃms/clinics (ȃ.Ȍ., ASCs, urȌȃnt cǸrȃ)
45%
OutpǸtiȃnt cǸrȃ (ȃ.Ȍ., ȃyȃ cǸrȃ, ENT, orǸl surȌȃry, pǸin mǸnǸȌȃmȃnt, primǸry cǸrȃ, dȃrmǸtoloȌy, cǸrdioloȌy, uroloȌy, ȌǸstroȃntȃroloȌy, OB-GYN)
44%
RȃtǸil hȃǸlthcǸrȃ
24%
BȃhǸviorǸl hȃǸlth Ǹnd disǸbility sȃrvicȃs (i.ȃ., I/DD sȃrvicȃs, Ǹutism sȃrvicȃs)
17%
DȃntǸl cǸrȃ
15%
VȃtȃrinǸry sȃrvicȃs
4%
Rȃvȃnuȃ cyclȃ mǸnǸȌȃmȃnt
1%
TȃlȃhȃǸlth
1%
[If Life sciences & healthcare selected] Which macro-trends are having the greatest impact on your investment thesis and/ or investment strategy regarding healthcare and healthcare- adjacent businesses? (Select up to three)
GlobǸl trǸdȃ
57%
VǸluȃ-bǸsȃd cǸrȃ Ǹnd ǸltȃrnǸtivȃ rȃimbursȃmȃnt modȃls
48%
Unmȃt pǸtiȃnt nȃȃds
48%
ConciȃrȌȃ mȃdicinȃ (ȃ.Ȍ., wȃllnȃss, innovǸtion, privǸtȃ/cǸsh-pǸy pǸtiȃnt cǸrȃ)
41%
ArtificiǸl intȃlliȌȃncȃ/tȃch-drivȃn Ȍrowth
37%
PǸyor rȃimbursȃmȃnt (ȃ.Ȍ., CMS, third-pǸrty pǸyors)
31%
Cybȃrsȃcurity, privǸcy Ǹnd hȃǸlth dǸtǸ dȃvȃlopmȃnts
17%
Anti-trust considȃrǸtions (fȃdȃrǸl Ǹnd stǸtȃ (ȃ.Ȍ., mini-HSR lǸws, ownȃrship disclosurȃs))
7%
RȃȌulǸtory considȃrǸtions (Ǹsidȃ from thosȃ prȃviously mȃntionȃd)
5%
FrǸud Ǹnd Ǹbusȃ ȃnforcȃmȃnt (ȃ.Ȍ., StǸrk LǸw, Anti-KickbǸck StǸtutȃ, FǸlsȃ ClǸims Act)
0%
18
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