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-January 9, 2025- 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."

ENDS

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