India a main force in Asian Healthcare deal activity: Bain & Co

The year had notable exits like TPG’s sale of a controlling stake in Care Hospitals to Blackstone.

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India emerged as a major player in the Asia-Pacific region contributing to almost 30 percent of the region's share of global healthcare deal activity in 2023, as per a report by Bain & Co. The report identified four factors that contributed to the rise in investment opportunities in India's healthcare segment.

These were resilient economic growth, a business-friendly government, a maturing pharmaceutical manufacturing landscape, and a growing middle class that is willing to pay for quality healthcare. The report further stated that India hosted 22 deals in 2023 with a total value of $4.6 billion. In the previous year, i.e. 2022, the deal value was $4.7 billion.

The year had notable exits like TPG’s sale of a controlling stake in Care Hospitals to Blackstone. As exits have given high returns for investors, global PE investors have grown more comfortable putting larger amounts of capital to work in India, making the market more competitive, the report said.

Moreover, more transactions are becoming controlling deals. The perceived risk of making large investments in India has diminished, according to the report. For example, Temasek currently owns 59 percent of India’s second-largest hospital chain (by number of beds) Manipal Hospitals.

Also read: Manipal Hospitals acquires 84% stake in Emami Group firm AMRI Hospitals

This growth is aided by Indian healthcare customers who are willing to pay for quality healthcare. Government health expenditures have risen significantly over the past decade (from around 29 percent of total health expenditure in 2014–15 to approximately 39 percent in 2021–22—S&P Global data), and healthcare spending is expected to grow further.

India’s stature as a powerful pharma manufacturing hub has also been a contributor to this rise in healthcare deals. India’s contributions to vaccine supply during the COVID-19 pandemic and activities like the Production Linkage Incentive program show government support for the sector. For example, PE firm Advent International acquired a majority stake in CDMO (contract dug manufacturing organisation) company Suven Pharma in September 2023.

Additionally, a few digital healthcare services, online fitness services and insurtech have also gained attention among Indian customers. While deal-making in digital health has slowed, long-term fundamentals, notably a young population eager to engage digitally, remain strong for Indian companies operating at the intersection of healthcare and technology, the report added.