APAC's healthcare buyouts doubled to 156 deals in 2020

Deals in the biopharma sector tripled during the year.

Whilst other regions experienced declines in volume and disclosed value, the number of healthcare buyouts in the Asia Pacific in 2020 more than doubled to 156 deals compared with 68 in 2019, amidst a strong growth in biopharma, a report from Bain revealed.

At the same time, disclosed values in the region shot up to a new high of $16.9b, compared with $11b the prior year. China led the way in overall activity, accounting for just over 60% of deals in the region, up from 41% in 2019.

A strong growth in biopharma fueled much of the rise as the most active sector, with 86 deals in 2020 compared to just 28 in 2019. Meanwhile, healthcare provider deals, historically the most active sector, saw a more modest growth to 39 for the year, up from 29.

In emerging markets with less developed provider infrastructure, the report noted that investors tended to focus on hospital targets such as acute care centers providing multidisciplinary or general care.

For example, Singapore’s GIC and Vingroup invested in the Vietnamese hospital operator Vinmec for $203m. A similar health center deal was made by TPG Growth, which bought Apollo Hospitals Dhaka. KKR aso bought Saket City Hospitals as part of the Max Healthcare platform, its buy-and-build platform in India that went public in 2020.

In more developed markets, by contrast, non-hospital provider deals involving alternative sites or specialized care garnered more investor interest. Nichii Gaakan, a Japanese provider of senior care, was acquired by Bain Capital for $1.6b. Similarly, Juvis, a South Korean obesity treatment and management provider, was purchased by STIC Investments.

For the biopharma sector, investors continued to promote promising cell and gene therapies in developed markets. Investors also showed greater willingness to take on molecule-specific risk in early-stage investments in China, where the government has invested to bring drug innovation onshore through various incentives.

Of the 86 biopharma deals in the region, 58 were Chinese. Further, Chinese targets accounted for 16 of the 24 deals exceeding $100m in disclosed value.

Medtech also saw a surge in activity, reaching 30 deals for the year compared with 10 in 2019. The 25 of those 30 deals were from firms in China, where the government has encouraged development of local medtech ecosystems.

The government also instituted a volume-based procurement programme to help local firms, acting as a negotiator for all hospitals in the country. These have spurred investment interest in newly growing innovative local assets, especially for high-value consumables.

Overall, investors in the region have focussed their sights on healthcare in hopes that their knowledge of the local landscape will give them an advantage. A heightened appetite in capital markets for healthcare firms in the region has also pushed valuations higher.

“Additionally, private equity sponsors have also become more willing to invest in early-stage assets alongside venture partners given misalignments in supply and demand for attractive, mature healthcare targets,” the report stated.

Investors are expected to continue showing keen interest in Asia Pacific, amidst a sharp growth of local innovation from high-tech biopharma and medtech targets and the strong demand for high-quality care in the emerging region.

“As private equity funds look for ways to put their capital to work, we expect fast transactions for those assets that can show early signs of returning to past performance levels,” the report added.