PE, venture capital deals in healthcare, health tech firms grew 16% in 2019

Surge defies economic slowdown and a pricing and insurance issues, as healthcare is seen as a necessity from consumer's perspective

Private equity and venture capital investments in healthcare and healthcare technology companies grew by 16.3 per cent in 2019 to $3.62 billion, from $3.11 billion, a year ago. Almost 58 per cent of the investments were in the healthtech segment. The industry continues to attract investors despite the economic slowdown, and the trend is likely to continue even in 2020, say experts.

Health tech has attracted a major share of these investments, with 55 deals worth $2.12 billion. This was twice the $1.06 billion raised in 81 deals during the same period last year. Forty-nine of the 55 deals, were venture capital, or seed to Series-F investments in companies less than ten years old, with a combined value of $616 million, according to data from Venture Intelligence.

In 2019, as per data collated by Venture Intelligence till December 24, there were 95 deals of which 66 were venture capital investments. In comparison, year 2018 had 120 deals of which 90 were VC.

The surge is despite the economic slowdown, and a number of issues related to the pricing and health insurance in the sector. The impact of these issues to the investors would be only known over time, as the industry is in the middle of an investment cycle.

Vishal Bali, executive chairman, Asia Healthcare Holdings (AHH), a healthcare operating platform founded by TPG Growth, said, "While there are issues related to the economy right now, somehow healthcare gets insulated from a lot of these things. From a healthcare consumption perspective, one is not seeing any slowdown because it is a necessity".

"PE and VC investors will continue to see opportunities in start-ups and new technologies, as this is a 1.3 billion-people consumption story. This could also be a good time to find the right assets," Bali said.

There are some 3,000 healthtech companies in the country and in the quarter ended September, there were about 16 large deals with more than $100 million investments done. There were also exits across 11 deals with $690 million, which shows some kind of activity both in terms of investments and exits, Bali added.

In May 2019, AHH reportedly signed agreements to acquire Nova IVI Fertility for an undisclosed sum.

However, the next financial year is expected to be critical, particularly in the light of rupee devaluation, and how the overall investing scenario and current investments plays out. Some of the major deals, including Seattle-based Columbia Asia's hospitals in India, are expected to take place in 2020.

According to Venture Intelligence, the top PE invsetments in healthcare and healthtech companies included Baring Asia's $880 million investment into Citius Tech in July, 2019, $496 million into AGS Health in May, 2019, Advent International's $250 million investment into Bharat Serums and Vaccines in November, 2019, General Atlantic's $212 million investment into Rubicon Research in Marcy 2019, among others.