Regional healthcare private equity deal activity grew in 2022 but its global market share shrunk due to a slowdown in China, according to a Bain & Company report.

In 2022, private equity buyout deals in the healthcare sector reached over $19 billion in Asia Pacific, surpassing the previous year's $17.8 billion record, according to a Bain & Company report.

«The strong regional activity shows these markets coming of age with geographical breadth, opportunities across sectors,» said Vikram Kapur, Singapore-based head of Bain’s APAC healthcare and life sciences practice.

Large deals in Japan, India, South Korea and Australia accounted for the majority of deal value last year with six buyouts at over $1 billion. India was a standout, in particular, being home to four out of the top 10 deals in 2022.

China Slowdown

Deal volume in the region, relative to the world, slowed due to a decline in China, driven by Covid curbs, geopolitical tensions and evolving policies in the healthcare sector. China’s total annual deal value fell to $1.6 billion, compared to an average of around $5.3 billion from 2017 to 2021. Deal count also dropped 67 percent compared to the previous five-year average. 

When excluding China, the APAC region registered its best year ever in terms of deal count and disclosed value, driven mostly by activity in the provider sector. Including China, the region accounted for 25 percent of global deal volume in 2022, down from 40 percent in 2021.

2023 Outlook

In 2023, Bain believes that uncertainty will persist though APAC-specific fundraising is up, dry powder remains ample, and M&A in healthcare has created more large-cap targets. India and Southeast Asia will be notable markets to continue watching.

«There is an emerging pool of investable assets in Asia Pacific, which could make 2023 an exciting year. Portfolio companies continue to resurface in the market, driving up deal value,» added Kapur. 

«Of the buyout deals that were $500 million-plus in 2018-19, more than 10 have yet to re-transact. These assets are likely to return to market in the coming years, creating potential for private equity investors to step in.»