Asia Pacific Healthcare PE firms abandon China for India, Japan, and South Korea as deal volumes plummet

ASIA-PACIFIC: Asia Pacific private equity (PE) firms are increasingly looking beyond China for investment opportunities in the healthcare sector, with markets such as India, Japan, and South Korea gaining prominence.

According to a recent report by Bain & Company featured in Healthcare Asia magazine, while the region has experienced a robust compound annual growth rate of around 21% in deal value since 2016, the overall volume of deals has taken a sharp decline, falling by 49% in 2023.

This trend is largely attributed to a slowdown in dealmaking activities within China.

India poised for growth amid declining China activity

India is rapidly emerging as a compelling alternative to China for healthcare investments.

The country’s expanding middle class and its strong economic growth are fueling a rising demand for healthcare, making it an attractive market for private equity.

Bain & Company’s report highlights that India’s healthcare landscape is becoming a major draw for investors seeking new opportunities as China’s market cools.

The global healthcare private equity market surged to an estimated $115 billion in 2024, bolstered by a wave of large-scale transactions, including five deals exceeding $5 billion—up from just two in 2023 and one in 2022.

The biopharma sector continued to dominate in terms of deal value, while healthcare IT saw a notable rebound last year.

Asia Pacific’s market share remains low in global dealmaking

Despite these developments, Asia Pacific still accounts for a relatively small portion of global healthcare PE investments.

The region’s share of total deal value stands at just 12%, far behind North America’s dominant 65% and Europe’s 22%.

This disparity highlights the continuing challenges and untapped potential within the Asia Pacific healthcare market, even as investors look beyond China to diversify their portfolios.

As private equity firms navigate a changing landscape in Asia Pacific, India, Japan, and South Korea are becoming central players in the region’s healthcare investment scene, offering promising prospects as China’s market slows.