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PE/VC investments into healthcare and related companies decline almost 8% in 2022

Gireesh Babu, New Delhi
Saturday, February 4, 2023, 08:00 Hrs  [IST]

After a year of record performance during the year 2021 in Private Equity/Venture Capital (PE/VC) investments into the healthcare and related companies in the country, the year 2022 has reported a decline of 7.74 per cent in value terms compared to the previous year. The number of deals declined by 21.7 per cent during the comparable period, though being the second highest number of deals in five years.

According to data from Venture Intelligence, a research service focused on private company financials, transactions, and their valuations, the PE/VC investments into healthcare and related companies has seen a decline in terms of value to $5.75 billion in 126 deals during the 12 months ended December, 2022, as compared to $6.23 billion in 161 deals, which is the highest in five years, in the year 2021.

Compared to the last quarter of the calendar year 2021, the deal value has seen a growth to $1.72 billion in 21 deals during the fourth quarter ended December, 2022. In the fourth quarter of the year 2021, the industry has seen fund infusion of $1.28 billion in 39 deals from the PE/VC firms.

Even as the investments into Pharma and active pharmaceutical ingredients (APIs) has also seen a 7.8 per cent dip in value of investments during the year - the sub-sector attracted $1.72 billion in 15 deals in 2022, as compared to $1.87 billion in 17 deals in 2021 - it remains as the highest attraction in terms of value for the private investors.

Hospitals and clinics sub-sector have reported a growth in attracting funds at $1.58 billion in 24 deals, as compared to $872 million in 21 deals during the same period last year. Medical technology, a sub sector which attracted $124 million in 11 deals in the previous year, has seen an increase in funding value to $473 million in 10 deals in 2022.

Business to business software sector, including Software as a Service (SaaS) in the sector has also seen an increased fund infusion at $ 687 million in eight deals as compared to $336 million in 18 deals in 2021. The nutraceuticals industry also witnessed an increased funding activity with $51 million invested in seven deals during 2022, as compared to $44 million in seven deals during 2021.

However, e-pharmacy, which has seen investors flocking in during the year 2021 with high value transactions bringing in $1.41 billion in 13 deals, has reported an investment of $261 million in five deals during the year 2022.

Healthtech has also seen a decline in fund infusion, at $849 million investment in 43 deals in 2022 as compared to $962 million in 54 deals during the 12 months of previous calendar year. Fund infusion into the biotech sector also experienced a dip at $109 million in five deals as against $117 million in nine deals in the previous year.

Interestingly, the last quarter of 2022 has shown increased funding in the pharma and API sector and hospitals and clinics sub sectors compared to the same period of 2021. Pharma and API industry has seen fund infusion of $77 million in two deals, as against $176 million in three deals during the same period of previous year. PD/VC investments into Hospitals and Clinics during the period went up to $605 million two deals as compared to $166 million in seven deals during the same period of 2021.

While the e-pharmacy industry witnessed two deals each in the last three months of 2021 and 2022, the amount invested has seen a decline from $354 million to $147 million during the comparable period. Investment into hospitals and clinics also declined during the quarter from $143 billion to $89 million between the comparable periods, though the number of deals remained four in both the quarters.

In terms of the top five investments into the sector, Suven Pharmaceuticals raising $762 million in December, 2022 from Advent International topped the deals in terms of value, followed by Asian Institute of Gastroenterology raising $316 million from Baring Asia in July, 2022 and Sahyadri Hospitals raising $315 million from Ontario Teachers Pension Plan in August, 2022. The other major deals in the healthcare and related sector during the year 2022 include Intas Pharmaceuticals raising $262 million from Abu Dhabi Sovereign fund Abu Dhabi Investment Authority (ADIA) in April, 2022 and Optimus Drugs raising $258 million from Pacific Alliance Group, CX Partners and others in May, 2022, says Venture Intelligence data.


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