Healthcare sector M&A deals surge 85% in H1FY23: Grant Thornton

The Indian healthcare and life sciences sector experienced an 85% surge in overall deal value, amounting to over $4.4 billion in the first half of 2023, compared to the same period in 2022, a recent Grant Thornton Bharat Report shows. Although deal volumes saw a decline of 17% from 89 deals in H1 2022 to 74 deals in H1 2023, the sector's growth remains robust, it states.

“A few high-value transactions played a significant role in driving the total transaction value from $1.2 billion in Q1 2023 to $4.4 billion in H1 2023. In the healthcare sector, the highlight of the quarter was Temasek's announcement of a $2 billion investment in Manipal Health to increase its stake by 41% for a controlling stake in India’s second-largest multispecialty hospital chain. Other key transactions in multispecialty included Blackstone Group’s investment in CARE Hospitals for $560 million,” Bhanu Prakash Kalmath, Partner and National Sector Leader – Lifesciences and Healthcare, Grant Thornton Bharat LLP, said.

The deal activity in Life Sciences was led by Serum Life Sciences' investment of $150 million in Biocon Biologics. IPCA Labs also announced a significant acquisition to obtain a 33% stake in Unichem Labs for $126 million, strengthening their API capabilities. Investments in the single-specialty space included ASG Hospital's acquisition of Vasan Eye Care and Nova IVF Fertility’s acquisition of Wings IVF.

“In the IVF segment, factors such as increased awareness of infertility, acceptability of treatments, and push towards better women and child healthcare are driving the growth. IVF is also a key medical tourism segment in India because of the affordability of treatment, the presence of expert professionals, and well-developed pre- and post-procedure infrastructure. We expect the segment to witness continued momentum. In Life Sciences, the focus continues to be on strategic investments to acquire products/licenses in regulated markets, and capacity expansion within India, particularly in the Biosimilar, CDMO, and API businesses,” Kalmath said.

The report also notes that while health-tech continues to attract investment, the ticket sizes of these investments were relatively small. The second quarter of 2023 witnessed a decline in both deal volume and value, indicating a cautious approach among investors. “Despite overall subdued investment sentiments, the healthcare and life sciences sector in India still holds substantial long-term investment potential. The confluence of factors such as demographics, government initiatives to enhance the quality of life, and the appetite of Indian businesses to leverage their manufacturing prowess to cater to domestic and global markets complemented by India’s macro robustness continues to augur well for the sector, which will continue to attract investments in the long-term. However, the tapered valuations may continue for some time”, Kalmath states.