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Healthcare investing in private markets has continued to evolve, shaped by long-term structural drivers and recent innovations. Demographic trends, such as the aging population and the rising prevalence of chronic diseases, are fueling global demand for healthcare services. By 2050, the number of people aged 65 and older is expected to double, driving sustained needs for senior care, chronic disease management, and advanced medical technologies. (WHO) Combined with heightened consumer expectations for personalized and accessible care, these shifts have attracted significant investment from private market firms.
The consequences of the COVID-19 pandemic also resulted in increased investment in healthcare. The pandemic accelerated innovation in healthcare delivery, making telehealth, at-home care, and remote monitoring central to patient care. Key growth areas include artificial intelligence (AI) in diagnostics, wearables for continuous monitoring, and virtual care platforms. The global telehealth market was valued at $83.5 billion in 2022 and is projected to expand at a compound annual growth rate of 24 percent from 2023 to 2030 (JPM).
However, regulatory scrutiny and economic challenges, including inflationary pressures, introduced caution in 2023. Healthcare deal activity declined significantly compared to its peak in 2021, with total deal value falling to approximately $60 billion from $151 billion. The number of deals also dropped from 515 in 2021 to 383 in 2023. (Bain & Company). Despite this slowdown, the healthcare sector remained a key area of focus, with private equity firms continuing to respond to growing demand for accessible, efficient, and technology-driven solutions.
Despite a challenging environment for healthcare deals recently, the outlook for the industry and private investment is optimistic. Growth is expected to rebound as economic conditions stabilize and significant opportunities exist across multiple sub-sectors. Investors are well-positioned to capitalize on these trends, solidifying healthcare as a cornerstone of private market activity.
In this article, we are highlighting some of the leading private investment firms and their investment focus within the healthcare sector. By the end of this, you'll have a deeper understanding of the strategies shaping healthcare investing in private markets.
Frazier Healthcare Partners specializes in growth buyouts within the healthcare sector, targeting areas such as pharmaceutical services, women's and newborn healthcare, pharmacy technology, and healthcare IT.
Notable Assets:
United Derm Partners: A network of dermatology practices offering comprehensive skin care services.
Matrix Medical Network: Provides in-home health assessments and care management solutions.
Recent Activity:
In December 2024, Frazier closed its latest fund, Frazier Healthcare Growth Buyout Fund XI, at $2.3 billion, surpassing its $2 billion target. The fund plans to invest in 10 to 12 healthcare companies, focusing on enhancing quality, accessibility, and affordability in the U.S (The Wall Street Journal).
ARCH Venture Partners concentrates on early-stage biotechnology companies, particularly those developing innovative therapeutics and leveraging advanced technologies like artificial intelligence (AI) in drug discovery.
Notable Assets:
Recent Activity:
In September 2024, ARCH raised over $3 billion for its 13th fund, aiming to invest in biotech startups addressing significant healthcare challenges, including preventative cures and AI-driven drug discovery (Barron's).
Blackstone Life Sciences, a division of Blackstone Group, specializes in late-stage drug development, biopharmaceutical innovation, and medical device commercialization. It targets investments that bridge the funding gap between clinical trials and full-scale product commercialization.
Notable Assets:
Alnylam Pharmaceuticals: Blackstone invested $2 billion to support RNA interference therapeutics for rare diseases.
Clarify Health Solutions: A healthcare analytics platform focused on patient-centric solutions.
Recent Activity:
In 2024, Blackstone announced plans to raise $5 billion for its largest life sciences fund to date, emphasizing support for late-stage clinical trials and drug commercialization. (WSJ)
Shore Capital Partners focuses on microcap investments, particularly in healthcare, targeting smaller businesses with potential for growth and consolidation.
Notable Assets:
Southern Veterinary Partners: A network of veterinary hospitals across the United States.
EyeSouth Partners: A management services organization for ophthalmology practices.
Recent Activity:
In October 2024, Shore Capital closed three new funds totaling nearly $1.9 billion, including the $1.4 billion Healthcare Advantage Fund aimed at investing in healthcare companies with revenues over $100 million(WSJ).
Written By: Alex deMarco, Investment Research Analyst
November 06, 2024
September 09, 2024
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