According to the Grant Thornton Bharat Report, the healthcare and life sciences sector in H1 2023 reported an 85% increase in overall deal values, totalling over USD 4.4 billion compared to H1 2022. However, deal volumes remained marginally low with a 17% decline from 89 in H1 2022 to 74 in H1 2023. Demand for better healthcare services has been on the rise due to factors like an aging population, higher disposable income, and increased awareness of health outcomes. Further, shifting business priorities coupled with government initiatives is resulting in the growth of life sciences sector.
Commenting on the space, Bhanu Prakash, Partner and National Sector Leader – Lifesciences and Healthcare, Grant Thornton Bharat said, "The healthcare sector in India is experiencing a surge in investments, in both multi- and single-speciality space, fuelled by rising demand for quality healthcare. In the life sciences sector, strategic investments remain a priority, with focus on Biosimilar, CDMO and APIs in the domestic market and acquiring market/ product licenses for accessing global markets. Despite cautious investor sentiment in the second quarter, the long-term investment potential of India's healthcare and life sciences industry remains promising, driven by favourable demographics, government support, and India's manufacturing capabilities."
Mergers and Acquisition (M&A) Landscape: During Q2 2023, M&A activity saw a 60% increase in deal volumes over Q2 2022, recording 16 deals. Value surged 97% to reach USD 487 million, resulting in an average ticket size of USD 30 million, compared to USD 25 million in Q2 2022. Serum Institute of India Ltd.’s domestic acquisition of minority stake in Biocon Biologics Limited for USD 150 million and IPCA Laboratories Limited acquisition of Unichem Laboratories Limited for USD 126 million, contributed to 57% of overall M&A transactions. For H1 2023, the M&A volumes saw an increase of 47% as compared to H1 2022, with a total of 25 deals, with values of USD 628 million.
Private Equity (PE) Landscape: Despite a fall in the number of deals from 32 to 19 from Q2 2022 to Q2 2023, PE activity recorded a 158% growth in deal value, raising the average ticket size from USD 32 million in Q2 2022 to USD 139 million in Q2 2023. Temasek Holdings’ 41% stake in Manipal Health Enterprises for USD 2 billion marked the largest fundraise in the sector in the last 13 years. Healthtech drove PE deal volumes activity in the quarter, followed by those in the wellness and hospital space. While H1 2023 saw a decline in deal volumes from 72 to 49 as compared to H1 2022, values soared a 110% with values totalling USD 3.8 million, led by hospitals segment.
The growing investment potential of India's healthcare and life sciences sectors draws substantial interest from private equity firms and strategic acquirers. The industry's resilience, coupled with favourable government initiatives and India's robust macroeconomic environment, continues to attract investors.