Healthcare Private Equity 2025: Complete Global Market Report Analysis

Global Healthcare Private Equity Market: $115 Billion in 2024

The global healthcare private equity market roared back to life in 2024, reaching an estimated $115 billion in deal value — the second-highest total on record. This remarkable surge was propelled not by a broad increase in deal volume but by a significant uptick in large transactions: five deals exceeded $5 billion in 2024, compared with just two in 2023 and one in 2022. The concentration of capital in mega-transactions reflects a market where conviction is high on select transformative opportunities.

North America continued to dominate the landscape, representing 65% of global deal value, with Europe accounting for 22% and Asia-Pacific 12%. Deal volumes remained steady relative to historical levels, with a wave of activity in North America and Europe offsetting a significant 49% decline in Asia-Pacific deal volume since 2023 — a shift driven primarily by China’s economic slowdown and the reallocation of capital toward India, Japan, and South Korea.

According to Bain & Company’s analysis, the healthcare PE landscape is characterized by four defining trends: mid-market fund innovation, the rise of carve-outs as a deal source, a growing imperative for exit value maximization, and the evolution of the Asia-Pacific investment landscape. Together, these trends are reshaping how PE firms approach healthcare investing and creating new opportunities for value creation in an increasingly complex market environment.

Biopharma Leads Healthcare Private Equity Deal Value

Biopharma and related services led all healthcare segments in deal value during 2024, fueled by several landmark transactions. The standout was Novo Holdings’ $16.5 billion acquisition of Catalent, enabling subsidiary Novo Nordisk to bolster manufacturing and fill/finish capacity for its blockbuster GLP-1 therapies. The recently announced Sanofi consumer health carve-out at $17.3 billion further underscored biopharma’s dominance in healthcare private equity dealmaking.

Despite record deal values, biopharma deal volumes actually declined. Volume in biopharma and life sciences tools sectors dropped by 5% and 10% respectively since 2020 in CAGR terms. Several factors explain this divergence between value and volume. The bid-ask spread between buyers and sellers remains wide, with sellers benchmarking to peak valuations while buyers demand clear value-creation plans. Additionally, reduced pharma services spending — driven by cost consciousness at large pharmaceutical companies and a biotech venture capital funding crunch — has created headwinds for service vendors and narrowed the pipeline of investable assets.

Looking ahead, positive changes in biotech funding, a rising number of active clinical trials, and increased investment in clinical trial services may signal improving market fundamentals. These trends suggest that the biopharma healthcare private equity deal market could broaden significantly over the next 12-18 months, creating opportunities for investors who have maintained discipline during the current cycle. This aligns with broader trends in global private equity activity where sector specialization is increasingly valued.

Healthcare IT: The Rebound Story

After declining in 2023, healthcare IT dealmaking rebounded strongly in 2024, driven by three converging forces. First, healthcare providers facing financial pressures and shifting reimbursement models are investing heavily in core systems to boost operational efficiency. This has created attractive opportunities for PE firms to invest in workflow optimization platforms, exemplified by TPG’s acquisition of Surescripts, an electronic prescription network.

Second, payers seeking to improve payment integrity are investing in advanced analytics capabilities. Cotiviti’s recapitalization with Veritas and KKR at an enterprise valuation of approximately $11 billion demonstrates the scale of opportunity in payer analytics. Third, biopharma companies are upgrading clinical trial IT infrastructure to accelerate drug development amid tighter funding and regulatory demands, driving deals like Arsenal Capital Partners’ acquisition of Endpoint Clinical and EQT’s acquisition of CluePoints.

Revenue cycle management (RCM) has emerged as a particularly active subsegment, with PE firms recognizing the critical importance of billing, reimbursement, and financial process optimization for healthcare providers. TowerBrook and CD&R’s acquisition of the R1 RCM platform highlights this trend. Meanwhile, core systems of record such as Epic Systems and WellSky are expanding capabilities to support both payers and providers on risk adjustment, as profit pools continue to converge across the healthcare value chain.

Why Mid-Market Healthcare PE Funds Are Outperforming

One of the most compelling findings in the Bain healthcare private equity report is the consistent outperformance of mid-market funds — defined as those managing between $500 million and $4 billion in assets. These funds have delivered returns that place them disproportionately in the top quartile of performance, outperforming their large-cap counterparts across recent vintage years.

This outperformance has translated into strong fund-raising momentum. Mid-market funds with healthcare exposure raised approximately $59 billion since 2022, exceeding fund-raising in the previous three years by about 40%. Limited partners are increasingly attracted to these funds’ combination of sector expertise, operational depth, and ability to source deals in a competitive market.

Several factors explain mid-market healthcare private equity outperformance. These firms have developed specialized knowledge in subsectors like biopharma services, healthcare IT, and medtech that allows them to gain early conviction on deals. They are willing to take on technical risks that more generalist healthcare firms historically avoided, and they have focused successfully on founder-owned businesses where bid-ask spread issues are less pronounced. Their strategies have evolved beyond traditional buy-and-build to emphasize capturing synergies through centralized infrastructure, capability expansion, and operational excellence.

The Shift Beyond Scale

The traditional mid-market playbook of buy-and-build with multiple expansion has become more challenging in the current environment. While tuck-in acquisitions remain valuable, broader value-creation levers have become essential. For physician practices, this means expanding into ancillary services, centralizing administrative functions, and improving operational efficiency. For CROs and CDMOs, it means building capacity, developing new capabilities, and achieving cost reductions through scale. For healthcare IT assets, large scale enables additional investment in product capabilities while centralizing infrastructure. Investors interested in the broader landscape of technology transformation across industries will find parallels in how healthcare PE firms are leveraging technology for value creation.

Carve-Outs: Unlocking Hidden Value in Healthcare

Healthcare carve-outs have been on a compelling upward trajectory, growing at a 17% compound annual growth rate since 2010. The combination of carve-outs and public-to-sponsor deals has become increasingly important as overall sponsor-to-sponsor deal activity declined since its 2022 peak. In 2024, carve-outs and public-to-sponsor transactions together accounted for over 40% of healthcare buyout deals above $250 million, up significantly from approximately 34% in 2019.

The economics of carve-outs are particularly attractive when well-executed. According to Bain’s analysis using DealEdge data, successful healthcare carve-outs can deliver IRR roughly 20 percentage points higher than typical buyouts, though with greater variance in outcomes. The value creation potential stems from the nature of carved-out assets: business units that have typically been used as cash cows to fund higher-growth segments, laboring under limited investment and management attention. Under new ownership with focused strategy and appropriate investment, these units can be reinvigorated significantly.

Revenue growth and associated multiple expansion drive the bulk of PE value creation in carve-outs. For public sellers, the rationale is equally compelling: revenue growth contributes to total shareholder returns roughly two times more in pharma and seven to nine times more in medtech than all other levers combined. By divesting lower-growth segments, companies can boost their overall growth profile and enhance shareholder returns — as exemplified by CD&R’s acquisition of a 50% controlling stake in the Sanofi consumer health business Opella.

Exit Value Maximization: The New Strategic Imperative

Healthcare private equity exit deal volume remained stubbornly low in 2024, down 41% from the 2021 peak. High interest rates, an uncertain macroeconomic backdrop, and misaligned price expectations between buyers and sellers have created a stalemate. This has resulted in record-long hold periods: the healthcare PE portfolio now includes approximately 2,700 companies, with the proportion held for more than six years growing steadily.

The decline in exits is creating mounting pressure from limited partners for liquidity. Portfolio turnover has dropped to levels well below the 12% historical average, straining funds’ ability to return capital and affecting future fund-raising prospects. With multiple expansion unlikely to power returns as it has historically — given the higher interest rate environment — sellers must fundamentally rethink their approach to exit preparation.

Bain identifies three critical elements for maximizing exit value. First, sellers must present evidence of actions creating value, with validated, repeatable playbooks that demonstrate causal links between management initiatives and financial results. Second, they must reveal the substantial value that remains for the buyer, offering explicit roadmaps with concrete implementation plans rather than vague promises of improvement potential. Third, they must provide tangible reasons to believe — demonstrating that new initiatives have already gained traction rather than presenting speculative projections.

Importantly, implementing an exit value maximization strategy cannot be done at the last minute. Successful sellers typically begin the process several years before their target exit, allowing time to revisit the original value creation plan, reorient strategic initiatives, and generate preliminary results that build buyer conviction. This discipline in exit planning mirrors broader themes in private markets management.

Asia-Pacific Healthcare Private Equity Evolution

The Asia-Pacific healthcare PE landscape is undergoing a dramatic transformation. While the region’s deal value has grown at a 21% CAGR since 2016, the composition of investment flows has shifted dramatically away from China toward India, Japan, and South Korea — three markets offering compelling fundamentals and growing institutional infrastructure for healthcare PE.

India: The Emerging Healthcare PE Powerhouse

India emerged as the largest healthcare PE market in Asia-Pacific by volume in 2024, accounting for 26% of regional deals. Remarkably, India proved more resilient to the broader deal downturn, with volumes dipping only 18% from 2023 compared to a 49% decline across Asia-Pacific overall. India’s approximately 7% GDP growth in 2024, healthcare spending projected to reach $320 billion by 2028, and successful PE exits like Advent International’s $1.6 billion sale of BSV Group to Mankind Pharma have validated the market’s attractiveness.

Japan: Governance Reform Drives Healthcare PE

Healthcare PE investments in Japan grew at a 20% CAGR since 2019, driven by improved corporate governance standards, aging demographics (nearly 30% of the population aged 65+), and capital redirected from China. Governance reforms including increased focus on price-to-book ratios and M&A code revisions favoring market checks have opened opportunities for carve-outs and privatizations that were previously inaccessible.

South Korea: Medtech Hub Rising

South Korea’s share of regional deal value jumped to 26% in 2024 — an eight-percentage-point increase from 2023. Slowing inflation, aging demographics, and regulatory reforms designed to attract foreign investment have boosted interest particularly in the medtech sector, where companies focused on aesthetic skincare and dental health attract global PE investors.

European Healthcare PE: Record-Breaking Activity

Europe delivered a record-breaking year for healthcare private equity in 2024, with deal volume surging past its previous 2021 peak. The European market was boosted by a focus on smaller deals in the first half of the year, with biopharma and medtech emerging as leading sectors. PE firms are increasingly investing in companies positioned further up the value chain — equipment manufacturers and raw material vendors rather than pure service providers.

Notable European deals included Novo Holdings’ acquisition of Single Use Support (biopharma equipment), Ardian’s acquisition of Masco Group (facility solutions for biopharma), and Partners Group’s acquisition of FairJourney Biologics (pre-clinical R&D and antibody development). These transactions reflect European PE firms’ strategy of building scale through geographic expansion across the fragmented European market, supported by favorable currency dynamics and stabilizing macroeconomic conditions.

The European provider segment remained more challenging, with varying regulations across countries requiring significant operational investments to achieve scale. As a result, large-scale provider assets have traded less frequently. However, given the strong growth in overall buyout volume and stabilizing macro conditions, the outlook for European healthcare PE is optimistic, with potential for more megadeals in the near term.

AI and Generative Technology Impact on Healthcare PE

Generative artificial intelligence is transforming the healthcare private equity landscape across all three major sectors: providers, payers, and biopharma. For providers, AI is enabling automation of revenue cycle management, workforce planning, and clinical documentation. For payers, advanced analytics powered by AI are improving payment integrity and risk adjustment. For biopharma, AI is accelerating drug development, optimizing clinical trial design, and reducing time-to-market.

PE sponsors are actively evaluating AI opportunities and risks in every healthcare IT investment, seeking to understand whether AI creates disruptive threats to core businesses or opportunities to enhance value and reduce costs. However, the report notes that investment opportunities in targets primarily relying on AI within the healthcare landscape have been limited — suggesting the technology is currently more valuable as an operational enhancement than as a standalone investment thesis.

The intersection of AI and healthcare IT is particularly dynamic. Investors focusing on clinical trial infrastructure, electronic prescription networks, and revenue cycle management are finding that AI capabilities can significantly differentiate portfolio companies. As the technology matures, healthcare PE firms with deep operational expertise and technology understanding will be best positioned to capture AI-driven value creation across their portfolios. For context on broader AI adoption trends, see our analysis of the state of AI in enterprise.

Outlook and Strategic Implications for Healthcare PE Investors

The Bain healthcare private equity report points to several developments that could significantly shape the market in 2025 and beyond. Deal multiples are beginning to plateau, potentially paving the way for better bid-ask alignment. The Fed’s rate cuts in the second half of 2024 are lowering borrowing costs and reflecting confidence in economic resilience. Meanwhile, the buildup of approximately 2,700 healthcare companies in PE portfolios, combined with increasing LP pressure for liquidity, suggests an imminent acceleration in sponsor exits.

Several key questions will determine the pace and direction of healthcare PE activity. Will bid-ask convergence accelerate sufficiently to unlock the backlog of sponsor-to-sponsor deals? How will macroeconomic shifts — including potential changes in the U.S. regulatory environment under a new administration — affect innovation, supply chains, coverage, and care delivery? Will the Asia-Pacific deal market continue its shift toward India, Japan, and South Korea, particularly if Chinese markets regain traction?

For investors, the strategic implications are clear. Mid-market specialization and operational depth will continue to drive outperformance. Carve-outs represent a growing and potentially higher-return deal source that requires distinct execution capabilities. Exit value maximization must become a discipline practiced throughout the hold period, not a last-minute exercise. And technology — particularly AI — must be embedded in both deal evaluation and portfolio company value creation strategies. The firms that master these capabilities will be best positioned to deliver superior returns in what promises to be an active and evolving healthcare PE market.