Bain Global Healthcare Private Equity Report 2025: Market Trends and Investment Outlook

2024 Healthcare Private Equity Market: Year in Review

Global healthcare private equity soared to an estimated $115 billion in deal value during 2024, reaching the second-highest total on record according to Bain & Company’s annual analysis. This remarkable surge was propelled by an increase in the number of large-scale transactions, signaling renewed confidence among investors despite persisting challenges from high borrowing costs and extended hold times.

North America continues to dominate the global healthcare PE landscape, representing approximately 65% of total deal value. Europe accounted for 22% of the global total, while Asia-Pacific contributed 12%. Deal volumes remained broadly steady relative to historical levels, though the composition shifted notably: a wave of activity in North America and Europe more than offset a significant 49% decline in deal volume in Asia-Pacific since 2023.

The year’s standout characteristic was the return of mega-scale dealmaking. Five transactions exceeded the $5 billion threshold in 2024 — a dramatic increase from just two deals of that size in 2023 and a single megadeal in 2022. This concentration of capital in large transactions reflects several trends: PE firms deploying significant dry powder accumulated during more cautious years, strategic sellers becoming more receptive to deal discussions, and the availability of creative financing structures that enable larger transactions even in a higher-rate environment.

For healthcare investors and industry observers, the Bain report provides essential context for understanding how private equity is reshaping the healthcare landscape — from pharmaceutical manufacturing and clinical trials to provider networks and AI-powered health technology.

Healthcare PE Megadeals Drive Record Values

The surge in megadeals represents a fundamental shift in healthcare private equity’s risk appetite. The most prominent transaction of the year was Novo Holdings’ acquisition of Catalent for $16.5 billion — a deal that enabled Novo Nordisk to significantly bolster its manufacturing and fill/finish capacity for GLP-1 therapies, the fastest-growing category in pharmaceutical history. The recently announced Sanofi deal, valued at $17.3 billion for the consumer health business Opella, further underscores the scale of capital deployment.

Other significant acquisitions include the buyout of Alinamin Pharmaceutical for $2.2 billion and several large-scale biopharma services transactions. The common thread across these megadeals is strategic rationale that extends beyond financial returns — acquirers are seeking operational assets, manufacturing capacity, and market access that can generate value over extended hold periods.

The concentration of deal value in large transactions has important implications for the broader healthcare PE market. While megadeals attract attention and capital, they can also create competitive dynamics that affect pricing and availability of deals across all size segments. PE firms that can effectively compete for large transactions while maintaining discipline on valuation have a significant advantage in the current environment.

Biopharma Leads Healthcare PE Investment in 2024

Biopharma and related services led all other healthcare segments in deal value during 2024, continuing a trend that has accelerated over the past several years. This growth was fueled by several converging factors: the explosive demand for GLP-1 manufacturing capacity, continued investment in clinical trial IT infrastructure, and the ongoing consolidation of contract research and manufacturing organizations (CROs and CDMOs).

The investment landscape in biopharma reflects the sector’s unique combination of scientific innovation and operational complexity. PE firms are increasingly attracted to businesses that sit at critical nodes in the pharmaceutical value chain — from drug discovery and development through manufacturing, distribution, and patient services. These businesses often benefit from significant switching costs, long-term contracts, and regulatory barriers to entry that create durable competitive advantages.

Notable investments in the biopharma space included GI Partners’ investment in eClinical Solutions, targeting clinical trial IT infrastructure, and several transactions focused on equipment manufacturers and raw material vendors serving the pharmaceutical production value chain. European PE firms, in particular, have been investing in companies further up the value chain, as exemplified by Novo Holdings’ acquisition of Single Use Support and Ardian’s acquisition of Masco Group.

The biopharma investment thesis is further strengthened by the global trend toward onshoring pharmaceutical manufacturing. Governments in the US, Europe, and Asia are actively incentivizing domestic production of critical medicines and ingredients, creating tailwinds for companies that can expand manufacturing capacity in strategic locations.

European Healthcare PE Dealmaking Rebounds to Records

European healthcare private equity dealmaking experienced a remarkable renaissance in 2024, with deal volume surpassing the previous peak set in 2021. This rebound was initially driven by a wave of smaller transactions in the first half of the year, followed by several significant mid-market and large-cap deals that elevated both volume and value metrics.

Biopharma and medtech were the leading sectors in European healthcare PE, as firms that acquired assets in these sectors benefit from the ability to scale across the region’s diverse but addressable markets. Within biopharma and medtech services, European PE firms are investing in companies operating further up the value chain, targeting equipment manufacturers, raw material vendors, and specialized service providers that serve the pharmaceutical and life sciences industries.

Pre-clinical research entities continued to attract investment, with theses centered on the impact of onshoring tailwinds and the potential to build scale through organic growth and tuck-in acquisitions. Partners Group’s acquisition of FairJourney Biologics exemplifies this approach — the deal is focused on expanding product capabilities in pre-clinical R&D and antibody development while creating global scale.

However, the European market faces unique challenges. Pressures on private provider and retail health groups have persisted longer than anticipated, and the varying regulatory environments across countries mean that provider and healthcare IT assets often require significant operational investment to achieve meaningful scale. As a result, assets frequently trade multiple times across sponsors, which has limited the availability of large-scale provider transactions. Despite these challenges, the stabilizing macroenvironment and strong growth in buyout volume provide grounds for optimism about continued deal activity and the potential for more megadeals in the current global economic context.

Why Mid-Market Healthcare PE Firms Are Outperforming

One of the most significant findings in Bain’s 2025 healthcare PE report is the outperformance of mid-market private equity firms relative to their larger counterparts. This trend, which has been building for several years, reflects structural advantages that mid-market firms can leverage in the healthcare sector.

Mid-market healthcare PE firms typically bring deeper sector specialization and operational expertise to their investments. Rather than relying primarily on financial engineering and multiple expansion, these firms create value through hands-on operational improvements — optimizing clinical workflows, enhancing revenue cycle management, implementing technology solutions, and driving organic growth through strategic market expansion.

The deal sourcing advantage of mid-market firms is also significant. In a market where large-cap healthcare assets are fiercely contested through broad auction processes, mid-market firms can often source proprietary or limited-process deals through their industry networks and reputation. These deals tend to come at more attractive valuations and offer greater potential for value creation through operational improvement.

Flexibility in deal structuring further differentiates mid-market firms. They can pursue platform-and-build strategies — acquiring a smaller initial platform company and then adding scale through complementary acquisitions — that would be uneconomic for larger funds. This approach allows mid-market firms to create substantial value through market consolidation, operational integration, and the combination of complementary capabilities.

The implications for limited partners and institutional investors are clear: healthcare PE allocation strategies should consider the risk-adjusted return potential of mid-market funds alongside the scale and diversification benefits of larger vehicles. A balanced approach that includes both segments may optimize portfolio outcomes across market cycles.

Healthcare PE Carve-Outs Open Up Value in Tight Markets

In a market characterized by elevated valuations and extended hold periods, carve-outs have emerged as a compelling strategy for healthcare PE firms seeking attractive entry points. Large pharmaceutical and healthcare companies are increasingly willing to divest non-core divisions, creating opportunities for PE buyers to acquire quality assets at valuations that reflect the complexity and uncertainty inherent in separation processes rather than the underlying business quality.

The most prominent example is CD&R’s acquisition of a 50% controlling stake in the carve-out of Sanofi’s consumer health business, Opella — a deal valued at $17.3 billion that demonstrates both the scale of available carve-out opportunities and the capital required to execute them. Similar dynamics are playing out across the healthcare landscape as large companies sharpen their strategic focus and divest businesses that no longer align with their core missions.

Carve-out execution in healthcare presents unique challenges. Regulatory requirements for pharmaceutical manufacturing, quality management systems, and patient data handling mean that separation processes are more complex than in most other industries. PE firms that invest in dedicated carve-out capabilities — including experienced operating partners, IT systems migration expertise, and regulatory affairs knowledge — can capture significant value that less prepared buyers might struggle to realize.

The value creation opportunity in healthcare carve-outs typically extends beyond mere separation. Many divested businesses have been underinvested during their time within larger organizations, with constrained R&D budgets, legacy IT systems, and limited commercial focus. PE ownership can unlock growth through targeted investment, management autonomy, and the alignment of incentives that a focused ownership structure provides.

Healthcare IT and Digital Health PE Investments

Healthcare IT continues to attract significant private equity investment, benefiting from three powerful tailwinds: providers’ increasing reliance on technology to boost operating efficiencies, growing investment in clinical trial IT infrastructure, and payers’ expanding focus on advanced analytics for cost management and population health.

The investment thesis for healthcare IT is evolving beyond the traditional core systems of record — electronic health records, practice management systems, and billing platforms — to encompass a broader ecosystem of digital health solutions. AI-powered clinical decision support, remote patient monitoring, patient engagement platforms, and interoperability solutions are all attracting PE interest as healthcare systems worldwide seek to improve outcomes while controlling costs.

Revenue cycle management (RCM) remains a particularly active sub-sector within healthcare IT private equity. The complexity of healthcare payment systems, combined with ongoing regulatory changes and the shift toward value-based care, creates persistent demand for solutions that help providers optimize their revenue capture and reduce administrative burden. PE-backed RCM platforms are increasingly incorporating AI and automation technologies to improve accuracy and efficiency.

The convergence of healthcare IT and life sciences technology is creating new investment opportunities. Platforms that serve both provider and pharmaceutical customers — such as clinical trial management systems, real-world evidence platforms, and patient identification tools — benefit from diversified revenue streams and the growing interdependence between healthcare delivery and pharmaceutical development.

Maximizing Exit Value in Healthcare Private Equity

With extended hold periods becoming the norm in healthcare PE, maximizing exit value has become an imperative for both sellers and buyers. Bain’s report emphasizes that the traditional approach of buying at a reasonable multiple, applying moderate leverage, and selling after three to five years is no longer sufficient in a market where holding periods are stretching and multiple expansion cannot be assumed.

Successful exits in the current environment require demonstrable value creation through organic growth, margin improvement, and strategic positioning. PE firms are investing more heavily in pre-exit planning, including management team development, financial reporting infrastructure, and strategic narrative building that communicates the value creation story to potential buyers.

The most effective exit strategies in healthcare PE share several characteristics. They demonstrate predictable, recurring revenue growth; they show expanding margins driven by operational improvements rather than cost-cutting alone; they highlight differentiated competitive positions that can sustain growth beyond the PE ownership period; and they present clear opportunities for the next owner to continue creating value.

For buyers, the emphasis on exit value maximization by sellers means that the quality bar for available assets is rising. Well-prepared businesses with clear growth trajectories and strong management teams command premium valuations, while assets with unresolved operational issues or uncertain growth prospects face more challenging exit dynamics.

Asia-Pacific Healthcare PE Growth Outlook

Despite a significant 49% decline in deal volume since 2023, Bain’s report presents an optimistic growth outlook for healthcare private equity in Asia-Pacific. The region’s healthcare PE market is distinct from its Western counterparts in several important respects, with provider investments focused primarily on hospital chains, multi- and single-specialty clinics, and senior living facilities rather than the derivative services that dominate North American deal flow.

The structural drivers for healthcare PE in Asia-Pacific remain compelling. Aging populations across the region — particularly in China, Japan, and South Korea — are creating inexorable demand growth for healthcare services. Rising income levels are driving increased willingness to pay for quality healthcare, and government healthcare spending is expanding across most markets. These demand-side dynamics create a favorable backdrop for PE investment in healthcare capacity expansion and quality improvement.

China’s healthcare PE market is evolving rapidly, with regulatory reforms creating both challenges and opportunities for investors. The government’s healthcare reform agenda is driving consolidation among hospitals and clinics, creating opportunities for PE-backed platforms to build scale through acquisitions. At the same time, regulatory uncertainty and geopolitical tensions have contributed to the recent volume decline, requiring investors to take a more nuanced approach to market participation.

India and Southeast Asia represent frontier growth markets for healthcare PE. The region’s large, young populations, expanding middle class, and significant healthcare infrastructure gaps create opportunities for PE-backed companies to build healthcare delivery systems from a relatively early stage. These markets are attracting increasing attention from both regional and global PE firms, with investment strategies ranging from hospital chain development to digital health platform building.

Strategic Implications for Healthcare Private Equity Investors

Bain’s 2025 Global Healthcare Private Equity Report offers several strategic implications for investors navigating this dynamic market. The return of megadeals, the outperformance of mid-market specialists, and the emergence of carve-outs as a value creation strategy all point to a market that is becoming more sophisticated and more competitive.

For limited partners and institutional investors, the report reinforces the importance of manager selection in healthcare PE. The performance dispersion between top-quartile and bottom-quartile managers is wider in healthcare than in most other sectors, reflecting the impact of sector expertise and operational capabilities on investment outcomes. Investors should prioritize managers with demonstrable healthcare sector knowledge, strong operating partner networks, and track records of value creation through operational improvement.

For PE firms, the report highlights the need to develop differentiated capabilities in areas like carve-out execution, digital health integration, and cross-border deal execution. The firms that will generate the strongest returns over the coming cycle are those that can source proprietary opportunities, execute complex transactions, and create value through operational improvement rather than relying solely on market tailwinds and financial engineering.

The healthcare PE market is entering a new phase characterized by larger deals, longer holds, and greater emphasis on operational value creation. Firms and investors that adapt to this new reality — by building the right capabilities, maintaining valuation discipline, and focusing on sub-sectors with strong secular tailwinds — will be best positioned to generate attractive risk-adjusted returns through the cycle.