In focus

How private equity can work with healthcare companies to build better, longer lives

The scale of the global healthcare market and the strength of its long-term drivers creates a significant number of investment opportunities. Many of these are privately held companies.

Covid-19 has put global healthcare centre stage in 2020, as care and cure have shouldered their way to the front of the world’s list of major concerns. However, prior to the pandemic, the global healthcare market already represented a meaningful portion of the world’s leading economies, and we expect it to grow. The Covid crisis will undoubtedly make lasting changes to the healthcare industry. However, we believe that the core themes that support rising healthcare investment are not altered by the pandemic, and would caution investors against being distracted from more lasting drivers.

Healthcare expenditure is being driven by a number of global demographic trends:

  • Aging populations and increased life expectancy
  • Increased prevalence of chronic disease due to aging and changing lifestyles
  • Expanding middle classes in developing markets

The country with the highest absolute expenditure on healthcare, highest relative portion of GDP, and highest per capita spend on healthcare, is the US. This high level of spending is influenced in part by inefficiency, with an estimated $935 million of waste in the US healthcare system1, accounting for approximately 25% of total US healthcare spending. The table below outlines the per capita healthcare spend and relative percentage of GDP for each country in the G7.

Figure 1.1: Healthcare spending: It keeps growing and growing and growing…


1 Source: JAMA Network.

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