In focus

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

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 structural changes caused by the Covid-19 pandemic have meaningfully impacted the investment landscape, but we believe it will accelerate a number of trends in the healthcare market – particularly consumerization of healthcare and the rise of telemedicine – rather than introduce new dynamics. We would caution investors against being distracted from more lasting drivers.

Why private equity for healthcare?

The underlying growth and innovation in the healthcare sector, as well as the potential for company transformation and consolidation among highly fragmented sub-sectors, aligns especially well with venture capital and private equity. 

There is also a tremendous opportunity set given the large number of privately held healthcare companies. Our analysis shows that there are approximately 146,000 privately held healthcare companies based in the US, Europe and Asia. This is in contrast to only ~2,700 publicly traded healthcare companies in the same geographies. The drastic difference in the supply of investable companies is one of the hallmarks of our attraction to healthcare private equity. 

However, while healthcare private equity investments offer compelling attributes and have increased in number and scale in recent years, the underlying investments can be difficult to access and exploit for many investors, making an experienced partner essential. 

In a new in-depth report, Schroder Adveq's private equity experts break down the healthcare industry, its key drivers, and where they feel the opportunities lie.