Pharma and healthcare sectors thrive despite dip in deal volume in Q3CY23

In the third quarter of 2023 (CY23), the volume and value of deals in the pharmaceutical and healthcare sector experienced significant declines, with a 26% reduction in volume and a 14% decrease in value when compared with Q2, according to a Grant Thornton Report released on Monday. 

During this quarter, there were a total of 26 deals, totalling $2.7 billion. However, this figure reflects a 32% decline in deal volume compared with Q3 CY22, per the report. 

The sector’s deal values soared by a whopping 298% compared to the same quarter in 2022. This surge was attributed to two deals, each exceeding $650 million and four deals exceeding $100 million each. 

In this landscape, areas of focus included API (active pharmaceutical ingredient) and CDMO (contract development and manufacturing organisation) within the life sciences sector, as well as the single specialty healthcare sector. These areas witnessed increased investor interest. 

Moving on to the mergers and acquisitions (M&A) landscape in Q3, there was a notable decrease of 50% in deal volumes, with only eight transactions. In contrast, the sector experienced an unprecedented 161% surge in value, primarily driven by two substantial high-value deals. The total M&A value reached USD 1,269 million when compared to the second quarter of 2023. 

The standout transaction during this period was Nirma’s acquisition of a 75% stake in Glenmark Life Sciences for $689 million, accounting for more than half of the total M&A values for the quarter. Cross-border M&A activity exhibited a diminishing trend, with just one significant inbound deal. 

The API segment within Life Sciences continued to attract substantial interest. 

In the private equity (PE) landscape, Q3 marked the lowest quarterly volumes in the last three years, with 18 deals totalling $1.4 billion. Despite the decline in deal values and volumes compared to the previous quarter, there was a remarkable 147% increase in values compared to the third quarter of 2022. This surge in value was primarily driven by a few high-value deals, resulting in a notable increase in the average deal size, reaching $80 million. A particularly attractive sector for investors was single specialty hospitals, with substantial investments such as BPEA EQT’s infusion of $657 million into Indira IVF Hospital Pvt Ltd. Additionally, Quadria Capital made an investment in Maxivision Super Specialty Eye Hospital, and Asia Healthcare Holdings acquired a majority stake in the Asian Institute of Nephrology and Urology. 

The landscape of initial public offerings (IPOs) in India featured three IPOs with a combined value of $379 million. Leading this IPO activity was Concord Biotech’s successful fundraising of $189 million. This quarter also witnessed the emergence of two additional IPOs, marking a notable increase in IPO issues compared to the previous quarter when none were observed. 

Investor interest in India’s healthcare sector displayed notable diversity in the third quarter of 2023. While hospitals continued to capture the attention of investors, the health tech segment experienced a surge in deal volumes, reflecting a sustained trend from previous quarters. This sector recorded 12 deals, including a standout investment involving a consortium of major players in Pharmeasy. As the Indian population becomes increasingly health-conscious, the nutraceutical and wellness products sector is attracting investments from prominent Fast-Moving Consumer Goods (FMCG) companies, aligning with evolving consumer preferences in the country. 

“Though the pharma and healthcare sector saw a decline in M&A values, investor interest was maintained with deal values surpassing $2.7 billion. The API and CDMO segments in life sciences and single specialty in healthcare sectors continued to attract investment, in line with expectations of sustained momentum,” said Bhanu Prakash Kalmath, Partner and Healthcare Sector Leader, Grant Thornton Bharat. 

“While deal volumes in healthcare may remain subdued, the sector’s growth drivers, such as increasing healthcare demand, technology adoption, and government support, are likely to persist,” he said. 

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