Private Equity Funds in Healthcare: Why 2021 Will be Special?

Private Equity Funds in Healthcare: Why 2021 Will be Special?

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One positive impact of the Covid-19 crisis is that the Indian healthcare sector encountered massive growth with the adoption of digital health and telemedicine services. Dealmakers continue to be more cautious and scrupulous, but buyers are looking to take benefit of opportunistic acquisitions. Private equity funds have huge capital that needs to be deployed, but valuations and pricing are being severely affected by the current market situation.

Foreign investors have shown increasing interest in the healthcare sector — including major private equity investors like Quadria Capital. This trend, which was visible before the outbreak of COVID-19, has only quickened during the pandemic, due to the disproportionately large impact of the virus on certain different sectors of the economy.

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Major hospitals and nursing homes, online pharmacies, lab diagnostics, and similar services are likely to see extended raised investor focus also in 2021.

As the Indian healthcare industry continues to grow at a lightning pace, the following trends will likely help key developments in 2021.

• Technology Adoption: Rising competition from new market players has been testing traditional business models. Now, the COVID-19 pandemic is expediting technology-driven change by helping companies realize the potential of technology and open up to new opportunities.

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• Increased Attention on Emerging Healthcare Sector: Healthcare companies are ready to establish or expand their presence in other emerging markets, where demand for healthcare systems is increasing due to aging populations, growing cities, and rising incomes.

• Rise in Private Equity Investment: Private equity funds will likely prioritize investments in the healthcare industry in 2021.

• Consolidation: The healthcare sector is likely to continue seeing increased consolidation as market players focus on the more specialized product. After the pandemic, larger healthcare groups, medical device producers, and other investors will likely accelerate their acquisitions.

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Focus on Cybersecurity: Healthcare cybersecurity is an important area of focus, given the quantity of personal and sensitive information present in patient health records.

As the healthcare system embraces technology in clinical medicine, market participants and regulators need to make sure that all aspects of patient safety, data protection, and privacy are a top priority.

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