Investors should be provided conducive investment ecosystem

According to data from Venture Intelligence, a research service focused on private company financials, transactions, and their valuations, the PE/VC fund infusion into healthcare and related companies during 2021 stood at $5.8 billion in a total of 129 deals, as compared to $3.1 billion in 118 deals in 2020

In what can be a bad indicator for the country’s pharmaceutical and related sectors, the Private Equity/Venture Capital (PE/VC) investments into these sectors declined by almost eight per cent in 2022. In the preceding 12 months, the PE/VC investments into healthcare and pharmaceutical sectors had jumped by 86.7 per cent as compared to 2020, mostly driven by the increased investment activities into e-pharmacy, health-tech, hospitals and clinics, among others. During the last quarter of 2021, the investments grew almost two fold to $1.34 billion in 28 deals compared to $489 million in 25 deals in the same period of 2020.

According to data from Venture Intelligence, a research service focused on private company financials, transactions, and their valuations, the PE/VC fund infusion into healthcare and related companies during 2021 stood at $5.8 billion in a total of 129 deals, as compared to $3.1 billion in 118 deals in 2020. This is a significant growth compared to the growth of the sector in 2020 compared to the year 2019 (during when $3.09 billion investment was reported into the sector).

After a year of record performance in 2021, the PE/VC investments into the healthcare and related sectors have now reported a decline of 7.74 per cent in 2022 in value terms compared to the previous year. Besides, the number of deals also declined by 21.7 per cent during this period, though being the second highest number of deals in five years. According to the data, the PE/VC investments into healthcare and related companies have seen a decline in terms of value to $5.75 billion in 126 deals during the 12 months ended December 2022, as compared to $6.23 billion in 161 deals, which is the highest in five years, in 2021. Compared to the last quarter of the calendar year 2021, the deal value has seen a growth to $1.72 billion in 21 deals during the fourth quarter ended December, 2022. In the fourth quarter of 2021, the industry has seen fund infusion of $1.28 billion in 39 deals from the PE/VC firms.

In terms of the top five investments into the sector, Suven Pharmaceuticals raising $762 million in December 2022, from Advent International topped the deals in terms of value, followed by Asian Institute of Gastroenterology raising $316 million from Baring Asia in July 2022 and Sahyadri Hospitals raising $315 million from Ontario Teachers’ Pension Plan in August 2022. The other major deals in the healthcare and related sector during 2022 include Intas Pharmaceuticals raising $262 million from Abu Dhabi Sovereign fund Abu Dhabi Investment Authority (ADIA) in April 2022 and Optimus Drugs raising $258 million from Pacific Alliance Group, CX Partners and others in May 2022, as per the Venture Intelligence data.

Even as the investments into Pharma and Active Pharmaceutical Ingredients (APIs) have also seen a 7.8 per cent dip in value of investments during the year - the sub-sector attracted $1.72 billion in 15 deals in 2022, as compared to $1.87 billion in 17 deals in 2021 - it remains the highest attraction in terms of value for private investors.

Hospitals and clinics sub-sector reported a growth in attracting funds at $1.58 billion in 24 deals, as compared to $872 million in 21 deals during the same period last year. Medical Technology, a sub-sector, which attracted $124 million in 11 deals in the previous year, has seen an increase in funding value to $473 million in 10 deals in 2022. Business to Business software sector, including Software as a Service (SaaS) has also seen an increased fund infusion at $ 687 million in eight deals as compared to $336 million in 18 deals in 2021. Nutraceuticals industry also witnessed an increased funding activity with $51 million invested in seven deals during 2022, as compared to $44 million in seven deals during 2021.

However, e-pharmacy, which has seen investors flocking in during 2021 with high value transactions bringing in $1.41 billion in 13 deals, has reported an investment of $261 million in five deals during 2022.

Health-tech has also seen a decline in fund infusion, at $849 million investment in 43 deals in 2022 as compared to $962 million in 54 deals during the 12 months of the previous calendar year. Fund infusion into the biotech sector also experienced a dip at $109 million in five deals as against $117 million in nine deals in the previous year.

To regain the past glory, the government and the industry have to provide a conducive investment ecosystem in the country to attract potential investors into pharma and related sectors.

(The author is a freelance journalist with varied experience in different fields)