Private equity investors have been pouring capital into the healthcare industry. Especially attractive so far this year is the healthcare technology systems sector, according to PitchBook. Over two dozen (26)PE investment deals in technology have been done to date, which puts this sector on track to match its highest yearly deal count ever—33, done in 2008.
The technology systems sector has accounted for 17% of deal activity so far this year in healthcare overall. The majority of investment activity continues to be in the services sector (51%), followed by devices and supplies (23%). Pharmaceuticals and biotech have so far accounted for 9% of deal activity this year.
Value insight: Where do PE investors see the value in healthcare technology? After all, it’s pretty much an established market with mature products, so there’s not much chance to increase revenue. Answer: Cost containment and improved performance, including better account management and more creative tactics to get the products into the market. That’s the primary source for future gains—and where these firms should focus their efforts to glean untapped value.