GLOBAL HEALTHCARE PRIVATE EQUITY AND
CORPORATE M&A REPORT 2017
This work is based on secondary market research, analysis of fnancial information available or provided to Bain & Company and a range of interviews
with industry participants. Bain & Company has not independently verifed any such information provided or available to Bain and makes no representation
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Global Healthcare Private Equity and Corporate M&A Report 2017|Bain & Company, Inc.
Page i
Contents
Welcome letter pg1
1. Healthcare private equity market 2016: The year in reviewpg3
Spotlight: The surge in public-to-private dealspg7
2. Geographic trends pg10
North Americapg12
Europepg13
Asia-Pacifcpg15
3. Sector trendspg16
Provider and related servicespg16
Payer and related servicespg19
Biopharma and related servicespg21
Medtech and related services pg23
Healthcare ITpg25
4. Corporate M&A pg27
Spotlight: What corporate acquirers can learn from
private equity’s approach to commercial due diligence pg30
5. Exit activitypg32
Spotlight: Sources of value creation in healthcare assets pg35
6.2017 and beyond pg37
Global Healthcare Private Equity and Corporate M&A Report 2017|Bain & Company, Inc.
Page ii
About Bain & Company’s Private Equity business
Bain & Company is the leading consulting partner to the private equity (PE) industry and its stakeholders.
PE consulting at Bain has grown sixfold over the past 15 years and now represents about one-quarter of the
frm’s global business. We maintain a global network of more than 1,000 experienced professionals serving
PE clients. Our practice is more than triple the size of the next largest consulting company serving PE frms.
Bain’s work with PE frms spans fund types, including buyout, infrastructure, real estate and debt. We also work
with hedge funds, as well as many of the most prominent institutional investors, including sovereign wealth
funds, pension funds, endowments and family investment offces. We support our clients across a broad range
of objectives:
Deal generation. We help develop differentiated investment theses and enhance deal fow by profling industries,
screening companies and devising a plan to approach targets.
Due diligence. We help support better deal decisions by performing due diligence, assessing performance
improvement opportunities and providing a post-acquisition agenda.
Immediate post-acquisition. We support the pursuit of rapid returns by developing a strategic blueprint for
the acquired company, leading workshops that align management with strategic priorities and directing
focused initiatives.
Ongoing value addition. We help increase company value by supporting revenue enhancement and cost reduction
and by refreshing strategy.
Exit. We help ensure funds maximize returns by identifying the optimal exit strategy, preparing the selling
documents and prequalifying buyers.
Firm strategy and operations. We help PE frms develop distinctive ways to achieve continued excellence by devising
differentiated strategies, maximizing investment capabilities, developing sector specialization and intelligence,
enhancing fund-raising, improving organizational design and decision making, and enlisting top talent.
Institutional investor strategy. We help institutional investors develop best-in-class investment programs across
asset classes, including private equity, infrastructure and real estate. Topics we address cover asset class allocation,
portfolio construction and manager selection, governance and risk management, and organizational design and
decision making. We also help institutional investors expand their participation in private equity, including
through coinvestment and direct investing opportunities.
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Global Healthcare Private Equity and Corporate M&A Report 2017|Bain & Company, Inc.
Page 1
Welcome letter
Dear colleagues,
Turmoil creates opportunity, and in 2016, there was plenty of both.
Private equity investors contended with a world of uncertainty.1 Would the long-running global recovery gain
strength, falter or muddle along Would the UK vote to exit the EU Who would win the US presidential election
Amid all this volatility, investors latched onto healthcare as a safe haven—that is, an industry with proven resil-
ience to economic turbulence. The growth of healthcare is powered by several immutable long-term trends: an
aging global population, a rising incidence of chronic diseases, an expanding demand for quality services and an
ongoing need to deliver those services more effciently.
Impelled by this logic and helped by low interest rates and readily available capital, funds pushed the total dis-
closed deal value for healthcare private equity to $36.4 billion in 2016, the highest level since 2007. It was a ban-
ner year in spite of a welter of questions surrounding the industry—especially in the US, the world’s largest
healthcare market. What would happen to the Affordable Care Act, and what would that mean for insurance re-
imbursement rates Would two pending megamergers between US health insurers be blocked by the courts
Would pharmaceutical prices come under greater pressure In this kind of environment, could the sky-high
valuations for deal targets that had prevailed during the past few years be sustained Would multiples continue
to expand
Given these concerns, investors selected their targets with care. They focused on those areas that were less ex-
posed to regulatory uncertainty, including outsourced services, healthcare IT and retail health providers. PE
funds took advantage of a disparity between public and private valuations for some healthcare assets, prompting
a surge in public-to-private transactions. The fip side of this trend was a falloff in the number of IPOs amid a
modest decline in overall exit activity.
With many buyers chasing a limited number of choice targets, valuations continued to rise. Healthcare deal
teams at traditional PE buyout funds faced heated competition for deals as new categories of players entered the
fray. They included generalist PE investors, technology investors, sovereign wealth funds, pension funds and
family offces. And while the total value of corporate M&A in healthcare fell sharply in 2016(due mostly to a
dearth of megadeals), corporate buyers remained active across the healthcare spectrum, often vying with funds
for deals.
In this challenging environment, successful healthcare PE investors can be guided by a few key principles:
macro downdrafts. Many of the top 10 deals of 2016 involved category leaders. Also, at a time when buyers
may no longer be able to count on expanding multiples to boost returns, the