Healthcare industry promised new investment boom

Now that the lockdown is over, investment activity is on the rise – at least, in the healthcare market.

Despite the decline of the early 2020, by the end of Q2, analysts are expecting a recovery, both in terms of the value and the quantity of deals. It should be noted that over the first three months of 2020, the number of deals went down by 6%, affecting China the most.

“Recent data indicate that the investment activity may recover,” say analysts from CB Insights.

Over the period between April 1 and May 24, healthcare companies around the world have indeed attracted over $8.8 bln through 672 deals. CB Insights predicts that if the same activity level maintains, investment into healthcare projects may exceed $15 bln (through 1,180 deals), showing the strongest investment results for the healthcare market in the past three years.

The Asian market promises to be the main contributor to this growth as the recovery seems to be happening faster in the region than anywhere else. European markets will also support the trend.  At the same time, we can expect lower interest in North American companies (experts estimate that they will receive $8.9 bln instead of $10.3 bln in Q2).

According to forecasts, the total investment into Asian projects may reach $4.8 bln, which is almost twice as high as the Q1 results – and a record number for the past few years.

Mega rounds for over $100 mio that local companies (in particular, Chinese ones) have managed to attract as the region is recovering from the pandemic, remain to be the driver. Chinese companies won five out of 14 mega rounds that were held between April and May.

This includes a $1 bln round raised by MGI Tech, a Chinese company producing equipment for genome sequencing. The company is also producing COVID-19 testing equipment.

That being said, North America is still the leading region if we consider the total scope of investment. Local companies have managed to attract eight mega rounds worth $1.1 bln in total, including a series B round for $200 mio won by US company Erasca that is currently developing new-generation cancer treatments.

Investors remain cautious about digital healthcare projects.

“Global investment in digital healthcare may reduce by 16% as of the end of the quarter, contributing to the annual decline of over 30%,” CB Insights comments.  

The digital healthcare trend is responsible for the decline in the North American market. Local companies will be able to raise just under $2.4 mio in 208 deals, which is almost $800 mio lower than in the beginning of the year.

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