Bob, welcome.
How have you seen private equity in health care evolve over last year?
Well, I'd say since we were here last year at JP Morgan, we've
definitely seen a bit of momentum increase.
We've seen an increase in transactions—over $100 billion
spent in 2024, which is definitely up from '23.
We've seen a slight increase in the number of transactions as
well, not just in valuation.
And I think the tone heading into 2025, coming out of '24, is
an upbeat tone of cautious optimism or, maybe said another
way, tempered optimism going in.
But certainly we feel like we can carry that into 2025.
What are you expecting generally?
What trends are you looking at that makes you think that that
momentum is going to continue into 2025?
It's a good question.
A couple of things.
One, despite some headwinds, we definitely believe the
fundamentals in health care continue to be very attractive
for investment.
We're a couple of years out from COVID.
So, clearly that means that we have a little bit more clarity
and certainty into what a lot of those end-market subsectors look
like post COVID, which, you know, gives some stability and
some understanding.
There's over $2 trillion of dry powder being held back right now
by private equity looking to be deployed, a significant portion
of that being considered for health care.
So that gives us some optimism. And we believe we're going to
continue to see very interesting high-quality assets being carved
out of a lot of corporate portfolios, as well as several
very attractive high-quality assets held within private
equity funds that we're expecting to come to market and
trade this year.
So for all of those reasons, we're pretty optimistic about a
continued momentum and a strong 2025, we hope.
Where do you see the most significant opportunities for
private equity in health care?
There's a lot of opportunities, I think. You know, for private
equity within health care,
we're going to see the continued traditional areas, a lot of
pharma services, some medtech subsectors are attractive.
I think two areas to highlight—maybe the first being
women's health.
It's a very interesting part of the market.
There are significant unmet and underserved needs for women.
If you take menopause as an example.
90% of the women deal with some kind of
adverse effects of menopause.
How to manage that.
It's definitely not something that's on the radar screen for a
lot of companies today.
Lots of opportunities to really, you know, reshape how research
is happening, reshape where therapies could be deployed,
reshape how women are engaged in the health care process.
So for me, that's a pretty interesting area to continue to
explore in a lot of ways.
The other continues to be around health care IT and innovation.
I think there's the health care IT platforms for the
sake of health care IT platforms.
What do I mean by that?
These are applications and services that are driven into
hospitals, for instance, to help drive
labor productivity.
We know this will, you know, move the needle, I think, for a
lot of those health care companies struggling to, you
know, remain profitable and serve patients,
which is very interesting.
But I think also on the health care and IT side, or on the
advanced technology side, we see a real opportunity there to
continue to accelerate, you know, more traditional companies
and how they can bring therapies to market faster, how they might
be able to tailor clinical trials in a way that allows them
to bring new, new therapies to market in a way that is more accessible.
Go deeper on innovation. What role does innovation have to
play in private equity-backed health care portfolios?
I think it's twofold,
very similar to what I was just talking about.
I think there are some standalone companies that
some would call either digitally native or innovative
in on their own.
These are use case-specific companies that
might be targeting workflow efficiencies in a hospital or
increased improvement in patient access,
if you think of some of the remote health or telehealth
services that provide access in
communities where patients lack the access that they need to the doctors.
There's another area, though, that says, there's an awful lot
of private equity portfolio companies out there—CROs,
contract manufacturers for medtech companies—where we can
deploy either technologies to accelerate products and
therapies to market through R&D, through clinical
trials, in a way that allows us to reduce the time to market for
those therapies.
A lot of advanced technologies are allowing us to focus on
segments of the market in a way that provide better outcomes of
some of those therapies that are being deployed.
And then on the efficiency side in some of these portfolio
companies, just given the focus on improvements in those health
care companies within private equity, think of back-end
functional efficiencies, whether it's in finance, whether it's in
HR, whether it's in their own IT platforms.
That is a lot of work there to unlock additional value in those
portfolios to make them, you know, more affordable for
patients, drive access for patients.
So I think there's two different ways to think about technology.
Bob, always great to talk to you.
Thank you so much for your time.
Thanks, Georgie.
Appreciate it.