The healthcare industry across Asia is experiencing significant growth driven by changing demographics and rising incomes. However, despite the growing demand, there are still significant gaps in key segments of the healthcare landscape. This presents a long-term opportunity for private equity in Asia to step in and make a difference.

Addressing Local Market Needs and Driving Innovation

Private equity players are instrumental in addressing local market needs, improving the quality and availability of care, and driving innovation across the region. The combination of rising incomes and policy support is creating a multi-decade opportunity for private capital investors to back the buildout of healthcare products and services, even amidst an uncertain global dealmaking environment.

A Growing Market with Expanding Opportunities

Since 2000, healthcare expenditures in Asia have grown more than five times, outpacing GDP growth. This trend is expected to continue over the next decade, according to fund managers active in the region. However, healthcare delivery remains fragmented and underdeveloped in key markets across Southeast Asia. Traditional providers continue to attract the bulk of commitments from private equity in Asia eyeing expansion opportunities.

Rising Demand and the Role of Private Hospitals

Improving health insurance coverage and a rising middle class are driving demand for medical services in Southeast Asia. Yet, the region faces a scarcity of doctors and a shortage of public sector spending. This gap presents an opportunity for investors to scale local private hospitals, addressing the growing healthcare needs of the population.

Specialist Care and the Pharma Value Chain

Private equity investors are increasingly eyeing specialist care providers across India and Southeast Asia, which remain underpenetrated. India, already a leading supplier of generic medicines, is transitioning up the pharma value chain with recent early-stage investments in biologics and genomics.

Ewan Davis, partner at Quadria Capital, highlights India's advantage: “India benefits from a deep pool of specialist doctors, which is why you’ve seen large specialty care hospital networks scale across the country. In Southeast Asia, similar models have yet to emerge at scale – we will get there, but the region needs to invest resources in growing its specialist talent pool.”

Healthcare Exits and the Future of Healthtech

Strong public markets and trade sale interest have driven a wave of healthcare exits in India. Following the investment boom in digital healthcare platforms during the early days of the pandemic, healthtech startups are now navigating a new environment of scarcer funding and pressure to reach profitability.

Conclusion

The healthcare industry in Asia is ripe with opportunities for private equity investment in India and across Asia. By addressing local market needs, improving care quality and availability, and fostering innovation, private capital can play a crucial role in shaping the future of healthcare in the region. As the market continues to grow and evolve, the impact of these investments will be felt for decades to come.