Healthcare Markets & Deals Roundup — Edition 2

Sep — Nov 2023 — Key Highlights

Ranging from Healthcare Platforms acquiring assets to large pharmaceuticals exiting and divesting their stake and Insurtech startups raising VC capital, the last few months have seen the culmination of some notable transactions in the Healthcare sector

Pharmaceuticals

Some of India’s largest listed pharma players have taken key strategic divestment decisions in the pursuit of geographical and business line rationalization. There is also portfolio expansion into newer dosage forms through the M&A route. Brand M&A activity has started to pick up after the slump in the last couple of quarters.

Deal value in the last quarter > $2 Bn across API and Formulations with Formulations leading the wayA Key trend has been the entry into new Therapy Areas in the Domestic Formulation Market through acquisitionsWhile deal activity has been muted relative to FY’23, M&A continues to remain a key growth lever across Healthcare Delivery and Pharmaceuticals.

Public Markets — A Snapshot

Listed Company Financials — PharmaceuticalsListed Market Multiples

Private Markets — A Primer

Key Transactions

Deal Round Up

1. Cipla divested its stake in Ugandan Subsidiary CQCIL to Africa Capital Works. This marks a strategic move that sees Cipla exiting its subsidiary firm which manufactures critical ARV medications

2. Eris Lifesciences acquired the Nephrology and Dermatology Business units of Biocon Biologics — this includes the field force, working capital and key leadership of the business with 20+ brands and a revenue run rate of 100Cr. This is in line with Eris’ strategy of entering new therapy segments through acquisitions. This transaction will be financed through debt

3. Zydus Lifesciences acquired UK based Liqmeds group for an all-cash deal of GBP 68Mn with yearly earn outs built into the structure contingent on meeting certain pre-agreed milestones. It is a strategic move doubling down on the Liquid Orals market with Zydus intending to leverage the development and manufacturing capabilities of the target

4. Sun Pharma acquired a minority stake in EzeRx, a non-invasive diagnostic and ancillary medical device company which has capabilities of production, marketing and distribution. This is a strategic move that aligns with Sun’s plans to expand into the non-invasive medical technology sector

5. Viatris finalized twin deals to divest India API and women’s healthcare for a total of $1.2Bn. The API business is being divested to iQuest Enterprises which is owned by Nimmagadda Prasad, the founder of Matrix Laboratories with Viatris retaining select R&D capabilities. The women’s healthcare business has been sold to Insud Pharma, a leading Spanish MNC. The women’s business comprised largely of oral and injectable contraceptives with 2 manufacturing facilities

6. Nirma acquired 75% stake in Glenmark Life Sciences, the API arm of Glenmark. This marks Nirma’s largest bet in the pharmaceutical sector and helps the move up the value chain towards an innovative brand led organization. GLS will be housed under Aculife Healthcare, a subsidiary of Nirma that earlier acquired Stericon, a Bengaluru based CDMO

Hospitals

Deal value has exceeded $500Mn which is a decline over the last quarter given some high-profile transactions (Care, Indira IVF) materialized earlierMulti-Specialty acquisitions lead the way with larger players using M&A as preferred route of expansion into Tier-2,3 cities

Public Markets — A Snapshot

Listed Company Financials — HospitalsListed Market Multiples

Deal Round Up

1. Fortis has sold it’s Chennai based Malar Hospital and adjacent land parcels to MGM Healthcare. This is an outcome of a portfolio rationalization exercise within Fortis Healthcare to deepen its presence in select geographies where it already has sizeable presence

2. Norwest invested in Kanpur based Regency Healthcare with Health Quad and IFC exiting their stake at 3x of their investment in 2017. Regency has hospital facilities of 700+ beds and also partnership with leading companies like Germany’s Fresenius Medical

3. Blackstone’s healthcare platform QCIL has acquired a majority stake in KIMS Health Management. Dr. Sahadulla will continue to operate the hospital chain. This deal bolsters QCIL’s geographical presence in Kerala and adds a capacity of ~1370 beds with 300 set to be added in 2024

4. Apollo has acquired a partially built 325 bed hospital in Kolkata. This unit will offer high end specialties including comprehensive oncology services along with radiotherapy. The acquisition helps add capacity and solidify its position as the leading care provider in the eastern region. They also intend to add additional capacity of 700 beds over the next 3 years

Healthcare Technology

The health tech sector saw high deal activity with many startups successfully raising VC CapitalPreventive care, Healthcare SaaS and Insurance are key sub-sectors that saw deal activityKey Transactions

Deal Round Up

1. Zyla Health, a care management platform that offers personalized lifestyle interventions successfully raised $4Mn in its Series A funding round. It has seen stellar growth with a 300% YoY revenue growth with 100% retention of Key accounts. The capital will be utilized to accelerate growth across its 3 core verticals — insurance, corporates and big pharma and will be used to improve product integration across the healthcare ecosystem to improve scalability

2. Bimaplan, an embedded insurance startup that works with ecommerce platforms and financial services firms to enhance insurance distribution has raised $3.5Mn as a pre-Series A round led by Orios Venture Partners. Bimaplan has served over a million customers in 2 years of operations and plans to enhance features and scalability of the technology platform to launch new business verticals and products to better serve customer needs

3. Sugar Fit raised $11Mn in a round led by MassMutual Ventures to expand the product offering, launching an offline presence to expand reach across India. 100Mn+ people in India suffer from Type-2 diabetes and Sugar Fit combines hardware, software and analytics to deliver a personalized program to drive lasting behavioural change that will improve health outcomes

4. IKS Health acquired AQuity Solutions for a consideration of $200Mn. AQuity is an industry leader in tech enabled documentation, medical coding and revenue integrity solutions for healthcare. IKS Health’s leadership in the ambulatory market will be coupled with AQuity’s leadership in acute care to enable clinicians and enterprises to deliver better and more efficient care across the care continuum

5. Onsurity, an employee healthcare platform, raised $24Mn led by IFC. The Insurtech startup offers subscription-based services that employers can offer to full-time employees, contractors, interns and consultants — some of the products are cyber insurance, D&O liability insurance, general liability insurance among others. The capital will be utilized to improve customer claims experience and expand partnerships

6. Creagis led a $35Mn round of Series B funding into health tech startup Doceree, which offers physician only platforms for programmatic messaging making it efficient and measurable to advertise to HCPs online. It has operations in US, Europe, SEA, Gulf and India and plans to utilize the capital to accelerate product development, augment product technologies, and expand globally

7. AI driven Healthtech startup, Qube Health has raised 25 Crores of funds in a pre-series A round from existing investors. It offers payment systems and a corporate credit line to employees of corporates that sign up which complements the group health insurance policies taken by employers

8. Healthcare SaaS company Coverself raises $4.8Mn in a round led by BeeNext ventures and 3one4 capital. It offers a collaborative SaaS platform for healthcare claims and payment integrity, removing administrative waste and duplication of efforts. By enabling a generational architectural shift, it aims to aims to simplify healthcare claim payments quickly and conclusively. It plans to utilize funds to scale company operations and scale sales, product and technology teams