《2024全球醫(yī)療健康行業(yè)私募股權(quán)報(bào)告》

GlobalHealthcarePrivateEquity

Report2024

Thisworkisbasedonsecondarymarketresearch,analysisoffinancialinformationavailableorprovidedtoBain&Companyandarangeofinterviewswithindustryparticipants.Bain&CompanyhasnotindependentlyverifiedanysuchinformationprovidedoravailabletoBainandmakesnorepresentationorwarranty,expressorimplied,thatsuchinformationisaccurateorcomplete.Projectedmarketandfinancialinformation,analysesandconclusionscontainedhereinarebasedontheinformationdescribedaboveandonBain&Company’sjudgment,

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Copyright?2024Bain&Company,Inc.Allrightsreserved.

Contents

HealthcarePrivateEquityMarket2023:YearinReviewandOutlook 2

GenerativeAIWillTransformHealthcare 12

HealthcareITHitsaSpeedBump 17

LifeSciences:NavigatingShiftsintheInnovation,

Regulatory,andOperationalTerrains 24

India’sHealthcareIndustryComesofAge 31

HealthcarePrivateEquityMarket2023:YearinReviewandOutlook

Macroeconomicchallengeshaveexactedatollonhealthcarebuyouts,

butgreenshootsindealactivityreflecttheindustry’sstrongfundamentals.

ByNiradJain,KaraMurphy,DmitryPodpolny,Franz-RobertKlingan,VikramKapur,andAlexBoulton

AtaGlance

Investorscontinuetryingtounlockliquidityandraisecapitalforhealthcaredeals,inachallengingfund-raisingenvironment.

Biopharmadealsrepresentthebiggestshareofhealthcarebuyouts,whilenewmodalitiesandinnovativetherapiessuchasGLP-1stransformtheinvestmentlandscape.

AsinvestorslooktodiversifytheirAsia-Pacificbuyoutactivity,Indiaisviewedasaplacetodeployhealthcarecapitalatscale.

PrivateequityinvestorscontinuetopursuehealthcareITdeals,withrisingcompetitionfromtechspecialistsandcorporateinvestors.

Thehealthcaresectorcontinuedtobeahubofprivateequity(PE)dealactivityin2023,relativetoallPEdealsacrosstheworld,despitehigherglobalinterestrates,inflationarypressures,andbroadergeopoliticaluncertainty(seeFigure1).

Figure1:Healthcarehelditsowninatepidoveralldealmarket

Globalbuyoutdealvalue,$billions(excludingadd-ondeals)

Otherbuyouts

Healthcarebuyouts

Dec2023forecast

1,012

295

300

372

$222

230

219

2010

11

12

13

14

15

16

17

18

19

20

21

22

23E

9%

8

9

10

8

9

11

13

15

15

21

20

15

15

339

430

484

480

501

654

444

Healthcare

aspercentageoftotal

dealcount

Notes:Excludesspin-offs,add-ons,loan-to-owntransactions,specialpurposeacquisitions,andacquisitionsofbankruptassets;basedonannouncementdate;includesannounceddealsthatarecompletedorpending,withdatasubjecttochange;dealvaluedoesnotaccountfordealswithundisclosedvalues;valuesupdatedbasedonDealogic2020sponsorclassifications;valuesincludenetdebtwhererelevant;2023EannualizedassumingtheaverageratioofJanuary–NovembertoDecemberfrom2019to2022,basedondatathroughNovember30,2023

Sources:Dealogic;AVCJ;Bainanalysis

Acrossallregions,anumberofcommonthemesemerged.Tostart,biopharmadealsalongwithtransactionsinvolvingrelatedservices,suchascontractresearchorganizations(CROs)andcontractdevelopmentandmanufacturingorganizations(CDMOs),madeupthelargestshareofglobaldealvalueat48%(seeFigure2).Meanwhile,inthehealthcareinformationtechnology(HCIT)space,dealsforelectronicmedicalandhealthrecordprovidersunderscoredtheimportanceofnext-generationITinhealthcare.Wealsotrackedthecontinuedriseofglucagon-likepeptide-1agonists(GLP-1s),whichwillhaveimplicationsacrossthesector,includingsupportingcontinuedgrowth

inthesterilefillfinishmarket,wheretheleader,BaxterBioPharmaSolutions(nowSimtra),wasacquiredbyWarburgPincusandAdventInternational.

Figure2:Biopharmacomposedthelargestshareofhealthcaredeals

Percentageofglobalhealthcarebuyoutdealvalue(excludingadd-ondeals)

100%

80

60

40

20

0

200102 03

04 05

06 07

08 09 10 11

1213

14 15

16 17 18

19 20 21

2223E

Providerandrelatedservices

Biopharmaandrelatedservices

Medtechandrelatedservices

Payerandrelatedservices Lifesciencestoolsandrelatedservices

Notes:Excludesspin-offs,add-ons,loan-to-owntransactions,specialpurposeacquisitions,andacquisitionsofbankruptassets;basedonannouncementdate;includesannounceddealsthatarecompletedorpending,withdatasubjecttochange;dealvaluedoesnotaccountfordealswithundisclosedvalues;valuesupdatedbasedonDealogic2020sponsorclassifications;valuesincludenetdebtwhererelevant;2023EannualizedassumingtheaverageratioofJanuary–NovembertoDecemberfrom2019to2022,basedondatathroughNovember30,2023;2010valueincludes$1billionofuncategorizeddeals

Sources:Dealogic;AVCJ;Bainanalysis

Theyearsawsixdealsinexcessof$2billion—thelargestbeingthetakingprivateofSyneosHealthbyElliottInvestmentManagement,PatientSquareCapital,andVeritasCapital—comparedwith

13in2022and14in2021,thoughwithsomelargedealsinflux.Therehavealsobeenaround375dealsbelowthe$2billionmark,atestamenttohighlevelsofactivityatthemiddleandsmalllevels.

WithinNorthAmerica,announceddealvaluescameinaround$29billion,withbiopharmaaccountingfor25%ofdealactivityand54%ofdealvalue(seeFigure3).Activityinproviderbusinesses(historicallyalargeshareofUSdeals)slowedasthosebusinessesexperiencedinflationaryandlabormarketpressures.Nonetheless,anumberofproviderdealsclosedacrossspecialtiessuchasoncology,orthopedics,andcardiologywiththeopportunitytodriveancillaryexpansionsrelativelyinsulatedfrombroaderhealthcareandmacroeconomicpressures.Caseinpoint:TPGandCencora’s(formerlyknownasAmerisourceBergen)acquisitionofOneOncologyfromGeneralAtlanticfor$2.1billion.

InEurope,announceddealvaluefellapproximately44%yearoveryearfrom$25billionin2022to

$14billionin2023.ExcludingEQT/Luxinva’sacquisitionofDechraPharmaceuticals,theannounceddealvaluewouldhavedeclinedbyabout70%.Constrainedcreditmarketsandcontinueddisruptionfromlaborandcostinflationdampenedactivityintheretailhealthandprovidersectors.Europealsosawseveralannouncedprocessesthatdidnotresultinatransaction,asbuyersandsellersfailedtoalignonvaluations.

Figure3:NorthAmericastillhoststhehighestvalueofhealthcaredeals

Healthcarebuyoutdealvalue,2018–22,$billions(excludingadd-ondeals)

$263

Healthcarebuyoutdealvalue,2023E,$billions(excludingadd-ondeals)

14

14

2

$29

103

79

1

NorthAmerica Europe Asia-Pacific Restofworld NorthAmerica Europe Asia-Pacific Restofworld

Providerandrelatedservices Biopharmaandrelatedservices MedtechandrelatedservicesPayerandrelatedservices Lifesciencestoolsandrelatedservices

Notes:Excludesspin-offs,loan-to-owntransactions,specialpurposeacquisitions,andacquisitionsofbankruptassets;basedonannouncementdate;includesannounceddealsthatarecompletedorpending,withdatasubjecttochange;dealvaluedoesnotaccountfordealswithundisclosedvalues;valuesupdatedbasedonDealogic2020sponsorclassifications;valuesincludenetdebtwhererelevant;2023EannualizedassumingtheaverageratioofJanuary–NovembertoDecemberfrom2019to2022,basedondatathroughNovember30,2023

Sources:Dealogic;AVCJ;Bainanalysis

DiversificationofinvestmentsintheAsia-Pacificregion

IntheAsia-Pacificregion,dealactivitywasslightlylowerthan2018–22levels,withannounceddealvalueataround$14billion(seeFigure4).Chinaremainsveryrelevantforinvestment,whileIndiarepresentedthelargestshareofannounceddealvalue.Thatsaid,investorsseekingtomanagegeopoliticalriskbegantobroadentheirhorizonstootherAsia-Pacificcountries.India,inparticular,hasseenalong-termriseinbiopharma-relatedactivity(forexample,ingenericsandactivepharmaceuticalingredientmanufacturing),albeitwithaslowdownyearoveryear,whilealso

seeinggrowthindomesticdemanddrivenbyanexpandingmiddleclassandgovernmentinsuranceprograms(seeFigure5).Thesemacroeconomicdynamics,coupledwithanumberofsuccessfulexitsfromearlyinvestorsinIndia—suchasTPG’ssaleofacontrollingstakeinCareHospitalstoBlackstone—havepropelledprivateequitysponsorstoregardIndiaasaplacetodeployhealthcarecapitalatscale.

Figure4:DealactivityhasprovedtobemoreresilientinAsia-Pacificrelativetootherregions

Globalhealthcarebuyoutdiscloseddealvalue,$billions(excludingadd-ondeals)

151

79

87

63

66

60

43

30

30

36

$15

21

16

23

2010 11 12

13 14 15

16 17

18 19 20

21 22

23E

NorthAmerica

Europe

Asia-Pacific

RestofworldDec2023forecast

Notes:Excludesspin-offs,add-ons,loan-to-owntransactions,specialpurposeacquisitions,andacquisitionsofbankruptassets;basedonannouncementdate;includesannounceddealsthatarecompletedorpending,withdatasubjecttochange;dealvaluedoesnotaccountfordealswithundisclosedvalues;valuesupdatedbasedonDealogic2020sponsorclassifications;valuesincludenetdebtwhererelevant;2023EannualizedassumingtheaverageratioofJanuary–NovembertoDecemberfrom2019to2022,basedondatathroughNovember30,2023

Sources:Dealogic;AVCJ;Bainanalysis

Figure5:IndiahastakenanincreasinglyimportantroleinAsia-Pacific’shealthcaremarket

Healthcarebuyoutdealvalue,$billions(excludingadd-ondeals)

Healthcarebuyoutdealcount(excludingadd-ondeals)

100%$5 3

7 16 11

17 18 17 14

100%23

52 61

88 68

156

179 92

128

80 80

60 60

40 40

20 20

0

201516

17 18

19 20

21 22

23E

0

201516 17

18 19

20 21

22 23E

India

China

RestofAsia

Notes:Excludesspin-offs,loan-to-owntransactions,specialpurposeacquisitions,andacquisitionsofbankruptassets;basedonannouncementdate;includesannounceddealsthatarecompletedorpending,withdatasubjecttochange;dealvaluedoesnotaccountfordealswithundisclosedvalues;valuesupdatedbasedonDealogic2020sponsorclassifications;valuesincludenetdebtwhererelevant;2023EannualizedassumingtheaverageratioofJanuary–NovembertoDecemberfrom2019to2022,basedondatathroughNovember30,2023

Sources:Dealogic;AVCJ;Bainanalysis

Responsestoliquiditychallenges:valuecreationandsecondarytransactions

Sponsorsfacedachallengingfund-raisingenvironmentin2023,atatimewhenoverallexitvolumewasdecreasingandcompetitionforfreshcapitalwasincreasing.InlinewiththeoverallPEmarkets,sponsorexitsinhealthcaredeclinedin2023,settingupPEfundsforaconflictin2024betweenprolongingholdingperiodsandthedesireamonglimitedpartnersforliquidity.

Fundsponsorshavebeenstrategizingabouthowtooffsettheimpactontheinternalrateofreturnfromlongerholdingperiodsviatwomechanisms:first,byinvestinginincrementalvalue-creationopportunities,withanemphasisoncommercialexcellence,pricing,andmarginexpansion,andsecond,byexploringalternativeavenuesforliquidity,bothforthefundsandtheirlimitedpartners.Thelatterapproachhastriggeredariseintheexplorationofsecondarytransactions(partial/earlyexits)includingcontinuationvehicles.

In2023,manybuyoutfundsinitiatedsecondary-dedicatedfunds;notably,Blackstoneraised

$24.9billion,$2.7billionofwhichisearmarkedtoitsinauguralGP-ledcontinuationfundstrategy.

Inaddition,Ardian,LexingtonPartners,andGoldmanSachscollectivelyfund-raisedmorethan$50billionfortheirsecondaryvehicles.Severalfactorsmaketheseinstrumentsattractive:

secondariesprovideGPsanearly,oftenpartialexitopportunity,allowingthemtosecureliquiditytofinancegrowthambitionsorreturncapitaltoinvestors,andboostingafund’sdistributions

topaid-incapital.

Continuationfunds,anotherformofsecondarytransaction,buytimeuntilthemarketappropriatelypricesaholding’spotential.Moreover,bid-askspreadsforsecondarymarketcontinuationfunds,wherethesellerisoftenapartialbuyer,tendtobenarrowerthanthebid-askspreadsinprimarymarkets.

PEfirmshavealsosoughttonavigatethecurrentenvironmentbyjoiningwithotherfirmstotacklelargertargets,inadditiontoseekingpartnershipswithandcapitalfromsovereignwealthfunds

(asintheacquisitionofDechraPharmaceuticals).PEfirmsarenotimmunetobroaderfund-raisingchallenges:Preqinestimatesthatin2023therehasbeen$3.3trillionofglobalprivatecapitaltargetedbyfunds,butonly$1trillionraised.Largefundsarecapturingagreatershareofallocations,benefitingfromstrongfundstrategies,commercialmotions,differentiatedpitches,andsector-specializedinvestmentteams.

CorporateM&A:Strategics’accesstolower-costcapitalenabledsustainedbiopharmadealactivity

HealthcarecorporateM&Avaluewasupfrom2022,buckingheadwindsonbiopharmafromtheInflationReductionAct(IRA)intheUS.PfizerannounceditsacquisitionofSeagenforjustunder

$45billioninthelargestacquisitioninbiopharmasinceAbbvie’sacquisitionofAllerganfor

$63billionin2019.Strategics,especiallylarge-capbiopharmas,haveretainedaccesstolower-costcapital,whichhasfueledhigherlevelsofactivitycomparedwithbuyoutfunds.ThislevelofactivityoccurreddespiteintensifiedscrutinyfromtheFederalTradeCommission(FTC),asseeninsuitsoverAmgen’sacquisitionofHorizon,adealannouncedin2022andclosedrecently.

InreactiontoheightenedFTCscrutiny,strategicsappeartobeprioritizingmoremodestacquisitionsthatadvancespecificstrategicgoalsandarelesslikelytoarouseantitrustscrutiny—forexample,Merck’sacquisitionofPrometheusBiosciences(seeFigure6).Thatsaid,corporatehealthcareM&Ahasseen19dealsinexcessof$2billioninthefirstthreequartersof2023.

Figure6:Thevalueofdealsbystrategicbuyersedgedupin2023,asstrategics’accesstofinancingallowedthemtododealslargeenoughtomovetheneedle

Globalhealthcareandlifesciencesstrategicdealvalue,$billions

543

417

446

418

393

315

275

305

253

272 274

$203 198

148

2010 11

12 13

14 15

16 17

18 19

20 21

22 23E

TotalactivityQ42023forecast

Notes:Q42023dealvalueisastraight-lineextrapolationusingQ1–Q3data;strategicM&AincludescorporateM&Adeals(whichincludePEexits)andadd-ons,excludesspecialpurposeacquisitioncompanies/blankcheckcompaniesdefinedbydealtechnique(SPACacquisition),excludesventurecapital/corporateventurecapitaldefinedbydealtechnique(fundinground)oracquirerbusinessdescription(venturecapital),excludesotherstrategicPEbuyers’dealsclassifiedasstrategicbuthavingtheacquirer’sspecificindustrygroupasdefinedbyDealogic:finance-acquisitions/restructurings,finance-capitalpoolcompanies,orfinance-governmentsponsoredentities/creditagencies

Source:Dealogic

Macroeconomicheadwindsbuffethealthcare

HealthcarePEhasoutperformedothersectorsacrossmultiplemarketcyclesandrecessionaryperiods;however,thereasonsforthisresiliencehavevariedfromcycletocycle.Overthepastdecade,dealreturnsweredrivenbyrevenuegrowthandmultipleexpansion—thelatterabyproductoflowinterestratesandabundantcredit.Bycontrast,thecurrentinflationaryclimatehastaken

aheavytollonlabor-intensivebusinesses,aslaborshortageschallengemanyhealthcaresectors.

Still,weseepositivemomentumgeneratedfrominnovationtriggeredbythepandemic,whichhasledtoarangeofnewhealthcaredeliverymodelsandmodalities(suchasremotephysiologicandtherapeuticmonitoringandat-homecare),andnewlife-sciencescapabilities(suchasCDMOs’supplyexpansionandCovidvaccinedistribution).Segmentspropelledbythisinnovationhavecontinuedtopowerdeals,whilesegmentswithamorechallengingcoststructurelookforways

toimprovemarginprofile.Notwocyclesarethesame,buttherearereasonsforoptimismaboutthefutureofhealthcareinvesting.

Weseepositivemomentumgeneratedfrominnovationtriggeredbythepandemic,whichhasledtoarangeofnewhealthcaredeliverymodelsandmodalities(suchasremotephysiologicandtherapeuticmonitoringandat-homecare),andnewlife-sciencescapabilities(suchasCDMOs’supplyexpansionandCovidvaccinedistribution).

Whattolookforin2024andbeyond

Followingaslowstartto2023,growthsignalshavereemergedinthebuyoutmarket(seeFigure7).Inmanygeographies,inflationiscoolingastheimpactofhigherinterestratestakeeffect;

atthesametime,elevatedmaterialandlaborcostsareshowingupashigherreimbursementsforhealthcaregoodsandservices.Increditmarkets,ratesareprojectedtoremainelevated

through2024.Asinvestorsadjusttotheserealities,weexpectsponsor-to-sponsorandsecondarytransactionstoincreasein2024.Meanwhile,take-privates,carve-outs,andsecondarieswillcontinuetorepresentanelevatedshareofdealactivityasinvestorsseektounlockvalue.

Followingaslowstartto2023,growthsignalshavereemergedinthebuyoutmarket.

Figure7:Healthcaredealvalueclusteredinthemiddleof2023

Globalhealthcarebuyoutdealvalue2023,$billions(excludingadd-ons)

12 13

Globalhealthcarebuyoutdealcount2023

(excludingadd-ons)

40

30

$3

1 1

20

6 6

5

3 3 10

2

0

January February March April May June July AugustSeptemberOctoberNovember

Providerandrelatedservices Biopharmaandrelatedservices Medtechandrelatedservices

Payerandrelatedservices

Lifesciencestoolsandrelatedservices

Dealcount

Notes:Excludesspin-offs,add-ons,loan-to-owntransactions,specialpurposeacquisitions,andacquisitionsofbankruptassets;basedonannouncementdate;includesannounceddealsthatarecompletedorpending,withdatasubjecttochange;dealvaluedoesnotaccountfordealswithundisclosedvalues;valuesupdatedbasedonDealogic2020sponsorclassifications;valuesincludenetdebtwhererelevant;2023EannualizedassumingtheaverageratioofJanuary–NovembertoDecemberfrom2019to2022,basedondatathroughNovember30,2023

Sources:Dealogic;AVCJ;Bainanalysis

Givenanimprovingmacroeconomicbackdrop,investorsshouldconsiderthesequestionsfor2024andbeyond:

WhenwillgenerativeAItransformthehealthcaresector?CurrentpilotsofgenerativeAItoolshavefocusedonrepetitiveorexpensivetaskssuchasdocumentation.Whenthesetoolsmovetowidespreadrolloutsthattouchonthecorecompetenciesoforganizations,theeffectswillbesignificantandwidelyfelt.

HowwilltheHCITlandscapeshakeout?HCITremainsanimportantleverforhealthcareandlifesciencesorganizationsseekingtooffsetmacroheadwindsandmakebetteruseofdataandanalytics.Inthisenvironment,bothprovidersandbiopharmacompaniesarestrikingabalancebetweenadoptingplatformsvs.best-of-breedsolutions.WithinHCIT,Epiccontinueditsexpansioninseveralofferings,suchasitspayerplatform.Thecompetitionforassetsisintensifying,withtraditionallynonhealthcareinvestorsenteringthespace,underscoring

theneedforstrongplaybooksinHCIT.

Howwilllifesciencesinnovationcontinuetoaffectinvesting?Duringthepastfewyears,wesawstronggrowthinnewmodalitiessuchasmRNAandtherapeuticclassessuchasGLP-1s.Whilethedirectimplicationsofgrowthareclear,therearesignificantdownstreameffectsofincreasedGLP-1agonistuptakewithinpharma,healthcare,andbeyond.

HowwillIndia’sroleinAsia-Paciftcplayout?InvestmentsinandstrategiesfocusedonAsia-Pacificareevolving,andIndia’sfavorablemacrotailwindshavemadeitaleadingdestinationforcapital.Indiahastraditionallyseeninvestmentsinbiopharmaandproviders,anditisstilltoosoontoknowwhethergreenshootsinotherareassuchashealthinsurancetechnologyfirmsachievecomparableprominence,andwhetherthesefirmscanparlaytheirsuccessinIndia

toexpandacrossAsia-Pacific.

Howcanftnancialsponsorseffectivelyrespondtoliquiditypressuresfromtheirinvestors?Sponsor-ledsecondarytransactions,especiallycontinuationfunds,haveincreaseddramaticallyinthepastdecade.However,therecordamountofcapitalraisedforsecondariesislikelytoincreasecompetitioninthisspaceaswell.

Giventhemountainofcapitalwaitingonthesidelines,competitionforin-marketdealsisexpectedtoremainstrong.Internalratesofreturnhistoricallyhavebeendrivenbyrevenueandmultipleexpansion,whichwillbemorechallengingtoachieve.PEsponsorswillneedtoestablishhigherconfidenceinvaluecreationopportunitiesearlier,suchthattheycancommitgreatercapital.

Itiscriticalforsponsorstothinkbeyondpurecommercialdiligenceandevaluateawidersetofoperational,technological,andotherfactorssuchasenvironmental,social,andgovernanceconsiderationsearlyintheirprocesstocreatevaluequickly.Onlyaclearfundstrategypairedwithstronginvestmentscreening,integrateddiligence,focusedteams,andpost-acquisitionvaluecreationplanswillsetthemostsuccessfulinvestorsapartintheyearahead.

GenerativeAIWillTransformHealthcare

Aonce-in-a-generationtechnologysurgesintoacenturies-oldindustry.

ByEricBerger,NiradJain,KaraMurphy,DmitryPodpolny,Franz-RobertKlingan,VikramKapur,andAlexBoulton

AtaGlance

GenerativeAIpromisestodrivesignificantproductivitygains,improvepatientandproviderexperience,andultimatelyleadtobetterclinicaloutcomes.

Thetechnologycouldloweradministrativecosts,speedbiomedicalresearchanddrugdevelopment,improveclaimsmanagement,andhelpdevelopnext-generationdiagnosticequipment.

BigtechnologycompaniesarepartneringwithhealthcareorganizationstoapplygenerativeAI,andinvestorsaredeployingcapitalinnascentcompaniesbuiltaroundthetool.

InvestorsneedtoconsidergenerativeAI’sdisruptivepotentialonportfoliocompaniesandnewinvestments,andidentifyopportunitiestotakeadvantageofthetechnology.

Foundationmodels,largelanguagemodels(LLMs),andgenerativeartificialintelligence(AI)capturedtheattentionofproviders,biopharmas,payers,andinvestorsoverthepastyear,driven

bythepromiseofmakinghealthcaredeliverymoreefficient,innovative,andeffective(seeFigure1).Whiletraditional,analyticalAIhasbeenusedinhealthcareformanyyears,generativeAIisdistinguishedbyitsabilitytocreatenewcontent,summarizeandtranslateexistingcontent,

and,ultimately,to“reasonandplan.”

Thetechnologyhaspotentialacrossmanyusecases,includingthese:

Forprovidersandincaredelivery,itpromisestocutthetimespentondocumentingpatientvisitsandreimbursement-relatedcommunications,whichwouldreduceclinicianburnoutandloweradministrativecosts.Indeed,organizationssuchasHCAHealthcarearepursuingtheseopportunitiesviapartnershipswithtechcompaniessuchasGoogle,inpartbecausepatientsmayalreadybechangingtheirbehavior,usingoff-the-shelftoolstounderstandandinformtheirinteractionswithclinicians.

Inbiomedicalresearchanddrugdevelopment,generativeAIisspeedinginnovation,asevidencedbythestrategicalliancebetweenSanofiandBioMap,whereSanofiwilluseBioMap’sAIplatformtooptimizetheprocessofdrugdiscovery.Molecularbiology-specificLLMsarealsosupportingpredictivemodelingofproteinstructureandtarget-bindingaffinity,inadditiontothecreationoftherapeuticcandidatesthemselves.

InsurersandotherpayershavelongmadeuseofAIindataanalytics,claimsmanagementautomationandadjudication,andqualityandriskmanagement.Now,theyareimplementinggenerativeAIformembernavigation,anexamplebeingUnitedHealthGroup’svirtualassistantforpatientcommunication.

Medtechcompanies,meanwhile,arefocusingtheirinvestmentsonnext-generationdiagnosticequipmenttodetectdiseasesviaAI-enabledhardware,surgicalrobotswithAI-poweredsystems,orsmartremote-monitoringdevices.Forexample,PhilipsispartneringwithAmazonWebServicestodevelopgenerativeAItoadvancethecompany’sPACSimageprocessingandenhanceradiologyworkflows,aspartofitsbroaderAIeffortsindiagnosisandtreatment,connectedcare,andpersonalhealth.

Asfoundationmodels,computervision,andotherareascontinuetomature,alltypesofhealthcareorganizationswillfindopportunitiestoapplygenerativeAItosupportoperationsacrossthevaluechain(suchassupplychainmanagementandback-officeactivities).

Ultimately,generativeAImayreshapehealthcareinstitutions’corefunctionalareas,presentinganopportunityforinvestorstoservechangingmarketsandadjustoperationswithinexistingportfoliocompanies.

Figure1:NewsheadlinesaboutgenerativeAIinhealthcaresurgedin2023

NumberofpressreleasesongenerativeAIinhealthcare Top20biopharmaceuticalfirms

associatedwithgenerativeAIpressreleasesin2023

42

45

ChatGPTbecomesavailableforpublicuse

32 32

26

26

16

11

12

1

2 2

2

5

Haspressreleases

Nopressreleases

100%

Oct2022

Nov

Dec

Jan2023

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

80

60

40

20

0

Nov

Notes:Left-handsiderepresentsresultsfromaFactivasearchforpressreleaseswiththekeywords“GenerativeAI”or“GenAI”or“Generativeartificialintelligence”or“GenAI,”in“Healthcare/