Private Equity Dealmaking Rebounds Sharply
A new Global Private Equity Report from Bain & Company finds that a rebound in dealmaking has lifted buyouts and exits to their second-highest values on record. The report indicates a sustained upswing is in prospect for the industry. This resurgence suggests a more favorable funding climate for capital-intensive sectors like biotechnology.
- While overall private equity and venture capital-backed transactions in biotechnology saw a global decline for the third year in a row in 2024, the broader healthcare sector remained a hotspot, attracting $115 billion in deal value. North America led these investments, accounting for 65% of the total value. - Contract Development and Manufacturing Organizations (CDMOs) have become particularly attractive targets for private equity due to their recurring revenue models and the increasing demand for advanced therapies. This is exemplified by the acquisition of Avid Bioservices, a biologics CDMO, by GHO Capital Partners and Ampersand Capital Partners in a $1.1 billion deal. - The renewed investment climate is fueling significant capacity expansions in the biomanufacturing space. CordenPharma, for instance, is investing over $981 million to expand peptide manufacturing, while Novo Holdings' $16.5-billion acquisition of Catalent is largely aimed at boosting manufacturing for GLP-1 agonists. - Private equity investment is increasingly focused on pharma services that support clinical trials and IT infrastructure, with investments in service providers for testing, inspection, certification, or compliance growing at 36% since 2022. In the third quarter of 2024 alone, there were 25 private equity deals in the U.S. pharmaceutical industry, totaling $2.3 billion. - A major driver for investment is the adoption of Industry 4.0 technologies to enhance efficiency in biomanufacturing. Private equity firms are helping to modernize operations by introducing digital tools, automation, and data analytics. This trend is reflected in the growing use of "digital twins" in biopharma to create virtual replicas of production systems for process optimization and simulation. - Looking ahead, nearly 60% of life sciences executives plan to increase investments in generative AI and digital tools across their value chains. This focus on digital transformation is creating a demand for leaders who possess both scientific and digital systems expertise. - For scientific leaders, this wave of private equity activity translates into new opportunities, as PE-backed companies prioritize operational improvements and strategic guidance. There is a growing need for executives who can implement data infrastructure, lab automation, and digital systems to accelerate development and manufacturing in these newly capitalized ventures.
