Private equity firms are driving consolidation in Europe's healthcare sector, but concerns have been raised about the impact on patient care and competition.
FREMONT, CA: Private equity (PE) funds are actively searching for opportunities to consolidate the fragmented European healthcare sector, which is facing challenges such as increasing costs and shortages of labour. The European healthcare sector received 19.9 billion Euros in investment through 300 private equity deals in the previous year. Although this indicated a decrease in the total amount of capital invested compared to the preceding year, it is still the second most active year in terms of the total number of deals in the past five years.
Though the healthcare sector in Europe is grappling with challenges such as increased regulatory scrutiny and labour strikes, it is still more resilient to economic downturns compared to other sectors. This is because of the consistent demand for healthcare services, continuous technological advancements, and demographic changes that support the industry.
The European healthcare market is still highly fragmented, which presents numerous opportunities for private equity firms. While there have been signing deals in recent years, there are also opportunities for firms to consolidate smaller sub-sectors and leverage economies of scale.
The healthcare sector has been highly resilient, especially after the pandemic. Despite a softening of the deal environment in the middle of 2022, the pipeline for deals in healthcare services has improved since the beginning of 2023. A strong history of supporting service providers across all parts of the healthcare ecosystem, with a specific focus on social care and consumer healthcare. Private equity is attracted to certain sub-sectors within healthcare because some revenues are indirectly guaranteed by the government.
