$200 billion, PE funds are intensively bottom-fishing medical assets

Global PE funds are bottom-fishing healthcare assets.

Data from Bain & Company shows that in 2025, the disclosed transaction value of the healthcare PE market reached $191 billion, breaking the historical peak in 2021; the value of exit transactions during the same period was $156 billion. Since 2026, merger and acquisition (M&A) and control investments have shown an accelerating growth trend.

The domestic market is no exception, with a series of significant M&A and control investment transactions. Recently, Beijing Jingguanguan Yizhuang Kangqiao Healthcare M&A Investment Fund acquired a majority stake in You'er Pharmaceutical, a leading pediatric enterprise; in February 2026, Hillhouse Capital acquired a stake in Bristol Myers Squibb; in November 2025, Sequoia China acquired the business and assets related to the antibiotic drug moxifloxacin from Bayer.

There have also been classic successful cases in terms of exits. At the 2025 performance communication meeting of Beauty Farm, it was mentioned that CPE Yuanfeng no longer constituted a major shareholder after selling its shares in 2025. CPE Yuanfeng held a controlling stake in Beauty Farm for 12 years and exited in stages, achieving an excess return, becoming a classic successful case of PE M&A and control. In 2026, Eiger BioPharmaceuticals planned to acquire Heisen Singapore for $250 million, and Kangqiao Capital completed its exit.

In the mature European and American markets, the ratio of M&A and control investment (PE) to growth & venture capital investment (VC) in the healthcare industry is 7:3. However, in the domestic market, this ratio is the opposite of that in the European and American markets, and VC investment is the mainstream. The balance is tilting towards the PE side, and the proportion of M&A and control investment in the domestic healthcare market is gradually increasing. More top institutions are beginning to pay attention to M&A and control investment with stable returns.

Why are PE funds making more investments?

From a statistical perspective, domestic PE funds are making investments intensively, with many transactions exceeding 2 billion yuan in scale. Some industry insiders said that in addition to established PE funds such as Kangqiao Capital and Hillhouse Capital, some funds that used to focus on growth investments are also starting to expand their M&A business.

One of the driving forces behind this shift comes from the change in institutional cognition. When talking about PE investments in Asian healthcare, global alternative asset management giant TPG said: "More and more private equity institutions are realizing that building high-quality healthcare enterprises requires a long cultivation period. More institutions are beginning to deeply participate in corporate operations to improve efficiency and create industry leaders through industry integration. Private equity investments in the healthcare field are evolving from the past transaction-based, lightly-intervened model to a more long-term and change-oriented investment approach."

From the perspective of the capital side, PE investments are facing a more favorable market environment. From the supply side, it is becoming increasingly difficult to find high-growth projects in the healthcare field. The IPO exit channel is volatile, and the track dividend is gradually fading, making it much more difficult for the VC model to obtain excess returns by relying on the high-speed growth of enterprises. However, there are more and more high-quality control transaction opportunities. Factors such as the divestiture of mature assets by multinational enterprises, the entry of valuations into the low range, and the debt difficulties of shareholders have brought a large number of opportunities for PE funds to acquire and control healthcare assets.

Against the backdrop of the warming global healthcare PE investment, which fields do PE funds favor?

Judging from the completed transactions, different global markets show different investment preferences.

In the biopharmaceutical field, Bain & Company pointed out that global investors continue to focus on sub - sectors with strong anti - policy - risk capabilities, such as contract development and manufacturing organizations (CDMO), generic drugs, consumer health, and animal health. These fields are relatively less affected by payer pressure and policy uncertainties.

In the medical device field, global PE funds are keen on acquiring assets divested by giants. Both the number and scale of spin - off M&A transactions in the medical device field are increasing. For example, Blackstone and TPG privatized and acquired Hologic for $18.3 billion. The Carlyle Group acquired the kidney care business divested by Baxter International and renamed it Vantive.

Behind this upsurge, PE institutions have explored a set of replicable value - creation methodologies: through the triple engines of "increasing revenue, thickening profits, and raising valuations", value - added has been achieved in multiple medical device M&A projects. Many of the spin - off assets in the medical device field have a solid foundation. After spin - off and divestiture, greater decision - making autonomy and more targeted investments can enable the assets to exert greater potential.

In the domestic market, PE funds prefer mature drug assets divested by multinational pharmaceutical companies. Multinational corporations (MNCs) have multiple motivations for divesting mature assets. On the one hand, multinational enterprises are more focused on their core high - growth businesses in the Chinese market; on the other hand, the rise of local enterprises and the intensification of competition due to the centralized procurement policy have brought systematic opportunities for the divestiture of MNC assets.

For PE funds, the mature drugs divested by multinational pharmaceutical companies have mature brand assets and stable cash flows. In the past, they were not valued due to MNC strategic adjustments. They have a mature operating system and room for transformation and appreciation. After PE funds acquire MNC mature assets, by formulating a tailored development strategy, re - allocating targeted development resources, introducing the best management team in the industry, and providing targeted incentive mechanisms, these businesses can be rejuvenated.

Although domestic and foreign PE funds have different preferences for projects, what is the same is the enthusiasm and confidence of global PE funds in healthcare industry assets.

How can PE funds do better than founders?

VC investments make money from the high - speed growth of enterprises, relying on track dividends and IPO exits, which tests investors' ability to judge tracks and enterprises. However, PE funds acquire and control healthcare assets to make money from value reshaping, which tests their operational ability. Value - added empowerment is the core ability of PE funds. How can PE funds do better than founders?

Looking back at the history of PE funds' acquisitions of healthcare assets, three pillars are often indispensable for successful value - added.

The first pillar is a higher strategic vision and in - depth industry understanding. PE funds need to find targets with long - term stable growth and be familiar with industry operations, and be the first to detect hidden opportunities in the industry. Only with in - depth industry understanding can the most appropriate strategic decisions be made.

For example, after CPE Yuanfeng took control of Beauty Farm in 2013, it was the first to discover that the medical aesthetics market had more growth prospects than the traditional beauty market. It helped Beauty Farm introduce medical aesthetics management talents and build a medical aesthetics team, enabling Beauty Farm to transform from traditional beauty to a dual - engine model of traditional beauty and medical aesthetics, seizing the golden period of medical aesthetics development.

The second pillar is M&A and integration. PE funds usually use M&A to build platform - based enterprises. This strategy is suitable for tracks that have been verified but are still in a fragmented state, and industry leaders can be built through M&A and integration.

For example, CPE Yuanfeng built Beauty Farm into the Danaher in the medical aesthetics field. In 2013, when CPE Yuanfeng took control of Beauty Farm, it was the third in the industry. CPE Yuanfeng realized that acquiring mature stores was more cost - effective than opening new ones. After establishing this strategy, CPE assisted Beauty Farm in building an M&A team. Since then, Beauty Farm has completed more than 30 M&A transactions and counter - attacked to acquire the first - ranked Siyanhua and the second - ranked Nairuil in 2013.

The third pillar is to layout more growth fields and introduce innovative products. Introducing transformative new products and creating synergies with mature products is the core of expanding growth.

For example, in 2019, EQT acquired the skin health department divested by Nestle and established Galderma. Previously, this department had slow growth. After EQT took over, it continuously introduced transformative new products, including Nemluvio (nemolizumab), an IL - 31 receptor inhibitor for the treatment of atopic dermatitis and prurigo nodularis, and Relfydess, a new liquid type A botulinum toxin. After these products were launched, they sold well and drove rapid performance growth. After Galderma's IPO, its stock price tripled, and EQT made 180 billion yuan from this investment, becoming the most profitable investment in history.

Some domestic PE funds are also starting to explore this model. After Sequoia China acquired the global assets of moxifloxacin from Bayer, it established Shanze Biotech, revealing that its business model will be "dual - engine driven by mature products and innovative products", aiming to build a leading biopharmaceutical platform focusing on the fields of anti - infection, respiratory, and critical care.

With more PE funds participating in M&A and control investments in healthcare assets, how can they exit?

Overseas, IPOs and inter - fund transactions are the main exit channels. However, in the domestic market, the IPO exit channel is volatile, and capable buyers are scarcer. It is necessary to explore and accumulate diversified exit channels.

Although the M&A and control investment in the domestic healthcare field started later than in overseas markets, it has witnessed a key turning point in recent years. With the in - depth development of the industry, the supply of high - quality projects and the professional talent echelon are becoming increasingly mature, and the wave of industry integration is accelerating. PE funds are deeply transforming from financial investors to industrial operators, actively participating in the M&A and control of healthcare assets to empower enterprises to reshape with full - cycle value - creation capabilities. This trend indicates that more stock assets are expected to break through the value bottleneck and achieve value leap.

Reference materials:

KPMG's 2026 Healthcare and Life Sciences Investment Outlook

The Future of Healthcare Investing in Asia: Perspectives from TPG Leaders Across the Region | TPG

Hu Tenghe of CPE Yuanfeng: Controlling investment is a compulsory course for entrepreneurship

CBC Viewpoint | What is the difference between M&A investment and venture capital investment?

This article is from the WeChat official account "Arterial Network" (ID: vcbeat), author: Yang Xue, published by 36Kr with authorization.