Global private equity activity in the healthcare industry hit a new record last year, with deal value estimated at $191 billion, according to new data from Bain & Company.
Nirad Jain, senior partner at Bain & Company, noted that health care remains one of the best-performing sectors for private equity investments, driven by its size and enduring demand from an aging population.
“Healthcare is infrastructure. In the United States, it is equivalent to 20% of the economy. Healthcare demand continues to grow due to immutable trends in demographics and basic health,” he commented.
Private equity investors have historically under-allocated capital to health care, and companies have been chasing what Jain calls their “fair share” of investments relative to health care's economic footprint. The healthcare industry has also underinvested in technology for decades, creating an opportunity for private equity firms to modernize healthcare organizations' operations and infrastructure, he added.
The areas with the most private equity deal activity in 2025 are pharmaceuticals and providers. Jain noted that private equity activity is increasing in the pharma services ecosystem. Attractive targets include packaging, filling and sterilization services, especially for injectable drugs such as GLP-1, as well as clinical trial sites, data collection companies and analytics companies, he noted.
Jain claimed that in the provider space, private equity investors are looking at technologies that enable better frontline care, such as workflow automation tools and diagnostics. Three forces are driving this interest, he said: past gross underinvestment in health care IT, labor shortages and rising wages, and macroeconomic demands for greater efficiency and cost control.
Private equity firms are particularly interested in supporting tools designed to increase provider productivity or reduce an organization's reliance on scarce labor resources, such as radiologists or nurses, Jain said.
Competition for such healthcare assets is increasing as more private equity investors pour into the sector, he added.
“Fifteen years ago, there were 175 private equity firms doing health care deals, compared to 350 last year,” Jain said.
This puts greater pressure on pricing and deal terms. As a result, he explained, traditional acquisitions are increasingly competing with deals between private equity firms, corporate spin-offs and going-private transactions.
At the same time, as portfolios age and companies sit at record dry powder levels, the pressure for a successful exit increases.
Jain said a combination of rising competition, aging portfolios and growing pressure to exit is reshaping the way private equity firms approach health care deals. While demand for quality assets remains strong, he noted that ultimately weaker or underperforming companies need to be considered.
Even so, Jain said health care's track record as a reliable source of returns will continue to make it a top priority for private equity investors in 2026.
Photo: Andriy Onufriyenko, Getty Images
