For those seeking to invest within the U.S. health sector, the experience can be tumultuous. To avoid too many peaks and troughs, an understanding of the market and its future direction is important.
To gain an insight into healthcare trends. Digital Journal caught up with Healthcare VC, Ravi Kumar, Partner, Connor Group.
Kumar explains why investors are circling around the healthcare space: “Healthcare has been a go-to sector in recent years for capital infusion from the ample dry powder that has amassed with private equity and venture capital investors.”
Drawing on a key example of the level of investment: “Over $305 billion was deployed to Healthcare companies in 2021 alone, almost double the preceding 3-year average.”
In terms of predictions for this year, Kumar foresees: “I expect this positive momentum in deal-flow to continue in 2022, including initial public offerings (IPOs), mergers and acquisitions (M&A), and significant financing rounds.”
Not everything is predictable, however. Kumar warns: “Uncertainty around the popularity of SPAC mergers in the Healthcare sector will continue, due to increased scrutiny of SPACs by the SEC, record high redemptions, and tightness in the private investment in public equity (PIPE) market.”
With SPAC, this is a special purpose acquisition company, a company that is publicly traded and created for the purpose of acquiring or merging with an existing company.
PIPE deals are often seen in SPAC transactions because sponsors need to raise more money than they get in their IPO to complete the acquisition of companies that are viable for the purpose of the SPAC.
He adds: “This is despite the abundance of over 550 public SPACs with an excess of $150B in capital to deploy. Sectors poised for growth include Digital Health due to the roll-out of the 21st Century Cures Act and the growing emphasis on data interoperability and portability. Biotech and Pharmaceutical industries will continue to thrive as we continue to battle novel viruses, variants and find new ways to combat long-standing diseases like cancer and other auto-immune diseases.”
The 21st Century Cures Act was passed in order to increase choice and access for patients and providers. The Act contains provisions to streamline development and delivery for drugs and medical devices, and to accelerate research into serious illnesses. The Act also seeks to address the opioid crisis, and improve mental health services.
