Smaller cheques, sharper bets: Healthcare deals hold steady in Q1 2025

India’s pharmaceutical and healthcare sector kicked off 2025 with deal volumes holding steady from the previous quarter, though overall deal value fell sharply as investors leaned towards smaller, more targeted bets and mid-market consolidation.

According to Grant Thornton Bharat’s latest Pharma and Healthcare Dealtracker report for Q1 2025, the sector saw 67 transactions amounting to $2.1 billion. While this marked a minor 3% drop in deal volumes, it represented a steep 70% decline in value from Q4 2024, when a $5 billion mega-merger between Aster DM Healthcare and Quality Care India had buoyed figures.

Still, industry watchers say the dip is more recalibration than retreat.

“Investor appetite is intact. We’re seeing more nuanced, strategic capital deployment in scalable platforms and regulated markets,” said Bhanu Prakash Kalmath, Partner and Healthcare Services Industry Leader at Grant Thornton Bharat.

Shifting priorities

According to the report, private equity activity remained resilient with 42 deals worth $562 million, just shy of last quarter’s $603 million. However, the absence of billion-dollar plays continues to drag down total values. The PE trendline now favors early-stage bets in asset-light, tech-enabled models across diagnostics, wellness, and chronic care.

Healthtech emerged as the most active segment by volume, accounting for over a quarter of all deals. These investments largely backed preventive care and consumer-centric delivery models—such as AI-driven diagnostics and fertility testing—underlining a shift towards decentralised healthcare.

In contrast, the pharma and biotech segment commanded the lion’s share of deal value, raking in $1 billion across 17 deals. Three large transactions in the space—including Intas Pharmaceuticals’ $558 million acquisition of Coherus Biosciences’ Udenyca—highlight India’s growing push into global biologics and complex generics.

Consolidation themes

Mergers and acquisitions held steady at 25 deals totaling $1.5 billion. Though outbound transactions led value creation—comprising over 85% of the M&A haul—domestic activity also remained strong, especially in hospital consolidation, the report noted.

Sun Pharma’s $355 million buyout of U.S.-based Checkpoint Therapeutics and Zydus Lifesciences’ near-total acquisition of France’s Amplitude Surgical point to a broader strategic alignment: tapping overseas R&D pipelines and specialty segments like oncology and orthopedics.

Notably, diagnostics and hospital platforms continued to draw investor interest. Kotak Alternate Asset Managers pumped $111 million into Neuberg Diagnostics, among the top five private equity deals this quarter.

IPOs signal institutional optimism

Three healthcare IPOs, raising a total of $503 million, hit the markets this quarter, along with a $74 million qualified institutional placement by a hospital chain. The listings—spanning hospitals, devices, and pharma—signal continued institutional optimism for asset-backed healthcare delivery models.

Still, macroeconomic headwinds could test investor sentiment in the months ahead. The report cautioned that possible tariff measures from the U.S. and a strong dollar could tighten liquidity for outbound expansions.