Healthcare dealmaking slows but capital chases scalable, specialised bets: Report

India’s pharmaceutical and healthcare sector witnessed a significant slowdown in deal activity in the second quarter of 2025, with overall transaction value plunging 62% from the previous quarter, according to a new report from Grant Thornton Bharat. The number of deals also fell, albeit more modestly, to 57 from 67.

Total deal value stood at $1.3 billion, sharply down from $2.1 billion in Q1 2025. While the decline is partly attributable to the absence of mega-mergers, the data also reflects a broader shift in capital being allocated away from expansionist plays and toward more surgical bets on specialised, scalable platforms.

“The moderation in dealmaking this quarter is not surprising given the high base set in late 2024 and early 2025,” said Bhanu Prakash Kalmath S J, Partner and National Leader - Healthcare at Grant Thornton Bharat. “What we are seeing now is a shift from growth for growth’s sake to consolidation, focus, and institutional readiness.”

A post-boom reality check

The slowdown marks a reversal from the frothy dealmaking seen over the last 12 months. In Q4 2024, total deal value had surged to $6.9 billion, driven largely by the $5 billion Aster DM–Quality Care merger. That single deal accounted for nearly 80% of the quarter’s M&A value, setting a high watermark that has not been matched since.

In contrast, Q2 2025 featured no deals above $500 million, apart from Biocon’s $523 million qualified institutional placement (QIP)—a fundraise rather than an acquisition. Without large anchor transactions, overall values compressed despite steady underlying deal flow.

M&A volumes held up, with 23 deals in the quarter—only two fewer than in Q1—but total disclosed value fell a staggering 86% to $208 million. The drop also reflects limited transparency: nearly three-fourths of M&A deals did not disclose deal value.

Pharma and biotech lead in value, not volume

Despite the broader pullback, pharma and biotech remained the most value-heavy segment, accounting for 40% of Q2 deal value due to Biocon’s QIP alone. Beyond that, the sector saw focused consolidation in formulations, contract manufacturing, biologics, and nutraceuticals.

Notable deals:

• Emcure Pharmaceuticals acquired a 20% stake in Zuventus Healthcare for $84 million.
• Sun Pharma picked up an 18% stake in Pharmazz Inc, a US-based biotech firm, for an estimated $25 million—a rare outbound move in an otherwise domestically concentrated quarter.
• Chromo Labs acquired Cohance Lifesciences’ CR Bio unit, signalling interest in CDMO capabilities.

On the cross-border front, activity softened. Outbound M&A fell from seven deals to three, with value dropping from $1.3 billion to just $35 million. Inbound activity was non-existent for the first time since Q3 2022.

Private equity focuses on depth, not breadth

The private equity and venture capital (PE/VC) landscape showed more resilience. Deal volumes fell to 33 from 42, but total value inched up to $580 million, led by two high-conviction bets:

• General Catalyst, along with PB Fintech and an undisclosed investor, invested $218 million into PB Healthcare Services.

• Advent International deployed $175 million into Felix Pharmaceuticals, a platform in pharma manufacturing.

These two deals alone accounted for nearly 68% of the quarter’s PE value, highlighting a capital concentration trend where investors are backing fewer, but larger, more institutionalised platforms.

Other mid-sized investments included:

• CureBay Technologies ($21 million) and Mosaic Wellness ($20 million), both digital-first healthtech startups.

• Paras Healthcare received a $20 million infusion from 360 One WAM, reinforcing PE interest in regional hospital chains.

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Hospitals remain the favourite

Across both M&A and PE, hospitals remained the most institutionally favoured asset class. Investors are drawn to their scalability, stable demand patterns, and clear monetisation paths—whether through operating leverage, consolidation synergies, or public listings.

The sector is evolving along two distinct tracks: multispecialty chains consolidating to achieve scale, market share, and IPO readiness. Single-speciality providers are expanding through asset-light, replicable models in Tier II and Tier III cities.

M&A deals such as PVP Ventures’ 56% stake in Optimus Oncology and PE bets on PB Healthcare signal continued investor belief in hospitals as high-visibility, medium-risk plays.

The consumer-facing side of healthcare—comprising diagnostics, healthtech, and wellness—accounted for nearly half of all Q2 transactions by volume. The momentum here is driven by three converging forces:

• Rising consumer awareness and health-seeking behaviour
• Growth in preventive care and early diagnosis
• Acceleration of digital and home-based delivery models.

M&A activity in diagnostics focused on regional consolidation. Metropolis Healthcare’s acquisition of Dr. Ahuja’s Pathology and Imaging Centre is a case in point. PE investors are also warming to structured digital platforms with specialised offerings—such as chronic care, mental health, and gender-specific wellness—over generic health apps.

Wellness, long an appendage of consumer health, is beginning to emerge as a standalone investment theme, particularly in gut health, D2C supplements, and hormone-based therapies. The segment remains small in value, but deal flow is growing and becoming more targeted.

Despite the sharp drop in quarterly values, analysts and investors see no reason to panic. Instead, they interpret the numbers as part of a maturing investment cycle, where capital is becoming more discerning.

“There’s still a strong appetite for healthcare, but the bar has moved,” said a partner at a global private equity firm. “We’re past the spray-and-pray phase. Now it’s about vertical specialisation, platform integration, and visibility into monetisation.”

According to Grant Thornton, the medium- to long-term outlook remains bullish. The combination of a large underserved population, improving care infrastructure, and digital penetration will continue to attract investment. But investors are likely to prioritise:

• Control deals over minority stakes
• Domestic consolidation over outbound forays
• Platforms with IPO potential over early-stage experiments.

“India’s healthcare story isn’t cooling—it’s getting more disciplined,” said Kalmath. “The focus is shifting to quality over quantity, depth over breadth.