Healthcare

Over the last 10 years global healthcare costs have shown no sign of slowing due to demographic changes and increased prices.

As costs have increased, governments have increasingly taken on the burden to pay for healthcare resulting in increasing deficits. Today healthcare is in the midst of a series of dislocations resulting in significant volume increases and broad-based price pressure. This backdrop informs several themes we are pursuing.

First, we are seeking targets that have an economic value proposition to the payors and help reduce costs or improve efficiencies. This can be accomplished through cost and utilization management or through shifting the location of care to more cost-efficient locations. Second, we are identifying market niches that benefit from geographic or product exposure driving continued volume growth – the demographics and rising spending power of the emerging markets are one example. Third, we are examining self-pay segments in which price pressure is less pronounced and patients are displacing physicians as the ‘consumer’ of healthcare.

These themes dovetail with the key trends in each major healthcare sub-sector. The pharmaceutical segment is under significant pressure as the industry faces patent expiries. As a result, large pharma is divesting non-core assets while looking to expand into high-growth emerging markets. The medtech segment continues to be viewed as lower risk and defensive due to favorable healthcare demographics. Finally, growing demand, budgetary constraints and, in Europe, an inefficient public sector provider base are causing pressure in the healthcare services segment. This creates opportunities for private investors to fund companies that firstly improve the provider base, in terms of assets and management, and secondly support the growth of businesses that improve efficiency in the healthcare system.

With all of our investments in healthcare Advent brings a high degree of focus on improvement of both product and service quality. We believe that patient safety and outcomes are key success factors for any business operating in healthcare. Given the dislocation in the healthcare industry, we believe our thematic approach applied to the individual sub-sectors will help us to identify unique opportunities that will drive better outcomes and care.

See our Healthcare investments

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