M&A deals in the UAE’s health sector will shift from provider consolidation to acquisition of strategic assets with investment funds showing appetite for healthtech and medtech assets post COVID-19, according to global professional services firm Alvarez & Marsal (A&M).

In its report, UAE Health Sector Pulse, A&M said investors in the UAE are reassessing their place in the value chain and how acquisitions can improve these positions. 

Local pharma and biotech are also considered prized assets for their potential for home-grown production and reducing reliance on imports, the company said in the second edition of its report.

Between 2016 and 2021, 81 percent of deals were driven by provider acquisitions or mergers, however post COVID-19, there has been an increase in healthtech, medtech and pharma deals.

Karim Benhameurlaine, managing director and head of healthcare and life sciences Middle East, A&M, said: “In the UAE, healthcare providers have typically focused on consolidation with the objective of capturing additional market share across multiple clinical specialties and catchment areas.

“This has led to sector oversupply concerns alongside the need for organizations to think differently about strategy, sustainability, and growth, as prompted by the pandemic. Investors should target subspecialty niche providers, to complement existing care continuums, for maximising value and diversifying offerings through new capabilities and services.”

Deal activity in the first half of 2021 was propelled by investment funds accounting for 58 percent of the transactions, versus 41 percent between 2016 and 2020, with more investment funds active in healthcare because of COVID-19 disruption.

Private equity (PE) accounted for 50 percent of investments in healthtech or medtech companies, as investor interest increased, enabling deal flow to recover in 2021.

PE firms’ investment in HealthTech is rising, as evidenced by the increasing share of late-stage investment, A&M said, adding that healthcare M&A saw strong growth over the first half of 2021 as investors continued to pursue deal opportunities in a sector that has played a crucial role in managing the pandemic.

Recent M&A activity in the region included Qatar-based healthtech firm Meddy Inc, which announced it had been acquired by Nigeria’s Helium Health last week.

(Writing by Imogen Lillywhite; editing by Seban Scaria)      

Imogen.lillywhite@refinitiv.com 

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© ZAWYA 2021