There has never been a more exciting time to be dealmaking in healthcare. A global watershed in both the approach to our sector and the speed of technological advancement promises an era of better outcomes for patients – in affordability, availability and importantly, also quality. Together, these trends also signal the attributes of what makes a potentially great deal in 21st-century healthcare.

Private equity (PE) has the potential to serve as both a catalyst and stabilizer in the healthcare market. The right PE partnership offers more than capital. It brings the networks, expertise and industrial strategy to scale local success into global reach while retaining the differentiation via better products or services, which gave a company its edge in the first place.

In a field where technology is accelerating discovery and potentially upending distribution models, PE partnerships must amplify technological nous and ambition and provide the tools needed to realign with macro shifts – be they regulatory, demographic or technological. Those partnered with PE firms can potentially accelerate their go-to-market strategies in new geographies and ensure they are well-positioned to thrive in an industry where fundamentals are now being redefined.

A backdrop of shifting ideas

The U.S. administration’s push for deregulation is likely to significantly impact our industry’s broader value chain, recasting structures and inefficiencies that have plagued market forces in the sector for decades.

Even small U.S. policy changes – for example, a shift towards value-based care or grant freezes – will trigger a global adjustment. Pharmaceutical firms, historically relying to a certain extent on high U.S. prices to offset lower margins elsewhere, may rethink their research and development (R&D) and market-access strategies. And, as the drug supply chain adapts to a major technological transformation, the companies leveraging new life sciences technologies – and those backed by PE – could gain a competitive edge in navigating this volatility.

The tech imperative

Artificial intelligence (AI) and machine learning (ML) are no longer speculative bets in healthcare. They are operational imperatives, transforming, among others, two critical pressure points in the value chain: upstream in clinical development and downstream in revenue management.

Generative AI pilots in biopharma have already been shown to have the potential to slash drug development timelines by a full year or more, according to McKinsey. And on the back end, automated billing solutions – such as the one developed by GeBBS, acquired last year by EQT – use ML to home in on the billions of dollars lost to billing errors annually in the US. This dual compression of R&D cycles and administrative overheads should reward those companies that industrialize and scale proven tech solutions the fastest.

For PE-target companies in healthcare, embedded tech leadership is table stakes. The right deal in healthcare PE is identifying and working with companies about to hit prime time, where proven technology meets the right moment for broader adoption.

CluePoints, an EQT portfolio company, is a good example of this. Its ML-powered analytics software was primed for scale, detecting 142,000 discrepancies across 1,600 clinical trials as of June 2024 – discrepancies that might otherwise have delayed the development of life-saving therapies. Harnessing this technology at speed and at scale was what drew EQT Healthcare Growth to partner with CluePoints last year. In them, we saw not just a leading Belgian-based tech-enabled services player but a potential global partner in a market hungry for robust and compliant risk-based quality management (RBQM) solutions – an industry worth over $50bn.

Going global faster

EQT’s majority acquisition of Cluepoints exemplifies our thesis around dealmaking today: blend product differentiation and technological leadership with a truly global reach.

Getting to the global market means aligning incentives across a company, its products and services, geographies and industrial systems faster than ever. Healthcare, by nature, is a specialist market, and as companies scale, growth has to be supported by continued product innovation and service differentiation.

The ability to execute this transition effectively is what propels companies to prime time. And that is why a strong healthcare PE deal must enable a team to focus, while the PE partner brings the network and expertise to take those ‘golden nuggets’ to the globe.

Because EQT has always provided this global network by default, we know how crucial it is. Our portfolio spans the entire healthcare value chain, enabling cross-pollination between investments. Companies we back often find that their customers, suppliers and strategic partners are already within our ecosystem; for example, life sciences companies in our funds can become the customers of digital service providers, CROs, manufacturers and logistics companies. We further support this connectivity with our own technology: our Motherbrain platform has been bringing AI solutions to portfolio companies for almost a decade.

A great deal is a partnership

So, two characteristics – local differentiation with global reach and tech leadership – define a great PE healthcare deal. A third, an aligned PE partner, makes the difference between success and missed opportunity.

In the Netherlands, we have a saying: twee handen op één buik – two hands on one stomach. An English equivalent might be “two peas in a pod”. It speaks to deep alignment, and it perfectly captures our investment philosophy. A great PE partnership is not just a financial transaction; it is a relationship built on trust, a shared vision, long-term commitment, and the ability to navigate complexity together.

It is always worth taking a step back to remember why all of this is important. Ultimately, we are concerned with the acceleration of patient access to life-saving treatments. And today, there is an unparalleled opportunity to deliver that.