The Future of Healthcare Investing in Asia: Perspectives from TPG Leaders Across the Region

From the consumerization of healthcare, to the rise of AI in diagnostics, and the shift towards value-centric care, healthcare in Asia is undergoing a dynamic transformation.

In our latest edition of The TPG Take, Ganen Sarvananthan, TPG Asia Managing Partner, and Partners & Co-Heads of Healthcare for TPG Capital Asia, Mitesh Daga and Vincent Wong, share their perspectives on trends driving the healthcare landscape in Asia today, and discuss our investment approach to creating multi-regional healthcare platforms of scale.

Note: the below is an edited transcript of interviews with leaders across the firm. For more, please be sure to watch the full videos.

The Opportunity for Private Healthcare Investment in Asia

Ganen Sarvananthan: "The reality in Asia is public healthcare systems cannot cope with the expectations of the middle class, and the governments in Asia just do not have enough money to be able to make those investments. And so, you need the private sector driving those capital investments. Private equity has shown a discipline around making capital investments, but also balancing that with investing for growth in markets like India or in other emerging markets of Asia that I think will carry on for a number of years."

Mitesh Daga: "I see 2025 as a year of recalibration. We came into the year on the back of rising geopolitical tensions across the globe, increasing inflation, and tightening liquidity. But we remain cautiously optimistic and, especially from an Asia healthcare perspective, the macro opportunity still remains very compelling to us.

Private equity investments in healthcare have evolved from being transactional and light touch, to now longer-term and transformation-oriented investments. Most private equity firms are realizing that the gestation period to build high-quality healthcare businesses is long enough and are getting involved and engaged with these companies in operational efficiencies and in driving consolidation to build winners for the future."

Vincent Wong: "There needs to be a balance between financial return and clinical excellence. We put a lot of discipline into businesses we buy. This will help companies become more efficient and it will allow them to be able to better treat patients as they unlock capacity and find new ways to do certain treatments.

We feel like the value add of private equity investing in healthcare is beyond just generating financial return. Because during the process of generating good financial returns, we will improve these businesses as well, and that will benefit clinical outcomes, and the broader community."

Trends Driving the Healthcare Landscape in Asia

Ganen: "We think the time has arrived in Asia where investing is no longer by country, but it's cutting across themes that consistently run across the region. We made a decision on the TPG Capital Asia side to have Mitesh and Vincent be Co-Heads of Healthcare for us in the region to be able to get that better underwriting, more consistently, and also generate thematic sourcing."

Mitesh: "My focus is on identifying long-term sustainable investment opportunities that align with the structural shifts happening in the sector. Some of the key trends that we are watching and which are driving our investment thesis are, number one, growing access and demand for quality healthcare. There is rising insurance penetration, there is increasing income levels, and several Asian governments are launching into universal health coverage, which is all creating an increasing demand for quality healthcare. At the same time, we are seeing a shift from volume-driven healthcare to value-based healthcare in many of these countries, and that's a natural evolution that's going to happen over time.

Number two is around the consumerization of healthcare. At the top end of the patient funnel, we are seeing a need for prevention, for wellness. We are now seeing growing demand for supplements and a growing demand for diagnostics. And that convergence between healthcare and consumers is a second theme and trend that we are backing in Asia.

Number three is the increasing demand for pharma and MedTech manufacturing in Asia. We are seeing global supply chain shifts, which are creating dramatic shifts on how pharma sources their drugs and raw materials from the rest of the world. It used to be largely China-centric and that is now moving away from China into countries in Southeast Asia and India. We are seeing a high level of outsourcing penetration now happening in India, which will enable scaled companies to emerge from the Indian subcontinent over the next decade."

Vincent: "The last big mega trend we're seeing is the use of artificial intelligence in healthcare. And a lot of that is playing out in diagnostics right now. In particular, with diagnostic imaging, we're seeing a lot of technology that helps radiologists identify abnormalities, and it saves time. That releases a lot of capacity in a system to allow more people to be treated."

TPG’s Investment Approach

Mitesh: "At TPG, our investment philosophy has always been guided by deep thematic conviction, aligned with the structural shifts that are happening in the sector. And our investment thesis has evolved over time with changing market dynamics, changing patient provider dynamics, and the technology innovation happening in the sector."

Vincent: "The first pillar is that we will double down on sectors that we know very well, but only if these sectors are still early innings in a multi-decade, structural growth tailwind.

The second pillar of our strategy going forward is we're going to leverage our regionally distributed footprint and our M&A expertise to create multi-regional platforms of scale in healthcare.

Novotech is a great example. We invested in Novotech in 2017 and we still own the business today. TPG played a real partnership role alongside the CEO in helping him think through strategic options. And that was a business, when we first owned it, that was predominantly an Australian business - about 70% of its revenue was in Australia, 30% in Asia. We're still early in that journey, but now the business is only about 30% in Australia, 50% in Asia, and a balance being the U.S. and Europe. That's an example of where TPG has had a close partnership with the company to create a multi-regional platform, which is one of our key investment pillars.

The third pillar relies on the fact that we are not only strong in healthcare, but we're also strong in the consumer space, which uniquely places us to invest at the intersection of consumer healthcare - businesses that focus on wellness, wellbeing, and preventative treatments. Inova, Made Group, Greencross Vets are all businesses [in our portfolio] that intersect between consumer and healthcare."

Mitesh: "While healthcare is largely delivered locally, it is transcending borders in terms of trends and the developments that are happening in the sector. Our global franchise and deep research orientation helps us stay ahead of the curve. As an example, we invested in a generic bulk drug business in India as early as 2006, which was way ahead of the curve and was a successful investment for us bought by, then, a strategic pharma company.

Similarly, we invested in a regional hospital chain in 2015, called Manipal Hospitals, and over time, converted it into a platform, which has emerged as the largest healthcare services platform in India over the last eight years of our ownership. We realized very soon that to drive financial performance, you have to invest behind clinical excellence and patient centricity. As a result, we invested a lot of dollars, a lot of our time, and management bandwidth in these areas, even before we got on to some of the financial performance metrics. We were very focused on driving the right experience and the right outcomes for our patients from day one, and our CEO was fully aligned with it.

I think it's a continuous process and the strength of our global franchise helps us stay ahead of the curve in terms of tapping these innovations and evolutions as they happen in this sector."

Looking Ahead

Ganen: "We're still at that growth phase of healthcare services and healthcare delivery in Asia as compared to managing costs and managing efficiency that you see in developed markets. Leaders really have to be able to allocate capital and expand in a prudent way to be able to get us that higher multiple on our exit."

Vincent: "From an investment standpoint, healthcare is not easy because there are a lot of stakeholders. You have the patient, the physician, and the provider – and typically the provider is the government. That creates a lot of complexity. And, at the end of the day, if you make a good healthcare investment, you’re helping the community as well."

ICYMI: Other News & Views from TPG...

We are excited about the continued momentum of TPG Growth, which recently closed its sixth and largest fund at $4.8 billion for the fund and related vehicles. This represents a 35% increase over its predecessor and is a testament to the dedication of the team and support from clients across the globe.

In a special episode of Investment Insights, hear more below from the team on our distinct approach to growth investing, which focuses on profitable growth and control investments within our core sectors.

In another episode from our Investment Insights series, Ryan Mollett, Managing Partner of TPG Angelo Gordon Credit Solutions, explores the enduring themes and sector-specific opportunities in today’s investment landscape. From navigating the "higher for longer" interest rate environment to uncovering growth potential in U.S. housing and retail, he discusses the forces driving credit markets.

Thank you to all of our followers and readers for joining us for another edition of The TPG Take. Please share the newsletter with anyone you think would be interested and we look forward to being back in your inboxes soon.