Private equity plays a critical role in supporting quality, affordable health care in the United States. For decades, PE-funded innovations have delivered more effective treatments and saved lives — and, importantly, helped lower health care costs for millions of Americans. According to data compiled by Pitchbook, private equity invested more than $79 billion in U.S. health care throughout 2020 to fund research into deadly diseases like Alzheimer’s and Parkinson’s, expand and renovate facilities, modernize medical records and health care data, and make other needed investments.
This year, private equity firms provided much-needed capital to health care companies and hospitals combatting the COVID-19 pandemic. Private equity investments supported the development of a robust antibody test and helped speed up the processing of COVID-19 tests. The industry also provided capital supporting the doctors and researchers developing vaccines and treatments, and many private equity-backed businesses are providing PPE and other supplies to health care workers on the frontlines.
Read about just a few of the recent investments private equity has made in health care:
Protecting Americans from COVID-19
Riverside-backed InVita provides hospitals and independent blood and plasma centers with software to manage the collection of blood and plasma samples and to keep track of tissue and other implantable devices. InVita’s services were especially critical during COVID-19, because with mobile blood drives shut down, there was an enormous shortage of blood in various parts of the country. Through its product HemaConnect, InVita was able to quickly integrate blood center tested antibody results into its product, resulting in many more people donating blood. In addition, their software was able to help blood centers and hospital-based blood banks recruit, manage and schedule those who could donate convalescent plasma and then track that plasma after it was donated. InVita also recognized the critical need for beleaguered hospitals to be able to order convalescent plasma more quickly, more easily, and more efficiently via its ordering and tracking software HemaControl. They were able to create the Rapid Roll Out program, which reduced the time needed for implementing its software products from three months to one.
In February 2021, KKR-backed health information provider WebMD announced the launch of its Covid-19 Vaccine Misinformation Center, which will help combat vaccine inaccuracies. The center will provide information, online tools, and fact-checked resources to ensure that users make informed decisions driven by science. “While reports show increasing receptivity to getting a Covid vaccine, about 1 in 5 Americans still say they are not planning to get one, or would only if required,” said John Whyte, MD, WebMD’s Chief Medical Officer.
In April, Carlyle-backed Ortho Clinical Diagnostics released a COVID-19 antibody test that received Emergency Use Authorization from the Food and Drug Administration. The new system can run up to 150 tests per hour to ascertain whether patients have already had the COVID-19 virus. “The unprecedented nature of this rapidly spreading virus required an immediate response from the diagnostics industry, and Ortho followed through on its commitment to help develop better ways to treat patients and provide robust data to help manage COVID-19,” said Chris Smith, chief executive officer.
Since July 2020, KKR-backed Headlands Research has been conducting vaccine trials for both the Moderna and Pfizer vaccine candidates at its research centers across the country. Specifically, the company has worked to recruit trial participants with pre-existing conditions and from diverse racial backgrounds, to ensure that the vaccine proved effective for all patients when it was finally approved. Historically, most vaccine trial participants tend to be healthier and disproportionately white compared to the general population.
Modernizing Health Care Data and Medical Records
In September, AIC member The Carlyle Group invested in TriNetX, one of the world’s leading global health research networks. TriNetX provides real time data to more than 170 health care organizations in 30 countries, including 13 top pharmaceutical companies and dozens of major hospitals, clinics and health networks. TriNetX’s data helps pharmaceutical researchers use real data to learn more about how drugs interact with patients in hospital and clinical settings. Researchers depend on this data to improve drug designs and patient outcomes.
Investing in Hospitals and Health Clinics
In the last decade, private equity investments have been critical for hospitals and health systems that need funding to improve existing infrastructure and modernize outdated systems. “Hospitals require funding to invest in IT and prepare for health care reform, but traditional financing is harder to get,” says Trey Crabb, president of Health Strategy Partners. Private equity also helps hospitals and health systems reduce administrative costs and deal with complex regulatory requirements.
Developing in Life-Saving Drugs and Medical Devices
Last November, KKR partnered with medical device veteran Duke Rohlen to form Zeus Health (“Zeus”), a $100 million platform focused on investing in and operating a portfolio of emerging medical device companies. Mr. Rohlen has successfully led and grown multiple medical device manufacturers alongside KKR over the last 20 years, including ENT manufacturer Spirox and Ajax Health. KKR’s $100 million investment will provide critical capital to medical device manufacturers that face expensive research and regulatory hurdles to develop life-altering devices for patients. Read moreabout this new investment.
In 2017, AIC member Bain Capital launched a health care fund, Bain Capital Life Sciences, to invest in and support companies developing lifesaving drugs, medical devices, diagnostics and medical tools. Bain raised more than $720 million for the fund in 2017 and an additional $900 million in 2019. According to fund managing director Adam Koppel, “This will continue to be a growth area because this will continue to be a priority for people. People not only want to live longer, but they want to live healthier.”
AIC member Blackstone’s Life Sciences fund partners with pharmaceutical, biotech and medical technology companies to address unmet medical needs and improve the quality of life of patients around the world. Blackstone provides critical capital and industry expertise to help these companies bring, “vital, but underfunded medicines and technologies to market by designing, funding and executing clinical trials for products in late-stage development.” To-date, Blackstone-supported companies have brought 99 lifesaving or life-altering drugs to market. In 2019, Blackstone invested in Anthos Therapeutics, which is helping to develop next-generation therapies to treat Thrombic Cardiovascular disorders, which cause nearly 500,000 deaths every year. Last year, Blackstone invested $350 million in Reata to fund the development and potential commercialization of an investigational therapy being studied for chronic kidney disease (“CKD”) in Alport syndrome.
In January 2018, pharmaceutical manufacturer Pfizer announced that it would shut down drug development for early- and mid-stage neuroscience drug development, citing expensive and time-consuming research costs. But private equity firm Bain Capital stepped up to partner with Pfizer by forming a new company, Cerevel Therapeutics, to keep developing treatments for some deadly diseases including Alzheimer’s and Parkinson’s. Bain invested $350 million dollars in the new company, while Pfizer provided several key researchers and science officers. According to CNBC, “Its lead programs include a medicine for the symptoms of Parkinson’s disease that is likely to enter late-stage clinical testing next year, and one for epilepsy that is ready to start mid-stage studies. Other compounds target Alzheimer’s disease, schizophrenia and addiction.”
Supporting Frontline Providers
In September, New Mountain Capital-backed Careismatic Brands, the world’s largest designer and manufacturer of medical apparel, launched a global campaign and fundraising effort to honor and support nurses fighting on the frontlines of the COVID-19 pandemic. This 19 Days of Gratitude campaign showcases frontline nurses from around the world over 19 consecutive days. Proceeds from the campaign will go to the DAISY Foundation, which is the leading international organization for nursing recognition. “Our mission at Careismatic Brands is to champion the people behind the scrubs, and we are honored to share this very meaningful tribute as a way to thank the people who have given so much hope and professional care – at much personal risk – to so many COVID patients during these extraordinary times,” said Michael Singer, CEO of Careismatic Brands.” This latest campaign comes on the heels of the company’s $1 million donation of its Cherokee Uniforms and Dickies Medical branded scrubs to health care workers. The company delivered scrubs to more than 200 hospitals, in areas most impacted by the virus.
Incline-backed ASP Global, a distributor of med-surg supplies, has been a key partner to hospitals and health systems fighting the pandemic by leveraging their global network to source critical PPE products. Since the beginning of the pandemic, ASP has supplied a wide range of PPE products including 539 million face masks to 174 hospitals and health systems in 39 states across the country to help protect frontline health care workers from the virus.
In April, Blackstone and its portfolio companies announced a $15 million contribution to COVID-19 relief efforts in New York, supporting first responders and assistance for frontline health care workers. $10 million of that donation was sent to the New York State COVID-19 First Responders Fund, which will deploy emergency aid and resources where they are needed most. “We are also going to set up a fund run by the Department of Health to assist the health care workers with expenses, costs, childcare, etc. I want to thank Blackstone for making the first contribution to that fund of $10 million,” said New York Governor Andrew Cuomo.
Private equity plays a critical role in supporting quality, affordable health care in the United States. For decades, PE-funded innovations have delivered more effective treatments and saved lives — and, importantly, lowered costs and made health care more accessible for millions of Americans in urban and rural communities.
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Private Equity Health Care