A preliminary agreement for collaboration between G42 Healthcare and Abu Dhabi sovereign wealth fund Mubadala is the latest development in a year that has seen a slew of capital commitments by state-owned investors in the healthcare sector.
The partnership will support various clinical and screening programmes, as well as on new scientific projects, they said in a statement. Hasan Al Nowais, chief executive of Mubadala Health, remarked, “The partnership will enable us to offer our patients deep, targeted insights into specific areas of the genome to assess their risk of developing certain diseases or to diagnose genetic conditions.”
The pace of healthcare investment by SOIs has been frenetic in recent months with total commitments reaching just over US$12 billion in the year-to-date, easily beating the US$3.8 billion invested in the whole of last year. The pandemic has spurred interest among sovereign wealth funds and public pension funds, sending venture capital investment in biotech and pharmaceutical startups to new heights. Abu Dhabi Inc - Mubadala, ADIA and ADQ - has led the investment drive with US$5.1 billion committed, although Singapore's GIC and Temasek are not far behind with a total of US$4.2 billion.
So far, VC in the sector has nudged ahead of last year’s total US$2 billion of investment, but as a proportion of total investment it has fallen from 52% to 17% with SOIs more inclined to directly acquire private equity stakes (45% of transactions) and seek co-investments (38%). The change is explained by the shift from the initial wave of excitement over pharma startups in 2020, at the height of the Covid-19 pandemic, to targeting more established entities providing services to the healthcare sector, clinics, hospitals, and care centers.
Mubadala has invested nearly US$2 billion in healthcare in the year-to-date with the most significant acquisition being a 60% stake in United Eastern Medical Services, which operates clinics and hospitals in the UAE and Saudi Arabia. It also co-invested with GIC, Singapore’s SWF, in Spain’s Healthcare Activos, which provides geriatric services, and was part of a consortium that took a 50% stake in South Korea’s Hugel, a manufacturer of cosmetic botox. In the UK, it plunged around US$500 million into Europe’s leading veterinary healthcare provider IVC Evidensia.
Life science is also a significant target of the Abu Dhabi fund’s VC drive in healthcare, with a particular focus on drug discovery. This push is set to remain a major theme in Mubadala’s GBP800 million commitment to the sector in the UK under its Sovereign Investment Partnership.
GIC has emerged as the clear front-runner of all SOIs this year, with a total of US$3.2 billion invested in the healthcare sector. In June, it was a junior partner alongside ADIA in the multi-billion take-over of Medline, one of the world’s largest privately-held manufacturers and distributors of medicals supplies. In the same month, it invested US$1 billion in Biomat, a US-based plasma collection company owned by Spanish pharma company Grifols.
Having burst onto the scene in 2020, Abu Dhabi’s young and energetic infra-focused fund ADQ has surged into healthcare. Last month, it entered into a definitive agreement to acquire Swiss-based Acino, a leading provider of pharmaceuticals and novel drug delivery. ADQ has also been ramping up its activities in Egypt, signing a deal in March to acquire Amoun Pharmaceutical Company – a manufacturer, distributor and exporter of branded pharmaceutical and animal health products - from Bausch Health Companies. The Acino and Amoun acquisitions share one common theme: gaining exposure to pharma sectors in high growth emerging markets. This month, it took the remaining stake it did not already own in UAE’s National Health Insurance Company (Daman), the nation’s largest health insurance provider with more than 2.5 million members, providing a healthcare tilt to its growing financial services portfolio.
Yet another Abu Dhabi fund – the emirate’s largest, ADIA – has secured US$1.3 billion of investment in healthcare in 2021, largely in the massive Medline deal. It also gained a minority stake in healthcare IT group Dedalus, which provides healthcare information and clinical and administrative software to hospitals, clinics and laboratories.
In terms of volume of deals, Temasek is the leader with 19 separate investments, largely in the form of early stage and growth stage venture capital in biotech and life sciences. The smaller value of each acquisitions meant the Singaporean state investor’s total was just under US$1 billion. Yet, the higher level of risk means that it could benefit from massive asset value growth – if its portfolio delivers results.