With several sectors in the Healthcare & Life Sciences industry seen as overvalued, finance executives are concerned that a market bubble is developing. However, despite bubble concerns, they expect a great deal of investment and M&A activity in health IT and outpatient services, according to a survey by KPMG LLP and Leavitt Partners.
In surveying 265 finance executives at healthcare corporations, investment banks, and private equity firms, KPMG/Leavitt found that 36% see the current state of the healthcare & life sciences market as a “moderate bubble” and an additional 22% see the market as a “bubble likely to burst.”
When asked about overvalued sectors, respondents most frequently cited biotech (71%), specialty physician practice management (67%), behavioral health (63%), and healthcare IT (58%). Medicaid plans (23%) and population health/primary care (17%) were described as the most undervalued.
KPMG and Leavitt Partners will issue their Investment Summary 2018, a report which examines policy and market matters pertaining to healthcare & life sciences and surveyed corporate finance, investment banking and private equity executives with expertise in the sector.
A slight majority of respondents (52%) are projecting the healthcare IT and data subsector to have “a lot” of investment activity in 2018-19, followed by outpatient services (44%) and 33% each for pharma and biotech, and post-acute care services.