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Private equity firms are rarely credited with helping to cure societal ills. But sometimes, as in the case of Blackstone and TPG’s $18bn purchase of medical technology group Hologic, buyout shops have a chance to do good and do well at the same time.
Hologic is focused on women’s health, providing devices for cervical and breast cancer screening, as well as uterine health. Women generally are an underserved market, tending to receive less effective treatments and poorer care than male patients. Eliminating the gap could be worth $1tn to the global economy by 2040, McKinsey and the World Economic Forum estimated last year, much of it through recovering the seven days the average woman loses per year to ill health.
Medicine has historically failed to take into account sex-based differences as fundamental as the workings of the heart or lung capacity. Standard asthma inhalers are far less effective for women than men, for example. Caroline Criado Perez’s 2019 bestseller Invisible Women notes that clinical trials don’t routinely document the sex of respondents nor necessarily aim for balance. Some drugs that might work for women risk getting dropped because they are less effective on the men who make up the majority of trial subjects.
As well as more effective treatment of conditions that afflict men and women, there are opportunities in alleviating female-specific conditions too. The potential market for endometriosis treatments is estimated at between $180bn-$220bn, McKinsey reckons, based on the number of women seeking help with the condition. The consultancy pegs the market for menopause treatments at between $120bn-$230bn.
While comparing the valuation of healthcare groups is not easy given their different products and specifications, Blackstone seems to be getting Hologic for a reasonable sum. The $18.3bn enterprise value — the full price if certain performance targets are met later — represents 14 times 2024 ebitda. That’s one-third below the average for large healthcare deals in the past five years, according to analysis of Dealogic data.
Private equity may not be known for its desire to heal the world, but it does have a well-earned reputation for spotting profitable niches and growing them smartly. Often that means “rolling up” acquisitions to create bigger groups able to invest and innovate more than smaller companies could alone. Hologic could lend itself to such treatment. Reducing sex-based medical inequities may not be the primary goal, but it could nonetheless be a happy side effect.
