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Specialty Carve-Out Healthcare Benefits Industry and Silicon Valley Investments

Delivered April 9, 2020. Contributor: Agnidip M.

Goals

To determine the market size of the specialty carve-out healthcare benefits industry along with identifying comprehensive industry reports on the market. To also find out the volume of venture capital invested per year in Silicon Valley / San Francisco Area startups from 1950 to present.

Early Findings

  • According to a report published by McKinsey in 2019, the global value of corporate divestitures, including spin-offs and carve-out sales to strategic or financial buyers, has increased at a steady pace from US$1.7 trillion in total transactions in 2010 to US$2.1 trillion in 2017.
  • In the health sector, med-tech companies have also seen a similar rate of growth with the total deal value of divestitures increasing from US$3.9 billion in 2010 to US$10.9 billion in 2017.
  • The volume of assets that these med-tech companies divested during this period amounted to more than US$25 billion.
  • According to a report published by the Boston Consulting Group in April 2019, between 2009 and 2019, private equity firms in the United States have undertaken 463 carve-out deals worth US$68.5 billion. 
  • Between 1995 and 2002, the total volume of venture capital invested in the state of California was US$108.38 billion from a total number of 12,412 investment deals.
  • Overall, in the United States, the total volume of venture capital investments increased from US$7.64 billion in 1995 to US$99.72 billion in 2000, and then decreased drastically to US$21.32 billion in 2002.
  • According to the latest information available, venture capital investment deal flow in Silicon Valley declined significantly from US$41.9 billion in Q4 2018 to US$29.6 billion in Q1 2019.

Proposed next steps:

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Our initial research indicates that the total market size of the specialty carve-out healthcare benefits industry is not available easily and may require triangulation. Therefore, we recommend continued research to find out the market size in US$ value. The research will highlight the industry reports used to calculate the market size.
We also recommend research to identify 5-7 top carve out deals in the United States that have happened in the specialty healthcare benefits industry in the past 3-5 years. Top will be determined by the volume of the deal in US$. If adequate number of carve out deals are not available, the research would provide examples of corporate divestitures.
For VC investments in Silicon Valley, we can start by researching the volume of investment done each year for the last four decades, i.e. 1980-90, 1991-2000, 2001-2010, and 2011-2020. Depending on the availability of information, the research will be later expanded to the following decades: 1950-1960, 1961-1970, and 1971-1980. If the volume of investment in Silicon Valley is not available for any specific year, the research would provide numbers for the state of California.