Half the top 50 listed health care service groups globally by market cap are now headquartered in emerging markets. What does that tell us about the sector internationally?  We publish the top 50 with detailed analysis in Deals and Insights.

Click here to see the top 50.

The figure is particularly striking given the vast size of the US health care services sector which accounts for 15 of the top 50 or 30% of the total. So why are emerging markets so strong? This mainly reflects the very high price earning multiples that Saudi, Indian and Chinese groups trade at. Excluding those making losses and extreme outliers (anyone on a PE of over 100), US providers trade at 15.7 times 2022 net earnings (after tax profits), Europe, including the big South African groups on a multiple of 20, Australia and New Zealand on 21, SE Asia on 37, Saudi Arabia and the UAE on 41, India on 55 and China on 58.

That means that almost all European listed groups are crowded out of the Top 50 by Saudi or Indian groups with far lower revenue and profits. Middle East Healthcare Company, which trades as Saudi German Hospitals, makes the cut with US$560m of revenue, whilst Medicover, the Pan-East European, German and Indian player quoted in Sweden with €1.5bn of revenue doesn’t.

Those sky high multiples generally reflect much higher growth rates. For instance, Apollo Hospitals, India’s largest operator, saw profits rise 50% with revenue ahead 21% in 2022 which partly explains a historic PE multiple of 65 and its market cap of US$8.75bn. High multiples also reflect the fact that many Emerging Market companies are closely held, making it much easier for a few investors to maintain an apparently high valuation.

Whilst emerging markets make up half the top 50, they only account for 42% of the market cap total of $408bn, or possibly 40% if you count South African groups Life and Mediclinic as Western, thanks to their substantial European assets. That leaves developed countries at 60% with the US alone accounting for US$177bn, or 43% of the total.

Aside from the two Fresenius companies, European headquartered companies are almost entirely absent from the Top 50. The last European operator with global ambitions was Orpea (active in China and Latin America as well as across Europe). It now languishes on a market cap of US$112m!