Thought Leadership

BENGALURU: Healthcare sector has been witnessing record investments for the past a few years and in just five months of this year, the industry has secured private equity and venture capital investment of over $1 billion.

As per analytics firm Venture Intelligence data, the industry saw investments of over $4.5 billion across 19 deals in 2023, a 220% rise from last year. In 2022, the sector attracted $1.4 billion across 15 deals.

Hospitals are also announcing their expansion plans as recently Aster DM Healthcare launched Rs 250 crore expansion plans for Aster CMI Hospital in Bengaluru. It will raise its bed capacity from 500-850 by FY27.

Recently, Japan’s Toyota Tsusho and Secom Medical System announced their plans to set up a second multi-super speciality hospital, Sakra, in Bengaluru for Rs 1,000 crore. The facility will boast a 500-bed capacity.

“PE community sees a huge opportunity in healthcare, which is an undeniably recession-proof sector and they would participate in the buoyant growth story. This growing participation will get a booster dose as more and more Indians move up the economic ladder to demand better lifestyles and quality healthcare,” said Dr. B S Ajaikumar, Executive Chairman, HealthCare Global Enterprises Ltd (HCG).

He said there are challenges given a few stifling government rules and minuscule GDP allocation to healthcare, but the opportunities outnumber and outweigh the challenges. HCG is expanding its footprint in Bengaluru with the launch of two new cancer care centres. The two centres will commence operations in early 2025.

Demand for health services

 

A surge in PE and VC investments in the sector is primarily attributable to the substantial demand for healthcare services. Investors foresee potential in meeting this growing demand and are thus allocating major funds towards healthcare ventures, said Dr Anil Krishna, chairman and MD of Medicover Group of Hospitals. “This influx of investments underscores the confidence in the sector’s future prospects and its pivotal role in addressing evolving healthcare needs of the population. As anticipation mounts, investors are seeking opportunities to contribute to advancement of healthcare infra and services in India,” he added.

As per him, the surge in demand for private healthcare services following the pandemic underscores the vital role of hospital sector. This demand is likely to persist and even escalate, in the foreseeable future.

“India faces a notable shortage of hospital beds, a pressing issue further exacerbated by the recent health crisis. Addressing this shortfall presents a substantial opportunity for expansion and investment within the sector,” Krishna added.

Recently, global investment firm KKR announced the acquisition of Healthium Medtech, a medical devices company, from an affiliate of funds advised by Apax Partners. The acquisition will be made by a special purpose vehicle owned by KKR-managed funds which will acquire a controlling stake in the group, including Healthium, it said.

In April, Apollo HealthCo, an arm of Apollo Hospitals Enterprises, entered a pact to raise equity capital of Rs 2,475 crore from PE investor Advent International. In the same month, healthcare provider in Northern India Ujala Cygnus announced its partnership with General Atlantic. GA acquired a majority stake in the hospital chain, as per the data, the investment is $120 million.

Anil Krishna said, “Initially, there was a noticeable trend towards single-specialty chains, mainly in areas like women’s and child health, cancer care, and ophthalmology. These specialised centres catered to specific healthcare needs with focused expertise and precision. However, over time, there has been a shift towards a more comprehensive disease management approach.”

“While specialised chains continue to play a crucial role, there is a growing recognition that addressing complex health issues often requires collaboration across specialties. This has led to emergence of multi-specialty chains that offer a holistic approach to healthcare delivery, incorporating diverse medical disciplines under one roof,” he added.

Last month alone, investors put in NephroPlus, Centre for Sight and Artemis Hospital. Quadria India, IIFL AMC invested $103 million in dialysis chain NephroPlus and International Finance Corporation (IFC) invested $40 million in Artemis Hospital. Centre for Sight, an eye care chain based out of New Delhi, has received a $100 million from ChrysCapital.

Investors see projected growth of hospital sector as an opportunity for high returns, said Somdutta Singh, founder and CEO Assiduus Global Inc, LP Angel Investor. As per Singh, the Indian hospital sector is on the cusp of a major transformation.