Healthcare attracts PE, VC investments

By Sangeetha G. Jul 14 2009 , Chennai

Private equity and venture capital investors are keen on investing in healthcare-related services such

as diagnostic and hospital chains, medical devices and wellness product manufacturers, according to a recent survey of equity firms.

PE and VC investors have invested over $2 billion in healthcare and life sciences (HLS) companies in India over the last five years, a report by research firm Venture Intelligence said.

“Given the fragmented nature of both hospital and pharmaceutical sectors, investors also see potential for consolidation opportunities in partnership with growth-oriented entrepreneurs,” said Arun Natarajan, CEO of Venture Intelligence.

According to India Value Fund, consolidation of hospital chains, especially in tier II-III cities, is an attractive opportunity for PE investors. “About 80 per cent of hospital bed capacity in India is accounted by healthcare centres with less than 30 beds,” said Siddharth Dhondiyal, VP of India Value Fund.

Young companies can tap the opportunities in healthcare by creating products and services to suit the needs of the Indian market, said IDG Ventures India.

According to advisory firm KPMG, growing population and increasing disease profiles are key growth drivers for the sector. Given the globalised nature of the sector, the fortunes of Indian pharmaceuticals firms are closely linked to trends in developed markets including those of the so-called “Big Pharma” firms, said Amit Mookim, director of KPMG.

Despite the overall optimism, the investor poll featured in the report indicates that PE/VC firms have a set of specific concerns relating to the HLS industry. Long gestation periods, scalability and talent shortage are among the top concerns for investors when it comes to the healthcare sector.

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