The market potential, to put it mildly, is mind-boggling. There are just 1.1 beds for every 1,000 Indians, compared to 4.3 in other Asian countries such as China, Korea and Thailand. As India's population ages and more people get afflicted with lifestyle-related diseases (such as heart and nervous problems, and diabetes), the demand for quality healthcare will explode.
...According to the FICCI-E&Y study, a middle-level manager with a family of four spent an average of Rs 1,935 on healthcare in the late 80s. At last count (2001-02), such a family spent between Rs 7,650 and Rs 11,475 on medical care.
...Until recently, corporate hospitals were also hamstrung by a lack of finance. But now global investors, in the form of private equity investors, are willing to put money behind them. George Soros' Quantum and Blue Ridge funds, for example, have invested in Fortis Healthcare, a chain set up by the promoters of Ranbaxy. Manipal Health Systems received $20 million (Rs 88 crore) from IDFC Private Equity Fund (see Private Equity and Healthcare), and Warburg Pincus picked up 23 per cent stake in Max Healthcare. "The entry of Warburg two years ago was a sign of confidence in the Max Healthcare model," says Mukesh Shivdasani, Max's Executive Director (Operations). The growth apart, what interests PE investors in healthcare is the fact that it is an industry with no down cycle-there are no years when people don't fall sick. "Hospitals will grow as long as they earn the trust of their patients," says Shivdasani
Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.