A Business World article titled Healthcare Sector At Inflection Point discusses trends in Healthcare Industry as Private Equity interests in the sector continue to gain in recent times:
1. Consolidation of Healthcare Companies
Availability of large capital, on the back of recent IPO success, increased PE investment in the sector and increasing global strategic investors in India will consolidate the share of organised players. e.g. IHH Healthcare, Malaysia acquired the majority stake in Global hospitals for over $200 million. Other players like Netcare (leading healthcare service provider in South Africa) and Sime Darby Group of Malaysia, have been scouting acquisition opportunities to make foot prints in India. PE-backed Healthcare companies have had successful IPOs in the last 8 months.
2. Interest in single specialty theme
By virtue of being a low asset and easily replicable format, single speciality medical centres have enticed the interest of PE investors in themes like dedicated eye care chains, mother and child care hospitals, diabetes clinics, dental chains, etc. It is expected that the investment in these formats will increase in the coming years like the concept of single speciality and short stay medical centres emerged in the 1970s in the US.
3. Expansion into Tier II and Tier III markets
Large corporate players are now increasingly looking to acquire/tie-up with medium or small hospital chains operating under standalone setups in these regions as disposable incomes rise. A similar trend is expected to be witnessed in the Diagnostic space as well, where large pan-India players like Dr. Lal PathLabs, Metropolis, SRL and Thyrocare are actively scouting for acquisitions to enter/further expand to newer regions.
4. Home Healthcare
The idea of home healthcare is largely driven by the increasing population of elders, the high prevalence of chronic diseases and a growing focus on primary and preventive care services. India’s home healthcare industry is currently at a very nascent stage and is largely unorganized. As per independent research by PricewaterhouseCoopers (PwC), the Indian Home Healthcare market is estimated to be of $2 billion currently and is growing at an annual rate of 20 per cent. (Compared to $130 billion by 2017 in North America)
Venture Intelligence is India's longest serving provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India.
Over the last few years, many PE funds have set-up dedicated healthcare-focused funds viz. Asian Healthcare fund, Quadria Capital, Sabre Partners, etc. For the 12-month period that ended in May 2016, the Indian Healthcare sector attracted investment of over $780 million from PE investors — 4.2 per cent of the total PE investment of $18.7 billion, according to deal database Venture Intelligence.
Trends to be seen:
1. Consolidation of Healthcare Companies
Availability of large capital, on the back of recent IPO success, increased PE investment in the sector and increasing global strategic investors in India will consolidate the share of organised players. e.g. IHH Healthcare, Malaysia acquired the majority stake in Global hospitals for over $200 million. Other players like Netcare (leading healthcare service provider in South Africa) and Sime Darby Group of Malaysia, have been scouting acquisition opportunities to make foot prints in India. PE-backed Healthcare companies have had successful IPOs in the last 8 months.
2. Interest in single specialty theme
By virtue of being a low asset and easily replicable format, single speciality medical centres have enticed the interest of PE investors in themes like dedicated eye care chains, mother and child care hospitals, diabetes clinics, dental chains, etc. It is expected that the investment in these formats will increase in the coming years like the concept of single speciality and short stay medical centres emerged in the 1970s in the US.
3. Expansion into Tier II and Tier III markets
Large corporate players are now increasingly looking to acquire/tie-up with medium or small hospital chains operating under standalone setups in these regions as disposable incomes rise. A similar trend is expected to be witnessed in the Diagnostic space as well, where large pan-India players like Dr. Lal PathLabs, Metropolis, SRL and Thyrocare are actively scouting for acquisitions to enter/further expand to newer regions.
4. Home Healthcare
The idea of home healthcare is largely driven by the increasing population of elders, the high prevalence of chronic diseases and a growing focus on primary and preventive care services. India’s home healthcare industry is currently at a very nascent stage and is largely unorganized. As per independent research by PricewaterhouseCoopers (PwC), the Indian Home Healthcare market is estimated to be of $2 billion currently and is growing at an annual rate of 20 per cent. (Compared to $130 billion by 2017 in North America)
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