Stay informed with free updates
Just sign up for Indian business and finance myFT Digest — delivered straight to your inbox.
Rising health spending in the world’s most populous country is piling up acquisition money at Indian hospital chains and healthcare companies, giving the sector a rare bright spot amid sluggish overall deal activity. It becomes.
Private equity and venture capital investments in the medical and pharmaceutical sector in India will reach a record of around $5.5 billion in 2023, up 25% from a year ago, according to a report released by Bain & Company on Thursday. did.
Global private equity executives from companies such as Bain Capital and Blackstone Group, as well as KKR co-founder Henry Kravis, have visited India in recent months to talk about the country’s economic potential and to build a multi-billion dollar market. promised to acquire.
“We’re off to a good start” this year, said Prabhav Kashyap, a partner at New Delhi-based Bain. “Assets are reaching the right size. . . . More products are coming to market.”
KKR made its latest move in India’s rapidly expanding healthcare sector this week, acquiring medical device maker Healthium Medtech from Apax Partners. Last month, Advent International announced it would invest nearly $300 million in the digital pharmacy arm of Apollo Hospitals, India’s largest corporate chain.
“Almost every hospital of some size is invested in by private equity, and that trend is not slowing down,” said Babin Shah, private equity and deals leader at PwC India. He emphasized the rise in medical costs and insurance coverage for 100 million people.
As India’s income steadily increases, so does the prevalence of non-communicable health problems such as diabetes. According to government agency Invest India, the healthcare industry is expanding due to “increasing incidence of lifestyle-related diseases,” with hospital revenues expected to reach approximately $219 billion by 2027, more than doubling from 2021. It is predicted that the number will increase.
The flow of funds into India’s health care also signals a widening gulf between the country’s expanding private network and the poor conditions of its underfunded public hospitals.
Radhika Jain, assistant professor of health economics at University College London, said: “Decades of underinvestment and mismanagement have left the public health sector with centers of excellence but overall poor performance.” The results showed that the quality and coverage were low.”
“The vast majority of health care visits, including a significant proportion of poor households, take place in the private sector, where people pay the full cost out of pocket.”
India is in the midst of a national election, with Prime Minister Narendra Modi’s incumbent Bharatiya Janata Party pledging to improve health services. In 2018, his government rolled out a public insurance policy that covered about 120 million low-income households.
However, government spending on health care remains among the lowest in the world, at just over 1% of GDP. Access to quality care remains patchy, especially in India’s vast rural hinterland.
Javier Guzman, director of global health policy at the Center for Global Development, a think tank in Washington, said “lack of infrastructure, shortage of health workers” and “lack of trust” in public facilities means most Indians are unable to access private health care facilities. He said that he started using it.
But Prime Minister Modi’s policy shift to expand insurance to cover private health care for poor Indians is “not a panacea” and “very complex,” Jain said.
“We need careful pricing and enforcement of insurance rules… regulating fraud, tying payments in some way to health outcomes,” she added. She added: “The extent to which we are ensuring widespread access to high-quality, affordable health care is unclear.”
The fund’s focus on the healthcare industry stands out as India’s private sector trade is set to expand by 35% overall in 2023, shrinking to about $39 billion. Bain said this reflected global trends influenced by rising global interest rates and political tensions. This decline was driven by a 60% plunge in venture capital funding.
While capital deployment will likely “remain cautious” this year, the consultancy noted that India’s share of private investment in Asia has risen from 15% to 20% since 2019.
PwC’s Shah said most funds are “keen to deploy significant capital in India” given the slowdown in China’s economy. “There will be a lot of deals this year.”
