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Investment in Healthcare-India-Part1

Investment in Healthcare-India-Part1

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Published by MarketingHealth
This is a market study on how international and domestic private equity is gearing up for investments in Indian healthcare industry.
This is a market study on how international and domestic private equity is gearing up for investments in Indian healthcare industry.

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Published by: MarketingHealth on Mar 11, 2009
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05/10/2014

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amshivas@gmail.com http://marketinghealth.collectivex.com www.twitter.com/marketinghealth  Article Month: Jan 2009
 
Brazil, Russia, India and China "BRIC" has maintained active attention of Private Equity (PE) players inmultiple verticals for quite some time. However, current economic turmoil, business slow down, andpessimism of economic revival in near future has resulted in tightening of investments from investor's
 
communities.Interestingly one industry that surely is attracting safe and high returns on investment in the "BRIC" region is"Healthcare".Healthcare in BRIC region has experienced a robust growth in last couple of years and is predicted tomaintain buoyancy of "sustained high growth" in coming years.The reasons for this robust growth and predicted consistency of high growth is due to:1. Robust economic growth2. Expansion of "the middle class" and increasing disposable income3. An aging population and greater health awareness.4. Government active impetus to this industry5. Aggressive penetration of insurance.6. Lower base and hence higher growth and returns potential.China and India from BRIC have shown remarkable growth in last decade.Going by the above reasons coupled with vast population (37% of world population!!) both countries havebecome the most sought after destinations for investments in healthcare industry. While China has beenahead of India, the investment community is getting bullish on India from long term investment perspective.Revenues from the Indian healthcare sector account for 5.2 per cent of the GDP, making it the third largestgrowth segment in India. (Pricewaterhousecoopers study)
 
amshivas@gmail.com http://marketinghealth.collectivex.com www.twitter.com/marketinghealth 
 
Jeremy J. Siegel (Prof. of Finance at Wharton-UPENN) and Mukund Krishnaswami (managing director of 
 
Krilacon Group) re-affirm on the long term investment edge in India. Ajit Thakur (Broadline capital;NYC) hasset his eyes in Indian healthcare sector. According to him, India offers good long-term investment
 
possibilities.Out of 40 richest people in India, 9 of them come from healthcare industry!
"Healthcare industry in India is capable of generating 10% net on sales and with a good capital to turnover 
 
ratio of at least 4 could get a return on capital in excess of 25%
" says suryanarayan (A leading healthcareventure consultant, founder of medybiz and lifeken)India's rapid growth has induced ‘health transition' in terms of shifting demographics, socio-economictransformations and changes in disease patterns. The new found prosperity of many Indian households are
 
spurring demand for high-quality medical care, transforming the healthcare industry into a profitable industry.Healthcare sector's growth in India will be driven by growing middle class, which can afford qualityhealthcare. Over 150 million Indians have annual incomes of more than US$ 1,000, and many who work inthe business services sector earn as much as US$ 20,000 a year. It's estimated that most of India would be"middle income group" by 2020. USD50 billion is projected as the investment required annually for next 20years to meet this growing demand.(CII) . India needs to add 2 million beds to the existing 1.1 million by2027, and requires immediate investments of US$ 82 billion as per the Technopak Advisors report.Health insurance is one of the key drivers in increasing the quality healthcare access for the masses.Currently only 10 per cent of the Indian population has health insurance. The Indian health insurancebusiness is growing at 50 per cent. The sector is projected to grow to USD 5.75 billion by 2010, according toa study by the New Delhi-based PHD Chamber of Commerce and Industry. According to a report by
 
McKinsey on the Indian pharmaceutical and healthcare sector, one-fifth of India's population is likely to havemedical insurance by 2015, leading to an estimated increase in consumer spending on healthcare from USD
 
2,054 per household in 2005 to US$ 3,514 per household by 2015.As per Technopak advisors, a US$ 35 billion healthcare industry in India, is expected to reach over US$ 75billion by 2012 and US$ 150 billion by 2017.

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