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Investments in Healthcare Part 2India.doc

Investments in Healthcare Part 2India.doc



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Published by: MarketingHealth on Aug 06, 2009
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Article Month: Jan 2009India'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 arespurring demand for high-quality medical care, transforming the healthcare industry into a profitable industry.Other factors that is driving overall growth include strong penetration of medical insurance, ageing population,improving infrastructure, higher awareness, skilled professionals, low-cost treatments, government support, bankfunding, telemedicine, business process outsourcing and health tourism.The hospital bed to population ratio in India is currently 1:3,500, while in developed economies, it is 5:1,000.Thecountry had 15,393 (2005) hospitals, which had about 88 million hospital beds. According to the WHO report, Indianeeds to add 80,000 hospital beds each year for the next five years to meet the demands of its growing population.The corporate hospitals came into existence after the government allowed private participation and investment inhospitals in the early 1980s.The Apollo Hospital,established in Chennai in 1987, was the first of its kind in India. Inthe following years, a number of corporate groups such asMax,Medica SynergieandWockhardtentered the fray. These hospitals are now expanding at a frenetic pace. The market place continues to attract newer hospitals in thissegment. The entry of corporate sector into the Indian healthcare industry has improved infrastructure and raisedthe quality of services.The allied service around hospitals have started gaining momentum. One service that one cannot ignore is Medicaltourism. Medical tourism is changing the face of traditional healthcare industry in India. India's excellence in thefield of modern medicine and its ancient methods of physical and spiritual wellbeing make it the most favorabledestination for good health! The cost advantage and explosive growth of private hospitals, equipped with latesttechnology and skilled healthcare professionals has made it a preferred destination for medical tourism.
This growth is further being fueled by new found interest of investor's community in healthcare. Private equityplayer's interest in healthcare was affirmed when 2006 saw a major deal of $33 billion acquisition of HCA (USA'slargest hospital chain). Same year saw another major deal in UK. General Healthcare Group (GHG) was sold byBC Partners to a consortium headed by Apax Partners, and the South African hospital Group Netcare for £2.2 billion.In last few years , many domestic and international Private equity players have already evinced interests in Indiahealthcare industry. $41 million investment in Indian healthcare in 2006 to $100 million in 2007 has beenconsiderable jump. Players like ePlanet Ventures, Groupe Limagrain, Lightspeed Advisory, Ajay Piramal Group,Singularity Ventures, Bluewater International Investment, Daninvest, Barings Private Equity Partners India,Reliance Life Sciences, Carlyle, Fidelity International, UK-based CDC Group, Blackstone, IDFC, HSBC, JPMorgan Private Equity Fund, American International Group Inc (AIG), Evolvence India Life Sciences Fund, andGeorge Soros's fund Quantum and Blue Ridge have already evinced interests in Indian healthcare sector.The biggest of all announcements has been US-based Global Healthcare Investments and Solutions (GHIS),which declared a $500-million fund to invest in the booming Indian healthcare sector. GHIS will invest incompanies providing hospital services, including diagnostics, radiotherapy, wellness, health insurance and loyaltyprogrammes (behavioural modifications).This is followed by IVen-with corpus of $250 million. IndiaVenture Advisors have $200 million corpus for healthcaresegment. The investments would mainly be targeted at hospitals, specialty clinics, nursing homes, wellness chainsand health city projects.To add to this momentum, the Government of India is taking active steps in healthcare sector. To mention some- Ithas announced tax holiday for next five years for setting up new hospitals in Tier II and Tier III cities. It hasintroduced a medical visa aimed at assisting overseas visitors to travel to the country for cut-price hospitaltreatment. An initial visa is available for up to a year and can be used for up to three visits during the 12monthperiod.

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