Private equity and venture capital investors, who have invested over USD2bn into healthcare and life sciences companies in India over the last five years, are keen to step up their pace
Private equity and venture capital investors, who have invested over USD2bn into healthcare and life sciences companies in India over the last five years, are keen to step up their pace of investments, according to Venture Intelligence.
Over 42 per cent of PE and VC investors surveyed by Venture Intelligence, a research firm focused on private equity and M&A deal activity, felt there was a strong opportunity to tap the market for healthcare services in semi-urban and rural areas.
The investors also identified diagnostic services, medical devices/equipment, hospital chains and wellness products and services as their favourite sectors for investments within the healthcare and life sciences industry.
‘Given the fragmented nature of both the hospitals and pharmaceuticals sectors, investors also see potential for tapping into consolidation opportunities in partnership with growth-oriented entrepreneurs,’ says Arun Natarajan, chief executive of Venture Intelligence. ‘The healthcare and life sciences industry did not participate significantly in the bull phase of the Indian public and private equity markets during 2005-2007. With about 20 per cent of new PE/VC fund corpuses expected to be invested into healthcare and life sciences going forward, a revival is clearly on the cards.’
Despite the overall optimism, PE/VC firms also have some specific concerns relating to investments in the healthcare and life sciences industry. The poll lists long gestation periods, scalability and talent shortage as among the top concerns for investors when it comes to the healthcare sector. In the life sciences segment, investors’ concerns are focused on the high risk of failure (especially in new drug R&D), stiff competition from inside and outside India, as well as patent-related issues. Lack of clarity in regulations and corporate governance standards were listed as common concerns across the industry.
