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Private equity and venture capital firms bullish on healthcare investments

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 the pace o

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 the pace of investments in the industry, a report by Venture Intelligence indicates.

A survey of over 60 private equity and venture capital firms shows that the investors are especially keen to tap into sectors like diagnostic services, medical devices/equipment, hospital chains and wellness products and services.

‘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.

According to an article by KPMG in the report, the sheer levels of under-penetration of healthcare services, in addition to factors such as a growing population and increasing disease profiles, is one of the key growth drivers for the sector.

Given the globalized nature of the sector, the fortunes of Indian pharmaceuticals firms are closely linked to trends in developed markets including those of the so-called ‘Big Pharma’ firms.

Despite the overall optimism, the investor poll featured in the report indicates that PE/VC firms have a set of specific concerns relating to the healthcare and life sciences industry. Long gestation periods, scalability and talent shortage are among the top concerns for investors when it comes to the healthcare sector. In the life dciences 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.

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