Raising capital in healthcare

The panel discussion on ‘Raising capital in healthcare’, addressed  the issue of lack of access to capital in healthcare and deliberated on the funding trends in healthcare. Dr Rana Mehta, Partner & leader- healthcare, PwC India (moderator); Apoorva Patni, Director, Currae Healthcare & Currae Healthtech Fund; Dr N Krishna Reddy, Vice Chairman, CARE Group of Hospitals and Dr Harish Pillai, CEO, Aster Medcity, Kochi & Cluster Head-Kerala were the esteemed panelists for this discussion.

Dr Mehta commenced the session by talking about the transformations happening within healthcare and how they  put India on the global map. He also drew attention towards the biggest deterrent to its growth- lack of access to capital. He pointed out that beyond the top 10 players from the healthcare sector, access to capital still a huge concern. “In India, we have seen a a lot of process  and product innovations within healthcare, however we do not see any financial innovations in this space, both in terms of funds deployment and in making healthcare more affordable and accessible”.

He asked Dr Reddy to list three or four imperatives for fund raising in healthcare. Dr Reddy replied, “It is important for both investors as well as providers to understand the dynamics of fund raising. One key area that will have significant impact is the role of government policies in healthcare. Be it universal health insurance,  price control, quality regulations or emphasis on digital health, these policies will cause disruption within the sector and hence can have an influence on funding patterns as well as financial models. Accordingly, investors and providers will have to moderate their performance as per these changing scenarios. Also, providers will have to think deeply and come up with strategies that can sustain in these changing environment.” He further stated that healthcare offers more periodic and timely returns to its investors. The growth of the sector will continue to rise at 20 per cent. Dr Reddy also highlighted that the business environment within healthcare is going to be a volume game with lower margins and driven by efficiencies leveraged by digital health.

Key takeaways

• Biggest deterrent to the healthcare sector’s growth is lack of access to capital
• Government policies will influence healthcare financial models
• Healthcare business will be a volume game
• Leverage opportunities wisely
• Providers need to keep the investors aligned to their business philosophy

Patni shared his company’s experience as a technology provider and mentioned that the reason they entered the healthcare space was because they realised that this sector had immense opportunities for technology adoption which would add value to their existing business. He also stated that healthcare technology sector has many white spaces which could be filled by them. Therefore, they created Currae Healthtech Fund with the idea to back entrepreneurs with disruptive ideas that will make healthcare more affordable and accessible. He said that they are seeing great success on that front.

Dr Mehta then asked Dr Pillai to share his perspectives on the funding trends in the global market vis-a-vis India. Dr Pillai, highlighting a paradox, stated, “The world looks at India as one market, but the fact is that we as a country have too many layers and several smaller markets. Therefore, we can call ourselves  the United States of India. As a healthcare market, India leverages clinical knowledge in various sectors. In healthcare per say, investors who focus on these aspects will continue to remain in this sunshine industry.

Dr Reddy further elaborated on the ethos set by Care Hospitals and how their business model has continued to please all their investors. He informed that Care Hospitals has received five rounds of investments and they have been successful in doing so because they enjoy a very good reputation. He emphasised, “Every hospital needs to stick to their philosophy of existence and keep the investors aligned to your philosophy. Unless the investor is aligned to your philosophy, you will not achieve your goals. Stick to your value system and grow with this ideology. ”

Dr Pillai also shared Aster’s experience in fund raising and explained how they have kept their investors happy without diluting their business principles.

Later, Patni shared his viewpoint as an investor and stressed that business models which have a viable plan and a focussed approach to caregiving will certainly be winners.

Dr Reddy additionally indicated that investors should remember that healthcare will slowly move out of hospitals and therefore these disruptive models will need investor focus as well.

Taking the discussions forward, the panel provided investment trends for the coming times and summed up the session by reiterating that healthcare business will be a volume game—both providers and investors will need to leverage the opportunities available in a wise manner.