The conference deliberated on strategies to facilitate increased flow of investments in tier II and III cities
CII Eastern Region organised the 3rd edition of the Evolving Healthcare Investment Landscape to explore the emerging scopes for venture capital, PE funds, debt and angel funds in the healthcare industry, in Kolkata recently.
Malay Kumar De, Principal Secretary, Health and Family Welfare, Government of West Bengal shared with the audience what the West Bengal government aims to achieve in this crucial sector. De announced that the state will add 17,000 operational beds in government-managed hospitals in the next one year.
De also stated that an MoU has been signed with the Government of Singapore to set up a training module in the healthcare sector. Five medical colleges in the state will be upgraded while four more will be set up through the PPP model. Cardiac care and cancer treatment will subsequently available free. De also spoke of the state’s move to set up 14 mother and child care hubs, tertiary care units and 68 critical care units.
Sanjay Prasad, Chairman, CII Healthcare Subcommittee ER, dwelt upon the phenomenal scope available for both industry and fund managers to take advantage in the immediate future. He also mentioned the role that regional players can play in providing service at very affordable cost, without compromising on the quality of services.
Later, Ananta P Sharma, MD and CEO, SIDBI Venture Capital, said SIDBI was contemplating setting up a West Bengal Fund which will look for investment opportunities in the State.
According to Dr Rupali Basu, President and CEO, ER Apollo Hospitals Group, the government spending in healthcare is too little to meet the growing demands. Medical devices, much of which is imported today, needs to be manufactured at home for making them available at low costs.
The session concluded with a vote of thanks by Rupak Barua, Group CEO, AMRI Hospitals.
Plenary I : Options & Opportunities
The session, featuring healthcare experts and fund managers, discussed various funding options and opportunities in healthcare. In his opening remark, Barua, moderator of the session, said that there are two key reasons why PE investors prefer the healthcare sector. First, being an emergency service provider, growth in business is constantly growing; and second, expectations from the industry are growing exponentially.
According to Skanda Jayaraman, President and Head of Investment Banking, Spark Capital Advisors, investment decisions depend on the scale and horizon of projects, making tailor-made investments for each. Investment opportunities in e-commerce projects will be preferred in the future.
Mahesh Anaokar, Director, Germinacion Capital, said investors look for projects and services that touch the masses in tier-II and III cities and rural India. Sectors which will elicit increased attention are home care health services, birth care and cosmetology.
On the future of PE, VC and Angel investments in healthcare sector, Pradeep K Jaisingh, Chairman, HealthStart, said the thrust is rather on projects and services for tier-two and three cities than the metro cities. Projects on lifestyle ailments, oncology and remote ICU managements attract investors as they touch many lives at the grassroot level. Angel investors prefer to look for projects in home care and elderly care, wellness and modern disease management.
Sudhakar Jayaram, Country Head, and Group CEO of BR Life Hospitals and Strategic Advisor NMC Group, UAE said entrepreneurs should not only learn how to move away from investments made, but also work towards it to grow in future. With market pressure shifting towards the outcome of businesses, costs of businesses will be the governing factor where pricing of products and services will be very important. He also said that there has to be a technology outburst to detect and change traditional treatments in the medical world.
Plenary II : Managing Mismatch
Although a number of start-ups have appeared in the healthcare sector of the Eastern region, there are no forums to discuss and debate the issues faced by entrepreneurs. Dr Rana Mukherjee, MD & Principal Consultant of Mediplanners, moderated this session which sought to assess the degree of difficulties for regional players to PE, VC or Angel funds. Dr Mukherjee suggested that there could be an “ongoing interactive platform” set up to facilitate investors and entrepreneurs alike. According to him, venture capital managers are often forced to downscale their investment targets because of a mismatch between fund size and fund requirements in the East. Risk capital appetite is low here, and as a result, many entrepreneurs look for a comfort zone in debt financing.
Ayanabh Debgupta, Co-founder, Medica Synergie, shared his experience of working with a fund manager, saying that “one cannot do without the other. He also mentioned the stringent norms followed by fund managers who adhere to a very strict audit system. Debgupta also called for creation of “value for customers” in the long run.
Presenting a first-hand view of what smart investments can do to a business, Somenath Mukherjee, Chairman, Hearing Plus, recounted his experience of handholding by Brand Capital. Within a year, Hearing Plus has been able to scale up business to 47 centres across India.
Advising budding entrepreneurs to focus on products and strive for constant improvement, Dr Sabahat Azim, Founder and CEO of Glocal Healthcare, urged entrepreneurs to “build for prosperity” and not cut corners in meeting compliances and rules by the government.
Vrinda Mathur, Partner, Grant Thorton India, spoke of the options that could be available in Eastern India. Providing an investor’s point of view, she stressed on the scalability of business models.
Plenary III : Stratagem & Strategy
The third plenary session discussed the strategies that healthcare units could adopt while utilising PE, VC, debt and impact utilisation funds.
While introducing the panel of speakers, the moderator, PL Mehta, Whole time Director of Neotia Healthcare Initiative, said that he would be glad to help set up the fund and even suggested that CII Eastern Region look for fund managers who could help set up the fund.
Social impact funds are selective in choosing enterprises that have products and services that affect social changes. Unitus Seed Fund, based out of Bengaluru and Seattle, funds projects that change the lives of masses at the smaller cities and the rural level, informed Vikram Duggal, Consultant of the company. “There is not just a social angle but also a commercial aspect to the project,” Duggal said. Unitus is looking to spread across the country, particularly in tier-two and three cities. While highlighting a few success stories of the eastern region, he pointed out that there is no dearth of talent in cities like Kolkata, but what they still lack is enough incubation skills needed to become a a big-time entrepreneur. Duggal also mentioned what seed funds look for while making their investment decisions and how they help partners scale up in volume and profitability before exiting.
Soumitra Ghosh, CEO, Wadhwani Initiative for Sustainable Healthare, (WISH), said that his organisation offers help and handholding to innovators who have products or services that aim to strengthen primary healthcare in the country. It has already started working in States with high populations. He said working with State governments is not impossible. However, a combination of government’s involvement with private entrepreneurs makes for a success story. WISH provides seed capital from Rs three lakhs to Rs three crores.
According to Ravichandran Natarajan, Senior VP, Narayana Health Group of Hospitals, the experience of having gone through two PE fund investments has been different with the second being more strategic and long-term that assesses the social impact and financial sustainability. Entrepreneurs should understand that there is enough money to tap, provided you have a good product and a clear concept of how to return.
Thus, the conference offered valuable insights for healthcare entrepreneurs.
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