Private Equity (PE) and Venture Capital (VC) investors, who have invested over $2 billion into Healthcare & Life Sciences (HLS) companies in India over the last five years, are keen to step up the pace of investments in this industry, according to a survey by Venture Intelligence, a research firm focused on Private Equity and M&A deal activity.
Over 42% of PE & VC investors 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 favorite sectors for investments .
?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,? said Arun Natarajan, CEO of Venture Intelligence.
?The HLS industry did not participate significantly in the bull phase of the Indian public and private equity markets during 2005-2007. With about 20% of new PE/VC fund corpuses expected to be invested into HLS going forward, a revival is clearly on the cards,? he adds.
Despite the overall optimism, PE/VC firms also have some specific concerns relating to investments in the HLS industry. The survey 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 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.