By Charles-Antoine Janssen
Is India’s healthcare going the way of groceries and financial services? Healthcare certainly deserves the disruptive comeuppance wrought by digital technology and entrepreneurship. Their combined interventions have brought affordability and access, quality and efficiency to once laggard services.
India did not need a pandemic to remind itself of the woeful state of its healthcare services. Yet as with all tragedies, there was a salutary lesson: systemic upgradation of the country’s health infrastructure and capacity has never been more urgent.
The pandemic forced healthcare providers into an embrace of digital technologies: in a stubbornly old-world environment, apparently 85 per cent of doctors were suddenly forced online to treat and prescribe. But this is the real reason: 140m Indians each year joining a current base of 560m internet users, a young $27bn e-commerce market, and 354m smartphone users.
At the same time, 63m Indians fall below the poverty line every year due to healthcare costs and nearly a third of the rural population – 260m – still travel more than 30km for primary care.
In any language, this is a springboard for a digital healthcare market.
This is where private capital has an opportunity to step forward and fulfil specific need gaps: access, technology, intermediation and quality. What is evident today is that venture capital and private equity funds have positions at all point along digital health value chain spanning clinical intelligence and analytics, fitness and wellness, specialized diagnostics and bioinformatics.
Last month, the specialised India healthcare fund I lead, HealthQuad, closed a $162m raise, and its success in attracting a fund size twice as great as its original target is striking measure of how investors view this opportunity. Our partners include MSD, the global biopharmaceutical leader and DFIs such as CDC Group, Swedfund and SIDBI, among other pedigree franchises.
The reason for our collective optimism is not difficult to fathom. India’s middle and lower-middle class are deserting traditional state agencies in favour of private healthcare with its promise of affordability, access and contemporary medical technologies.
A market that was growing at a clip even before the pandemic is now forecast to race ahead at a CAGR of 26 per cent to $21bn by 2025. This is an opportunity that combines India’s unique social-economic factors (100m plus diabetes patients within another eight years), a more prosperous consumer class fed up with the paucity of public services, and a private sector mobilising big capital and smart technology.
Private capital in particular has the capacity to iron out distortions and inefficiencies in the medical value chain. HealthQuad’s elastic positioning in India is evidence of the breadth of opportunity: each of our investee companies is both an innovator – treating patients using innovative tools and platforms – and a leader in its field, whether THB’s digital medical analytics or ekincare’s data-driven wellness tool.
I believe this is an unstoppable force that is additionally achieving social impact of another magnitude. HealthQuad’s JV partners are KOIS, a pioneer in impact investing, and Quadria Capital, Asia’s largest healthcare-focused private equity fund. Together, we have identified trends that we believe serve as a template for all potential investors.
Digitisation is well documented; next is federalisation of delivery models, consumerisation of healthcare, which has created unicorns such as Pharmeasy; disintermediation of delivery; systemic shift to inclusive health care; and roll out of healthcare insurance such as Ayushman Bharat
The Ayushman Bharat programme, with its guaranteed pay-out, is illustrative of a welcome role by government while revised regulatory guidelines on teleconsultation and e-pharmacy and the National Digital Health Mission are critical steps in a new enabling environment.
These tailwinds have fanned investment. In the four years to 2020, health tech funding expanded 18 pct CAGR, with funding for the year to July forecast at a little over USD1bn and counting. In fact, e-health as a sector attracted total funding of more than $1.2 bn over the same period while health tech drew in funding of about USD4bn, of which $3.5 was in the past 2 years alone.
In the near future, delivering care in our homes via tele-health and Internet-of-things devices will be a norm for most income groups. Treatment will be personalized while consumers will be able to own their health data through secure platforms. Central in this emerging bouquet will be preventive healthcare, with injectables, wearables and community health apps such as the Aarogya Setu, Cowin app and others set to transform how we can help ourselves and ease the burden on public hospitals.
Amid all the changes arising from the pandemic, perhaps the most transformative is the integration of healthcare with technology. This blurring of lines will raise patient care, enhance affordability and reduce costs for the public treasury. And in this mix stands a decisive new partner for Indian healthcare: private capital honed by social impact.
(The author is a Co-founder and Chief Investment Officer of HealthQuad. Views expressed are personal and do not reflect the official position or policy of FinancialExpress.com.)