Trust Acts As Key In Healthcare Investments

Any investor looking for Private Equity (PE) is basically looking for investors that are directly looking at private companies or start-ups. Healthcare is no exception, a sector which was in the centre stage of all the PE’s. BW Businessworld’s fourth health care summit came with a core that melts every aspect of investment for the healthcare sector in it. The panel discussion was chaired by vice president of sustainable investment banking, Yes Bank ,Rajnesh Trivedi and participated by eminent personalities like NK Pandey, CMD Asian Institute of Medical Sciences; Sunil Thakur, COO Quadria Capital; Syed S Azim, CEO Global healthcare.

Sharing the various situations that an entrepreneur has to face while investing in healthcare, NK Pandey said that man power to be allocated to a remote area is something where we have to work upon. Even for someone willing to invest, he or she must have confidence in the workforce. Role of responsibility delegation is also very much important, especially for someone with capital.

The key factor to investing in healthcare sector starts with the right vision, suggested Sunil Thakur of Quadra Capital. He shared that most of the PE’s do have the habit of selecting firms based on their experience. It becomes evident to know that India had witnessed a slight down fall in the healthcare sector in the previous year. The aggregate investment has come down YoY by 30 per cent, says a data from Venture intelligence outlook.

Sunil also focussed on a few areas that can be helpful for budding entrepreneurs in the healthcare sector. He categorically termed that opportunity in the market, a good theme selection and selection of promoter along with key stakeholders plays a critical role for any PE to select a potential partner.

Growth opportunities may go well beyond geographies. Specifically recognised areas play an important role in partner selection while considering healthcare as a potential investment opportunity.  Gastroenterology is one such area where PE’s have a special interest, said Sunil.

Only 28 per cent people in India have access to doctors Syed Azim said. A 20 or 25 per cent return is not the key. It is the mutual understanding and confidence which plays a big role in PE’s relationship with their partners. It is to get a well-placed system that gives you profit along with indigenously made mechanisms to support your customised needs in the healthcare sector. ‘Syed gave a positive node to the discussion by stating that the healthcare sector has a potential of 220 billion US dollars if given serious note’. Demands can also make you suffer but the confidence of partner investor in any healthcare is most important for growth and to achieve break evens, said Syed. He also shared an instance when he chose to shut down 85 per cent of his healthcare business and how his investors had shown confidence in his decision.

Selection of the right investor was also a major point of discussion. The panel had a consensus on one aspect that if an investor can come down to inspect a potential business, irrespective of its remote location, it can be observed as an indication of the right investor. 

Affordability of business model in healthcare cannot be seen in the light of service industry. Healthcare industry in India has a trend of trying asset model. Healthcare has a different approach as investors still follow standard models in it. The panel also agreed that penetrating an alien model may not be possible in healthcare investment. Price control and possibilities are also the areas of importance in healthcare, said the panel. Policy making bodies’ transparent in disclosing various prices may also lead to a better profitability in a fair manner said, NK Pandey. Syed Azim threw light on the restrictive role that regulations play in healthcare services industry.