CII-Eastern Region organises conference on ‘Evolving Healthcare Investment Landscape’ in Kolkata

Inaugural session of the conference

‘Evolving Healthcare Investment Landscape’ — a conference on ‘Scope of Venture Capital & Private Equity funds, Debt and Angel Funds in Healthcare’ was held in Kolkata recently. Organised by CII – Eastern Region, the conference was attended by medical practitioners, fund managers, entrepreneurs and government officials.

The speakers at the event said that the healthcare industry is expected to reach $280 billion by the end of 2020. However, much needs to be done to achieve a faster growth of investments and help the country realise ‘health-for-all’ goal in less than a decade.

According to the experts who spoke at the event, the route to faster growth does not lie in conventional sources of investments, but in smart money through venture capital, private equity, debt funds and angel funds.

In his inaugural speech, Viresh Oberoi, Chairman, CII Eastern Region and MD of mjunction services said, “India has become a major destination for investment in healthcare, particularly in the fields of pharma, healthcare delivery and medicine. Eastern region is emerging as a potential destination with low costs and quality healthcare. Low cost and quality treatment are its key advantages.”

Much of this demand comes from a growing middle-class in big cities. Opportunity lies in investments in high-quality and speciality healthcare services in tier II and III cities where return on investments (RoI) are higher than metros.

It is estimated that the healthcare market in tier II and III cities will grow at faster CAGR of 15 to 20 per cent till 2023, five per cent higher than a CAGR of 10 to 15 per cent in metros. “Most importantly, the IRR of hospitals in tier III is almost double than that of in the tier I cities,” he added.

Audience listening with rapt attention to the experts at the conference

“A large number of patients from Bangladesh, Nepal, Bhutan and Myanmar, visit Kolkata for organ transplant, treatment of orthopaedic, cardiac and oncology problems. There are opportunities in medical tourism as well,” Oberoi said. Funding agencies should view this as a great opportunity to engage, he added.

Yet, whether India can become the ‘Utopia’ of healthcare is a question that remains. According to Malay Kumar De, Principal Secretary, Department of Health and Family Welfare, Government of West Bengal, most people in West Bengal have “laid faith in the healthcare facilities offered by the state”. He felt that there was “enough scope for the private sector to come in.”

He also chose the conference to disclose that West Bengal will have three medical colleges at Bhangar near Kolkata, Krishnanagar in Nadia and Cooch Behar under PPP model. For the medical college near Kolkata land has been provided with a five- year deadline, while those at Krishnanagar and Cooch Behar will have two years to turn two existing government hospitals into full-fledged medical colleges.

He said that the government will soon float e-tenders inviting private players to bid for diagnostic centres to be set up in government hospitals for providing high-end services such as like CT scan, dialysis and MRI. Medical equipment manufacturers can also join the bidding process. “Since West Bengal needs more hospital beds, more doctors, more technicians and healthcare personnel, we need the support of the private sector in a big way,” said De. Suyash Borar, Chairman, CII-Healthcare Subcommittee, Eastern Region and CEO, CMRI Hospitals said CII will launch a website to connect investors from across the world with entrepreneurs in the Eastern region. A white paper with highlights is being prepared. The objective is to make ‘concerted and focused efforts to make sure big-ticket investments happen in this region and the state.’

Dr Rupali Basu, CEO, Apollo Gleneagles Hospitals, Kolkata and CEO, Eastern Region, Apollo Hospitals Group said, “The year 2103 saw the largest investment made in the healthcare sector in the country. Eastern region, too, got its fair share of the investments. It is our collective responsibility to give greater pace to this trend. We have had enough of plans. Now, it’s time to execute and deliver.”

Sanjay Prasad, Co-Chairman, CII-Healthcare Sub-Committee, Eastern Region, and Executive Director and CEO, Mission of Mercy Hospital & Research Centre, delivered the vote of thanks. The sessions at the event were as follows:

Plenary-I

Funding opportunities in healthcare

A viable model always attracts investment. However, factors such as low penetration of insurance in healthcare and bar on FDI in insurance prove to be stumbling blocks for big money to come in. “Private equity and smart money will play a crucial role in healthcare investments in the days to come and will play a key role in bridging its demand-supply gap,” said Dr SP Singh, CEO Healthcare, CK Birla Group. Tapping smart money for investments is not easy but the evolving healthcare sector in India is an attractive destination. Fund managers in India and abroad are looking for ‘good deals’ and ‘viable projects.’

According to Matt Eliot, Principal Investment Officer (Health and Education), South Asia IFC, 31 per cent of its investments happen in India, though mostly in small deals. Opportunities in big ticket deals are likely to rise, he said adding that the new government at the Centre can play a key role.

Srini Nagarajan, Regional Director, South Asia, CDC Group, Development Finance Institution, UK Government, said low-cost investments for Eastern region states and for India-Africa chain were being designed. According to him, patience capital pays off in the long run. Investors should add value to their projects to attract funds, he said.

“Profit sustainability of projects would come from innovation, standardisation and ethical practices,” said Sunil Sachdeva, Co–founder, Medanta – The Medicity. “Though various models were experimented, both capital intensive and those on shoe string budgets, primary care in small towns, technology applications such as mobile medicine could be options for India,” he said. Highlighting the various options available, Gaurav Malhotra, MD & CEO, Bourn Hall International, said much can be achieved if facilities like ‘single window’ clearances can be availed. Key factors such as time bound management and policy stability in government decisions would influence investment mandates.

Plenary – II

Integrating finance with healthcare

At a clinical exchange of ideas, fund managers crossed thoughts with medical practitioners coming from across the Eastern region. Addressing a key issue of ‘long time taken for funds to be available’, Vrinda Mathur, Director, Grant Thorton India, said, “many promises are made that eventually do not come.”

She was discussing on how accessible PE and VC funding are to regional players and felt that entrepreneurs should be clear in addressing issues such as quantum and willingness to disinvest, and clarity of fund requirement and its utilisation, amongst others.

Fund managers place promoters at the forefront of discussions, and his impression makes or break a deal. Disclosures build confidence in funding agencies, felt Asish Mohapatra, Director Healthcare Investments, Indian Operations of Matrix Partners, US.

Padmaja Ruparel, President, India Angel Network, opined that high network individuals at home and abroad could be tapped for start-ups with a promise. V Kesavan, Group CFO, Narayana Hrudalaya Group, spoke of the various models available and suggested tapping charity money.

Dr Sabahat Azim, Founder CEO, Glocal Healthcare, pointed out to entrepreneurs timing of projects is crucial for their success. “You should know why and how the money comes for it stores value” — entrepreneurs should build for the future.

The session was moderated by Sanjay Prasad, Executive Director and CEO, Mission Mercy Hospital & Research Centre.

Plenary -III

Money for crazy ideas

Hari Balasubramanian, Chairman and MD, Ontrack Systems and an angel investor, called for young minds with crazy ideas. “Fund their dreams and you have a project blooming,” he said. Most of the time finding money for ‘out of the box’ concepts becomes difficult because conventional investors look for comfort in tested projects. An angel investor thus spends a great deal of time explaining concepts to people who may not understand! So, what Balasubramanian does is “structure ideas” that are eventually funded.

According to Samir Agarwal, MD, INDCAP, there is always a ‘right fit for the right idea’ where specialisation is key. He pointed out that there is a great deal of interest in innovative projects in the East and the entire North East.

The session was moderated by PL Mehta, Director, Neotia Healthcare Initiative.