Private Equity for Healthcare, Delhi

Contribution by: Manan Agrawal, CFA

The Delhi chapter of IAIP organized this Speaker Event on 12th October 2013. Sameer Wagle, CFA – Managing Director of Asian Healthcare Fund in Delhi – delivered an insightful talk covering Private Equity investments in the Healthcare sector in India, trends, future expectations, challenges,  and recent examples & case studies of investments made by Private Equity funds in Indian companies in the Healthcare space. The event was well attended by both IAIP members and non-members.

Sameer began by describing the various segments within the Indian healthcare sector and their economic characteristics. A large portion of the healthcare sector is still unorganized. Currently, a $57 billion Indian healthcare industry can be divided into Products ($23 bn) and Services ($34 bn). Overall, the healthcare industry is expected to double by 2015, and become 4 times by 2020. Products include the following three segments: Pharma, Bio-pharma, and Medical equipment & Devices. Services include the following: Hospitals (expected cagr 12%), Distribution & Retail (expected cagr 11%), Diagnostic products (expected cagr 25%), CRAMS (expected cagr 25%), CROs (expected cagr 29%), Diagnostic labs. Out of these, CROs and Diagnostic Products are capital light businesses. Businesses focused on serving global markets include CRAMS, CROs, and Healthcare services outsourcing businesses (remote diagnosis, TPA/insurance work, medical audit charts etc.) There are also “Healthcare allied sectors” which include healthcare IT, and training companies (which train doctors, nursing staff).

Discussing the current state of healthcare infrastructure in India, Sameer pointed out that India has 1.1 beds per 1000 people whereas US has 3.6 beds per 1000 people.

Further, Sameer discussed things that VC / PE funds look out for and processes they follow before investing in companies. VC/PE funds look out for two key things – People (qualities of the leadership team) and Business (business model, competitive advantages, growth potential). In people, besides competence, they look out for qualities like integrity, persistence, adaptability. From a business viewpoint, VC/PE funds look out for value to the customer (can the customer live without the product?), market growth potential (>30% cagr), business model (free cash flow). Processes include screening, due diligence, deal structuring, negotiation, term sheet, and post-investment monitoring. Out of these, bulk of the time is spent on monitoring.  VC/PE funds are not passive investors. Interests of the entrepreneur and the funds are aligned. VC/PE funds add value in many ways, for example – providing strategic advice, helping with business development by providing access to new markets and more customers, conducting monthly and quarterly reviews towards ensuring that the business plans are met.

Moving on to Case Studies, Sameer discussed two investments – Mydentist and Healthspring. Mydentist (,  is a chain of dental clinics (in Western India) which provides better services at a lower cost when compared to unorganized mom and pop dental care centres. Every clinic is frugal (in a 350 sq ft) space and locations are selected scientifically. It scaled successfully from 3 clinics to 50 clinics. Now growing at 2-3 clinics per month with a target of 150 clinics. Healthspring ( provides primary healthcare services.

Sameer also discussed investments in Vasan eye care, Dr. Lal pathlabs (diagnostics), and Thyrocare. Thyrocare (based in New Bombay) is a good example of pathology outsourcing in India. Their front-end is franchisees.

As for the risks and challenges, the challenge in healthcare is managing a team of doctors. The risks in healthcare include change in government regulations (example – CRO industry currently hit by government regulation), and conflict between profitability and social good (example – companies measuring performance by average revenue per bed, and the practice of kickbacks or referral fees).


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