PE Investment Surge & Digital Health Crunch


Private Equity Firms Bet Big on India’s Healthcare Sector Amidst Digital Health Crunch

Private equity firms such as Platinum Equity, Blackstone, The Carlyle Group, and Hellman & Friedman have become major players in the healthcare sector over the last decade, reshaping the traditional big Pharma dominance with their disruptive investments totaling over $280 billion. These investments are aimed at fostering innovation and advancing patient care. The Asia Pacific region is witnessing a surge in private equity (PE) deal volumes in healthcare, with India emerging as a key driver.

India: A New Hub for Healthcare PE Deals

India accounted for about 30% of the region’s deal value from 2022 to 2023, marking 22 healthcare deals in 2023 alone. The country’s robust economic growth, business-friendly government, mature pharmaceutical manufacturing landscape, and the burgeoning middle class have created a fertile ground for investment opportunities. The rising expenditure on both private and public healthcare, a booming pharmaceutical manufacturing and service sector, and a rapidly evolving healthcare technology ecosystem have all contributed to India’s rise as a new hub of healthcare PE deal activity.

Biopharmaceutical Sector: A Beacon of Growth

The Indian pharmaceutical and medical technology sector is crucial for the nation’s health and well-being, commanding a significant market size of $50 billion and ranking as the third largest in the world by volume. The National Medical Devices Policy 2023 aims to propel the med tech sector from the current $11 billion size to $50 billion by 2030. The Indian government has launched several schemes and policies encouraging R&D and innovation in the Pharma MedTech Sector, including a financial outlay of Rs 5,000 crore spread over five years.

Digital Healthcare Sector: Challenges and Opportunities

Despite the overall growth, India’s digital healthcare sector, encompassing online pharmacies and digital fitness apps, is grappling with a significant cash crunch due to a lack of private capital funding. Although some companies are striving for profitability, the extent of the funding crunch’s impact remains uncertain. The sector is pivoting towards an omnichannel approach, with companies like Netmeds planning to open 2,000 offline pharmacy stores within the next 12 months. The Pharma analytics segment exhibits financial stability and an international customer focus after securing over $2.8 billion in funding. Telemedicine, despite struggles with profitability, is diversifying into subscriptions, offline healthcare delivery, and diagnostic tests, thanks to $250 million in funding over the past three years.

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