Indian hospitals attracted Rs 27,000 crore investments in two years 

Indian hospitals attracted Rs 27,000 crore investments in two years

ICRA reports that there has been a strong demand for healthcare services in the Indian hospital sector and that organized companies have continued to increase market share.

According to rating agency ICRA, private equity investments in the Indian healthcare sector have increased, totalling over Rs 27,000 crore in the past two years.

The top transactions are investments in Manipal Hospitals, Sahyadri Hospitals, ASG Eye Hospital, and Maxivision Eye Hospital. Temasek made a 16,400 crore rupee investment to gain control of Manipal Health.

As approximately Rs 4,000 crore has been invested in these institutions in the past several months, the eyecare sector has attracted the attention of PE investors.

General Atlantic and Kedara invested Rs 1,500 crore in the ASG Hospital, while Quadria Capital invested Rs 1,300 crore in Maxivision Eye Hospital and Rs 1,050 crore in Dr Agarwal’s Healthcare. For $ 65 million (Rs 540 crore), Kedara Capital purchased the Olivia skin and hair clinic from Sreyas Holistic Remedies.

Tata Capital Healthcare Fund provided $10 million (Rs 83 crore) in Series A funding to Mumbai Oncocare Centre, a chain of cancer daycare facilities and a division of Cellcure Cancer Centre.

Existing PE participants have also made departures with sizable profits. With the Ontario Teachers’ Pension Plan Board (Ontario Teachers’) investing, Everstone Group left Sahyadri Hospitals.

The largest hospital chain in Maharashtra, Sahyadri, was acquired by Ontario Teachers for between Rs 2,500 and Rs 2,700 crore, giving them a controlling share in the company. Ontario Teachers would invest another Rs 750 crore in the Sahyadri Hospitals network.

The Indian healthcare industry has been consolidating since the Covid scandal, and patients now seek higher-quality care. During a previous conversation, people were moving from smaller nursing homes to larger hospitals, according to Dilip Jose, managing director and CEO of Manipal Hospitals.

According to Jose, the market was consolidating due to several independent hospitals trying to join more extensive hospital networks and searching for purchasers. During the epidemic, Manipal purchased the Columbia Asia Hospital and the Vikram Hospital.

ICRA reports that there has been a strong demand for healthcare services in the Indian hospital sector and that organized companies have continued to increase market share. With a substantial revenue increase of 8–10% predicted for FY24 and an operating profit margin of about 22–23%, the Indian hospital sector is in excellent shape.

According to Mythri Macherla, associate vice president and sector head at ICRA, continued demand growth underpinned the healthcare sector’s expansion.

“The sample set firms of ICRA have announced significant expansion ambitions, including an upgrade/refurbishment plan over the next four years and installing nearly 8,400 beds.

This amounts to a capacity increase of more than 26% from March 2023 levels. Some significant businesses in the sector are still looking for inorganic expansion possibilities, which may result in the addition of more beds through mergers and acquisitions,” Macherla said.

For FY2024, ICRA predicted that overall occupancy would be robust at 63-65% and that average revenue per bed would increase by 5-7%. This was caused by the increased prevalence of non-communicable lifestyle illnesses, rising healthcare spending per person and awareness levels, expanding use of health insurance, and increased medical tourism activity.

In the ever-evolving landscape of healthcare around the world, India stands as a significant player in its burgeoning healthcare sector.

Over the last two years, Indian hospitals have experienced an unprecedented influx of investment, attracting a colossal sum of INR 27,000 crore (approximately 3.6 billion USD, according to exchange rates as of 2021).

This remarkable figure is not just a statistic; it affirms the substantial transformation and rapid expansion that the healthcare sector in India is currently undergoing.

As the world’s second-most populous country, India is critical in providing healthcare to its diverse and massive population. In light of this, the surge of investments in the country’s hospital sector signals a pivotal moment deserving close examination.

These investments, coming from a mix of domestic and foreign sources, including private equity, venture capital, and public funding, have not only altered the financial landscape of healthcare in India but are also shaping the future of medical services and infrastructure in the nation.

This capital infusion has enabled the expansion and modernization of existing healthcare facilities, new state-of-the-art hospitals, and a greater reach of medical services into rural and underserved areas.

 Additionally, this investment boom has sparked innovation in medical technology and healthcare management practices, steering India closer to its goal of becoming a global healthcare destination.

The enormous sum of INR 27,000 crore that has flowed into Indian hospitals reflects growing investor confidence in the sector’s long-term prospects.

Investors recognize the potential of the Indian healthcare market, driven by factors such as a large and ageing population, increasing prevalence of lifestyle diseases, growing awareness about health and wellness, and the government’s intensified focus on healthcare through schemes like Ayushman Bharat.

Additionally, the COVID-19 pandemic has cast a stark light on the necessity for robust healthcare systems and has acted as a catalyst, urging both the public and private sectors to invest and collaborate like never before.

This article aims to delve into the nuances of this massive investment wave in Indian hospitals, dissecting where this capital originates from and how it is utilized. We will explore the impacts of these investments on the quality of healthcare services, the geographical distribution of healthcare facilities, and the broader implications for India’s economy and society.

Furthermore, we will analyze the government’s role in facilitating this influx of investment and scrutinize the challenges and opportunities this newfound capital presents to the Indian healthcare sector.

In the context of a global health landscape that the COVID-19 pandemic has irrevocably changed, the surge of investments in Indian hospitals is more than a national phenomenon; it is a case study that offers insights into the evolving dynamics of healthcare financing and development in emerging economies.

As we move through this article, we will unearth the intricate details of this investment boom and consider what it heralds for the future of healthcare in India and potentially beyond its borders.