Vrinda Mathur - Health Care East

Report
How Accessible is PE/VC Funding to Regional Players?
A focus on East India
Vrinda Mathur
Healthcare and Life-sciences Advisory
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CONTENTS
Key Points for
PE/VC Funding
Healthcare
Stats
Dealscape:
India and
Regional
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Regional
Deals:
Case
Studies
Glaring Statistics on Indian Healthcare Scenario
India ranks 112th on the WHO ranking of the world’s
health systems.
Healthcare spending accounts for a mere 4% of India's
GDP, far below OECD's average of 9.5%
Doctor-to-patient ratio for rural India, as per the
Health Ministry statistics, stands at 1:30,000, well
below the WHO’s recommended 1:1,000.
Of the 1.35 mn hospital beds, only 48% are functional
Merely 20% of India’s 1.2 billion population is covered
by health insurance
• least developed among all zones
• hospital projects in Tier II towns getting funded by high interest borrowings from
banks making projects unviable and most recently through select PE/VC investments
• resistance from skilled staff to settle in this region
• high number of private nursing homes but very few multi specialty/ network of
hospitals
East India Healthcare Scenario
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Key Healthcare Investment Trends in India: 2011- 2013
Healthcare has seen US$3.5bn worth of transactions during 2011-13
Multi Specialty Hospitals have seen maximum volumes with an average US$50mn ticket size
followed by Single Specialty hospitals with an average US$20mn ticket size
70
M&A and PE Activity
between 2011-2013
60
Average Deal Size (US$ mn)
•
•
Multi Specialty Hospital
~ US$ 7 bn
50
Pharma
Pharmaceuticals
40
Diagnostic Centres
~ US$ 3.5bn Healthcare
Medical Devices
30
Primary Care Services
Single Specialty Hospital
20
~ US$ 1 bn
10
Biotechnology
0
0
20
40
60
No. of deals
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80
100
120
140
MedTech
PE Investment Trends in India- Healthcare : 2011- 2013
Continuous Uptick in Volumes and Values
Deal Volume
13
2011
24
2012
40
2013
Deal Value US$ mn
US$219 mn
2011
US$577 mn
2012
US$639 mn
2013
3
5 2
3
8
8
4
4
Single Specialty
15
15
6
4
Multi Specialty Hospital
Primary Care Services
10
158
152
102
14
37
316
474
6
Diagnostics Centre
103
12 51
• Single and Multi Specialty Hospitals have seen significant traction in PE/VC
investments
• Deals in this space, particularly single specialty hospitals have happened at 3x-4x 1yr
forward revenue multiples
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Geographic Distribution of PE Deals in India: 2011 till date
North
2011
Volume
107
US$ mn
2458
Pharma/Healthcare
Volume
5
US$ mn
42
West
2011
Volume
127
US$ mn
2486
Pharma/Healthcare
Volume
4
US$ mn
7
2012
123
2298
2013
151
3893
2014
79
1464
8
107
16
219
5
52
South
Volume
US$ mn
Pharma/Healthcare
Volume
US$ mn
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2012
92
2293
2013
110
2935
2014 YTD
56
772
8
125
16
512
2
25
East
2011
Volume
14
US$ mn
354
Pharma/Healthcare
Volume
1
US$ mn
3
2011
125
3476
2012
180
2756
2013
176
3126
2014 YTD
86
1344
8
209
21
669
35
648
12
270
2012
6
30
2013
15
118
2014
7
65
1
5
5
45
2
3
Key Healthcare Investments in East India
Year
Investor
2011
Sequoia Capital,Elevar Equity
2012
Matrix Partners
2013
2013
2013
Ennovent GmbH; Ankur Capital
Advisors
Swedfund International AB;
Deutsche Investitions- und
Entwicklungsgesellschaft mbH;
Quadria Capital
Angel funding through the
Intellecap Impact Investment
Network
2013
Lighthouse Funds
2013
SIDBI Venture Capital Ltd
2014
Samridhi
2014
Arun LLC, Mumbai Angels
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Investee
Sub sectors
Glocal Healthcare Systems Pvt
Ltd
Enhance Aesthetic and Cosmetic
Studio Pvt Ltd
Multi Specialty
Hospital
Dermatology &
Cosmetology
ERC EyeCare Pvt. Ltd.
Eye Care
N.A.
Medica Synergie Pvt Ltd.
Multi Specialty
Hospital
25.7
iKure Techsoft Pvt Ltd
Primary
Healthcare
N.A.
Suraksha Diagnostic Pvt Ltd
Glocal Healthcare Systems Pvt
Ltd
Kanungo Institute of Diabetes
Specialities (KIDS)
iKure Techsoft Pvt Ltd
Diagnostics
Centre
Multi Specialty
Hospital
Diabetes
Specialities
Primary
Healthcare
US$ mn
3.2
5.5
9.0
4.0
2.9
0.1
Key Takeaways: Seeking PE/VC Funding
PRE
▪ Positioning the growth story – a robust business plan
▪ Clarity on Fund requirement and Utilization
▪ Timing of the fund raise
DUIRNG
▪ Groundwork (systems, financials, controls etc)
▪ Right team in place to scale business
▪ Quantum/ willingness of divestment
POST
▪ Approach the right set of funds
▪ Visibility of financial and strategic plan post funding
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Case Study of Regional Healthcare Players raising PE/VC
PE Funding: Mewar Ortho (Rajasthan) and Meditrina (Kerala)
Highlights
•
Promoter run chain of specialty hospitals in Non metros/ non urban areas
•
Closely held family business entailed evaluation of the merits and demerits of each
funding route.
•
Significant narrowing down of target investors
Challenges
•
Limited or No exposure to external fund raising & Closely held family run business
•
Showcasing the profitability of the centres & network
•
Deciding on the domestic expansion strategy (tier II cities only)
•
First such transaction in the specialty orthopaedic space and in specialty cardiac space in
India
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