1

July 2009
 Contents Page No.

Private Equity in Indian Healthcare & Life Sciences 6

Survey of PE/VC Investors 9

Entrepreneurs’ Perspective 14

Indian Healthcare Services: An Overview 16

- Amit Mookim, KPMG

Picking Winners in the Private Hospitals Market 23

Consolidation of Hospitals: Opportunities & Challenges 28

- Siddharth Dhondiyal, India Value Fund

Unlocking the Value in Hospital chain 33

- Muralidharan Nair, Ernst & Young

Pharma 2020 - Challenging Business Models 42

- Sujay Shetty, PricewaterhouseCoopers

Healthcare Innovation – Changing Paradigms in the Indian Context 48

- Akhil Awasthi, Baring Private Equity India

Opportunities in Healthcare – A VC Perspective 52

- Ranjith Menon, IDG Ventures India

The Legal Perspective 55

Listing of Investors focused on Healthcare & Life Sciences 57

Listing of Advisors focused on Healthcare & Life Sciences 61

2
Executive Summary
Whether it is consolidation of hospitals within
India or the impact of the push for generic
drugs by the new US administration (let alone
scares like the swine flu), there is no lack of
buzz and opportunity for the Indian Healthcare
& Life Sciences (HLS) industry. With segments
like diagnostic products and services, CROs and
CRAMs growing at over 20%, “slowdown” is not
a word that this industry is often associated
with.
The Venture Intelligence survey of leading
Private Equity (including Venture Capital)
fund managers suggests a strong appetite for
adding to the over $2 billion investments they
have already made in the HLS industry over the
past five years. Given the fragmented nature of
both the hospitals and pharmaceuticals sectors,
investors see clear potential for tapping into
consolidation opportunities in partnership with
growth-oriented entrepreneurs.
Despite the overall optimism, PE/VC firms
also have some specific concerns relating to
investments in the industry. Our poll lists long
gestation periods, scalability and talent shortage
as among the top concerns for investors when
it comes to the healthcare sector. In the Life
Sciences segment, investors’ concerns are
focused on the high risk of failure (especially
in new drug R&D), stiff competition from inside
and outside India, as well as patent-related
issues. The “Entrepreneurs’ Perspective” section
of the report features how entrepreneurs are
addressing these concerns and their experience
in working with PE/VC entrepreneurs.
In his article, Amit Mookim of KPMG
points out how the sheer levels of under-
penetration of healthcare services—in
addition to factors such as a growing
population, increasing disease profiles,
etc.—is one of the key growth drivers for
the sector. While growth for healthcare
services is a given, Mookim highlights in
detail the various challenges that lie in the
path. Structural and regulatory issues (low
health insurance penetration, licensing
norms for retail, limited manpower talent
pools, etc.) are factors that players in the
sector would need to address appropriately
in order to ensure that their growth is
profitable.
Given the globalized nature of the sector,
the fortunes of Indian pharmaceuticals firms
are closely linked to trends in developed
markets including those of the so-called
“Big Pharma” firms. In a special article,
Sujay Shetty of PwC visualizes the global
pharma landscape 10 years ahead. He
points out how Big Pharma’s traditional
preference for doing everything in-house
is set to change dramatically - which spells
immense opportunity for Indian Life Science
companies. Interestingly, Shetty also points
out international examples of non-HLS
companies tapping into healthcare-related
opportunities. A wireless telecom services
firm is enabling patients to monitor their
health parameters wirelessly at the comfort
of their homes, while an insurance firm is
reducing premium rates for people who
take up gym memberships!
3
3
 In the context of rising interest among PE
firms to invest in the hospitals segment –
with several firms setting up special purpose
vehicles to consolidate small hospital chains
- The Parthenon Group provides a special
perspective on how investors can pick the
right firms to back in a sector characterized
by wide variation in financial performance.
The advisory firm lays out five strategic
criteria that hospital businesses need to
meet in order to emerge as winners in the
marketplace. The Parthenon article also
points out how driving down costs would
be crucial to successfully addressing the
vast opportunity in serving the middle-
income market (as against the rapidly
saturating segment of corporate hospitals
targeting the high-income market in the
metros).
Siddharth Dhondiyal of India Value
Fund delves into the nuances that make
consolidating hospital chains - especially
in Tier II and Tier III cities - an attractive
opportunity for PE investors. He points out
how about 80% of the hospital bed capacity
in India is accounted for by hospitals
with less than 30 beds! Despite having
capable doctor teams, such hospitals lack
the managerial and financial resources to
expand and upgrade their infrastructure.
Dhondiyal also highlights the several
execution challenges that need to be
overcome in order to successfully exploit
the consolidation investment theme –
from difficulties in spotting the right types
of chains in Tier II & III cities, to selling the
need for parting with majority stakes, to
corporate governance issues and retaining
the commitment of the doctor teams.
Muralidharan Nair of Ernst & Young details
how hospital chains can work towards
4
4
replicating pockets of excellence across all
owned and operated hospitals consistently and
uniformly. He also draws interesting examples
of areas where the healthcare industry can
learn and draw inspiration from other industries
like organized Retail and Hospitality. In his
article, Ranjith Menon of IDG Ventures India
highlights the various opportunities that young
companies can tap into by creating products
and services to suit the unique needs of the
Indian market.
Akhil Awasthi of Baring Private Equity Partners
India provides an interesting perspective
on understanding innovation in the Indian
context. He points out how the absence of
social acceptance of the risks and failure
associated with innovations prevents the best
ideas for unstructured disruptive innovations
from seeking capital. The Indian ecosystem
fares well though for process based innovations
given adequate depth of management in this
area and presence of experience curve. He
goes on to share a framework for taking an
innovative idea to business describing the key
enablers that need to be put in place as part
of the process.
For the convenience of entrepreneurs, the
report also provides a listing of Private Equity
and Venture Capital funds keen to invest in this
industry. A directory of investment advisory
firms, who provide value-added intermediation
services with a special focus on HLS, is also
included.
+91 40 2354 1305

5
 Private Equity in
PE Investments inIndian Healthcare
Healthcare & Life Sciences
& Life Sciences:
What the Data Shows...
2004-2008
PE Investments -By Sector** 2004 - 2008

3% 4%
4%
2% Pharmaceuticals

Hospitals

CRO

13% 40% Biotech

Wellness

10% Medical Devices

Diagnostics
24%
Others

* By no. of deals Source : Venture Intelligence PE Deal Database

PE Investments -By Year

700 40
600 35
30
US $ Millions

500
25
400
20
300
15
200 10
100 5
0 0
2004 2005 2006 2007 2008

Amount No. of Deals

Source : Venture Intelligence PE Deal Database

6
6
PE Investments - In Hospitals

350 12
300 10
US $ Millions

250
8
200
6
150
4
100
50 2
0 0
2004 2005 2006 2007 2008

Amount No. of Deals

Source : Venture Intelligence PE Deal Database

PE Investments - In Pharma

350 20
18
300
16
US $ Millions

250 14
200 12
10
150 8
100 6
4
50 2
0 0
2004 2005 2006 2007 2008

Amount No. of Deals

Source : Venture Intelligence PE Deal Database

7
7
 PE Investments - In Biotech

20 9
18 8
16 7
US $ Millions

14
6
12
5
10
8 4
6 3
4 2
2 1
0 0
2004 2005 2006 2007 2008

Amount No. of Deals

Source : Venture Intelligence PE Deal Database

PE Investments - In CROs

140 9
120 8
7
US $ Millions

100
6
80 5
60 4
3
40
2
20 1
0 0
2005 2006 2007 2008

Amount No. of Deals

Source : Venture Intelligence PE Deal Database

8
8
What PE/VC Investors think ….
Here are the key highlights of a poll conducted among Private Equity & Venture Capital
firms during April-May 2009. Fund managers from over 60 firms participated in the poll.

According to 87% of the fund managers polled, HLS should constitute at least 10% of
portfolios of new funds being raised for investing in India.

For a new fund, what would you recommend as an allocation to HLS?

13%
6% > 30%
< 10%

81% 10 -30%

Investors chose Diagnostic Services, Medical Devices / Equipment, Hospital Chains, Wellness
Products and Services and CROs as their favorite sectors for investments within the HLS
industry. Other areas of interest include specialized chains in areas like diabetes, orthopedics,
optics, geriatrics and psychiatric.

Most Attractive Sectors for Investments

500
450
400
350
300
250
200
150
100
50
0
i c e l Ch s

Se nt
s
y a cs)

ac D

ice

s
in

ag Equ s
y

ns
ne e
le ines

ice
R&

Os

e
n
og
in

ot Cha
ri

ris

pm
ai
ai

rv
ne

ed dic

CR

rv
De nol
nd

Ch

ou

Se
c

i
ge

lT
h

al

nd
m

ta
V
s(

ic
ec
ici

ca
nt
er

l D spi

st
sa
al

s/
di
Te
ov

no
tic

i c a Ho
ct
Bi

e
M
sc

M
eu

du

ev
e
Di

Di
ac

iv

ro
ug

at
m

sP
rn
ar

Dr

es

ed
te
Ph

ln
Al

M
el
W

9
9
 Pharmaceuticals-related opportunities, with the possible exception of CRAMs, are clearly
not the “flavor of the season” among PE investors. A majority of investors participating in
the poll ranked most pharma-linked opportunities 5 or below in terms of attractiveness
(on a scale of 10).

How Investers have rated Each Sector (on a scale of 1-10)

100
80
60 Rated above 5
40
20
0 Rated 5 & below
-20
-40
-60
-80
-100
m
h ns

Ch s

s
s)

ns
Va &D
es

ne

ica ains
al gy

Se nt
s

ita ice

ice
RO
ris
ric

e
cin

ai
o
ici

ot Cha
R

no ipm
ou
De nol

rv
C
h
ne

ed
nd

r
c

Ho Se
lT
ge

ne

ag Equ
l
m
ya

ec

ic
nd
nt
s(

le

ici

sp

st
er

Te

ed
al

sa

s/
ed
ov

Bi
tic

ice
M

ct
M
sc
eu

du

ev
Di

Di
ac

iv

ro

lD
ug

at
m

sP

ica
rn
Dr
ar

es
te

ed
Ph

ln
Al

M
el
W

Taking Healthcare beyond the Metros

Over 42% of investors surveyed felt there was a strong opportunity to tap the market for
healthcare services in increasingly prosperous semi-urban and rural areas.

Investors who are postive on this opportunity believe the usage of telemedicine and
“hub and spoke” models will make serving this underserved market quite profitable. Plus,
once the delivery and business models are honed, non-urban India provides healthcare
companies with a large and scalable market. The naysayers, however, cite the lack of three
ingredients - insurance, affordability and trained manpower - as well as the fragmented
nature of the market as significant execution challenges.

10
10
 How attractive an opportunity is healthcare targeting non-urban centres?

Attractive
25%
Not So Attractive
42%
6% Too Challenging

27% No response

Hello Doctor, Can I buy your hospital?

Given the fragmentation of the market, PE investors see significant opportunity in
consolidating the space – either on their own or by supporting an existing player from the
industry. Funds like ICICI Venture and Sabre Capital have created special purpose vehicles
(SPVs) for this “roll up”opportunity and have already acquired some mid-sized hospitals.
Once they create a certain scale, the PE firms expect to take such SPVs public by launching
an IPO.

Investors point to numerous advantages in consolidation. Even consolidation on a regional

scale would help address the issues of scalabilty and foster various efficiencies including
standardization of processes. Several investors point how how a larger chain would have
significant leverage vis-à-vis suppliers and insurance companies. The availability of hospitals
below replacement cost is also expected to sustain this trend.

While consolidation makes a lot of sense on paper, given the variance in the standards
of service as well as the state of infrastructure across individual hospitals, other investors
point to the significant execution challenges of such a strategy. Several of the naysayers
are also wary of the capital intensive nature of such an excerise. While there are quite a few
chains who are strong on a regional basis, they might not be able to cross over regions and
integrate with other chains successfully.

The preference of key doctors to work for niche/standalone hospitals rather than larger
corporate structures is another challenge. Some investors also point out that since the
healthcare market in India is still largely underpenetrated (in terms of hospital beds per
capita), the entry of new players will continue.

11
11
 Is Consolidation of Hospital chains an attractive Investment opportunity?

15% Attractive Opportunity

Attractive, but tough

54% to execute
31%
Not Interesting

Spinout of Drug R&D? Not really..

Inspired by the innovative Perlecan Pharma spinout by Dr. Reddy’s in September 2005
- in partnership with PE firms ICICI Venture and CVC International – several leading
pharma companies have been toying with the idea of seeking PE capital for their R&D
subsidiaries.

However, with Perlecan Pharma not panning out as expected (Dr. Reddy’s ended up buying
out the PE investors in the company in July 2008), investors don’t seem to have the appetite
to enter into such deals.

An investment in R&D spinouts of Pharma Cos. an interesting opportunity?

17% Yes

44% No

No response
39%

12
12
Macro Challenges
The Venture Intelligence poll lists long gestation periods, scalability and talent shortage as
among the top concerns for investors in the healthcare sector.

Some opinions conveyed in the survey:

 “A key issue is that a large portion of the investment goes into land and building, which
increases the gestation period substantially. Smaller PE funds therefore would look to
invest into models that are less capital intensive.”

 “Reputation of doctors/consultants is often more important than that of the

hospital.”

 “Lack of affordability of healthcare to the masses, especially in the rural and semi-urban
areas.”

In the Life Sciences segment, investors’ concerns are focused on the high risk of failure
(especially in new drug R&D), stiff competition from inside and outside India, as well as
patent-related issues. Several investors express discomfort with the “binary output” for
drug discovery and R&D. Investors also tend to feel the need for extra domain knowledge
while evaluating opportunties in this sector.

Lack of clarity in regulations and corporate governance standards were listed as common
concerns across the HLS industry.

13
13
 Entrepreneurs’ Perspective
India’s healthcare segment needs
an investment of over US$50 billion
every year for the next 20 years, says
a Confederation of Indian Industry
(CII) study. Another estimate, by
a consulting firm, pegs the need for
investment in healthcare industry at
Rs 60,000 crore over the next five years.
While estimates may vary, it is quite clear
that India’s Healthcare and Life Sciences
industry is ready to absorb massive
amounts of capital and entrepreneurs
across the value chain are keen to tap the
funding and expertise of Private Equity
and Venture Capital investors to fuel the
growth of their ventures.
Entrepreneurs who have already
partnered PE/VC investors, point out the
ability to accelerate growth as one of the
key reasons for choosing to go in for this
type of financing. For many, the process of
raising PE/VC investments itself brought
with it rigorous financial discipline and
clearer business focus. It also makes
the company attractive for follow on
investors, including public markets.
“Getting an investor like International
Financial Corporation (IFC) to take
a stake in the company created a
certain enhanced
comfort level
fo r s u b s e q u e n t
investors,” points
out Anuradha
Anuradha Acharya
Ocimum Biosolutions Acharya, Founder
14
14
& CEO of Ocimum Biosolutions, a global
genomics outsourcing company.
Entrepreneurs list several value additions
of PE/VC investors besides their ability to
provide “quick access to capital”.
“Our investors have helped
us in fine-tuning the
business model and building
newer relationships,” says
K. Krishna, Managing Director K. Krishna
Sai Advantium
& CEO, Sai Advantium.
Dr. Villoo Morawala Patell, Founder and
Managing Director of Avesthagen, points
out that, in her firm, a lot of teamwork –
between the company
leadership and
investors - happens
before decisions are
taken at the board
level. Dr. Villoo Morawala Patell
Avesthagen
The size and type
of company also dictates the nature
o f t h e v a l u e a d d i t i o n e x p e c te d o f
investors. “In small biotech firms, most
VCs play a very major role in shaping
the destiny of the companies,” points out
Dr. P.M. Murali, Managing Director, Evolva
Biotech, pointing out how VC investors help in
attracting good talent to such companies.
“We specifically chose PE capital for help
with national and global acquisitions thanks
to their large number of contacts,” says Dr.
Sushil Shah, Chairman of diagnostic chain
Metropolis Health Services.
 Entrepreneurs view
the recent entry of
cross-border PE/VC
funds - who have
professionals with
deep understanding of
Dr P. M. Murali
Evolva Biotech some of the specialized
areas within HLS – as a
welcome development. “The entry of cross-
border funds brings in very talented people to
evaluate science in India,” points out Evolva’s
Dr. Murali.
Addressing Investor Concerns
The poll conducted by Venture Intelligence
among PE/VC investors indicated that
scalability, high-risk of failure and long
gestation periods are among their common
concerns vis-à-vis investing in the Healthcare
& Life Sciences industry.
How can entrepreneurs mitigate these
concerns?
Evolva, for instance, has chosen to go in for
a range of steps including inducing the right
mix of returning Indians and grooming home
grown talent for customized innovation,
accessing national and international drug
discovery expertise through consultants
from academics and industry, identifying
diseases with clear clinical end points
(such as anti-infectives), building revenue
streams from philanthropic and government
funding agencies, tying-up with academic
research institutions for proof of concept and
conducting experiments in a well nurtured
CRAMS ecosystem.
Avesthagen’s Dr. Patell feels the situation is
more nuanced than it appears and calls for
better understanding from PE/VC investors.
“In biotech, what works in European and
American environments may not work
in India. Global PE investors in this
segment should have teams with regional
biotech expertise. That would pave the
way for setting credible and achievable
milestones,” she suggests.
D r. S h a h o f
Metropolis feels
scalability is not a
major issue in his
sector. “Scalability
can definitely be
Dr. Sushil Shah
achieved. We have Metropolis Health Services
grown from being a
national to an international player adding
clinical trials and Hospital Laboratory
Management,” he says.
Anuradha Acharya of Ocimum points out
how, given the focus on cost optimization
in mature markets such as the US,
outsourcing opportunities in areas like
R&D will only increase. She also feels areas
such as drug discovery, which have not
received much of PE/VC funding in India
so far, will begin to attract more attention
in the future.
Entrepreneurs point out that one area
where PE/VC firms could add significant
value is in helping their investee companies
in India structure partnerships with large
global players. Avesthagen’s Patell feels
that the present legal documentation in
India needs to become a lot more rigorous
while entering partnership models such
as joint ventures. She also points out
how MNCs sometimes have difficulty in
appreciating genuine delay in research.
Such global partnerships-related issues
present PE/VC investors with another
significant area in which they could add
value to HLS companies in India.
15
15
 - By Amit Mookim, KPMG

Healthcare has been one of the oldest
“industries” in existence and yet one of the
very recently privatized sectors in India
(the first private hospital that opened
was Apollo in Chennai). The sector has
since then witnessed rapid growth across
healthcare services, education as well as
infrastructure. Recent estimates peg the
number of hospitals at more than 15,000-
16,000 with close to a million beds, and a
potential unmet demand for 80,000 beds
a year!
The Healthcare market in India is estimated
to be around 55-60 BN USD, with services
accounting for more than 60% of the market
size.
A quick snapshot of the services
segments indicates hospitals continuing
to account for the largest share, while
CROs, diagnostic services and diagnostic
products are segments witnessing rapid
growth.

16
16
 Segment Size Growth
Hospitals USD 30-33 BN 12-13%
Distribution and Retail USD 200-220 MN 11-12%
Diagnostic Products USD 880-900 MN 25-26%
CRAMs USD 12-13 BN 25-26%
CROs USD 140 MN 29-30%
Diagnostic Laboratory Services USD 850-870 MN 20-21%

Source: Industry Estimates, KPMG Analysis

Growth Drivers medical professionals to cater to the

In addition to factors such as a growing
population, increasing disease profiles
etc., one of the key growth drivers for this
industry has been the sheer levels of under-
penetration.
Per capita spends continue to be low:
Healthcare spend per capita for India is less
than 50 USD per person per annum, lower
than her Asian counterparts like Indonesia,
China, Thailand etc. In comparison, countries
like Mexico, Argentina, Brazil etc. would be
spending more than USD 600 per capita per
annum.
Additionally, public expenditure on healthcare
as a percentage of total healthcare spending
is less than 20-22% (compared to an average
spend of 40% for other growing economies),
making India significantly dependent on
private sector spending.
Current Infrastructure: India currently
ranks amongst the lowest in hospital beds
and doctors per capita i.e., there is both
a shortage of infrastructure and qualified
growing needs of the Indian healthcare
sector. There are only 1-1.5 hospital beds
per 1000 compared to 2-4 beds in other
countries such as Argentina, Australia,
Brazil, China, South Africa, Mexica etc.
Additionally, India has 0.5 doctors per
1000, compared to 2-4 doctors for these
countries.
Health Insurance: Health insurance
penetration, which has been a significant
growth driver for spends and growth
of healthcare infrastructure in other
economies, is currently less than 10% in
India. It is estimated that more than 70%
of spending is carried out by patients
themselves, which does put a cap on
potential spending by the lesser income
classes, hence making healthcare a “part-
discretionary” spend.
Segment-wise overview: This section
provides a brief overview of the current
market dynamics, opportunities and
challenges relating to a few segments that
we have chosen to review.

17
17
 Hospitals
One of the key components of healthcare
services delivery, hospitals in India have
competed with traditional neighborhood
dispensaries and clinics with a mix of
In-patient and Out-patient revenues at
near equal shares. The current market
comprises of a significant share of total
bed supply in the six metros (Kolkata,
NCR, Mumbai, Hyderabad, Bangalore and
Chennai) at 130-140,000 beds.
The landscape for private play in
hospitals is evolving at a rapid pace as
the earlier supply was dominated by
Trusts and Government institutions/
medical colleges. The last decade has
witnessed the emergence of both large
and mid-size (regional) players expanding
their presence through greenfield and
brownfield ventures across the country.
The expansion is taking place in several
ways.
Geographical expansion into newer
cities, especially tier-II and tier III
locations
A quick analysis of the current hospitals
landscape in India indicates significant
potential for growth in tier-II and tier-III
locations. While these towns have their
own primary catchment which needs
quality healthcare, these towns also serve
as hub zones from other feeder locations
nearby smaller towns and villages, hence
making the potential catchment much
larger in size than the town itself. As a
result of this, there is significant activity in
these locations by both national players
as well as regional hospitals setting
18
18
up greenfield ventures or even forging
tie-ups with an existing hospital in these
locations.
However, a careful analysis and evaluation
of the business models for these locations is
necessary in order to emerge as a profitable
player in the long run. There have been
instances of national players expanding
into these locations and then seeking
to exit given the fact that the revenue
potential did not match cost structures earlier
envisaged. Players will need to understand
the purchasing power of these towns and
accordingly plan their capex and scale - hence
formats that may be successful in larger cities
would need to be tweaked in these locations.
To illustrate, revenue per bed day in Tier-III
locations could be in the range of INR 6000-
9000 while the same for a well-run hospital in
a metro could be INR 12000-16000, indicating
a significant range!
Expansion into specialty care:
A variant of geographical expansion has
been extending current facilities to include
specialty care like cardio, oncology etc. While
large players are building out dedicated
facilities or units in their existing chains to
include these specialty care centres, regional
players are also expanding their existing
infrastructure to include these. The rationale
for the same is increased revenue per bed
from specialty (a premium of 20-30%) as well
as the logical expansion for a single or 2/3
centre player.
There are, of course, several challenges to the
profitable growth and rapid investment into
hospitals. One of them is the availability of
talent beyond the metros and larger cities,
 for both doctors and nurses. While some
players are trying to adopt doctor rotation
models to service their regional centres,
sustainability of these hospital centres will
be ensured by a stable and resident doctor
pool. Another key challenge has been the
size of the micro-market itself which makes
break-evens challenging in a reasonable
time-frame, especially on a greenfield basis.
This is coupled with rising real estate costs
and availability of real estate at desirable
locations, exerting further pressure on future
profitability.
Pharmacy chains ‑ the changing landscape
Fragmented Unorganized Market
- Stand alone pharmacists
Limitations in the quality and integrity of supply chain
despite it accounting for more than 30 percent of the
retail cost of a drug
Fragmented structure makes it prohibitive for the
pharmacautical companies, distributive and retailers to
invest adequately in the infrastrucure to facilitate stock.
Lack regulatory oversight, in terms of restrictions on
number of outlets in an area and compliance to set
operational standards has resulted in lower entry barriers
and hence increased proliferation and fragmentation
Issues around unfair retail substitution and compliance to
GMP which are detrimental to the patient’s interest
Pharmacies
Indias retail pharmacy market is highly
fragmented and dominated by archaic
independent kiosks. The penetration
of organized retail was only 4% in 2007,
up from 3.2% in 2006; with over 95% of
the market unorganized neighborhood
chemists dominate the market. In
comparison, retail pharmacy chains
in the US and UK contribute 54%
and 48% of the retail pharma sales
respectively.
Consolidated Organized Market
- Retail chains with ‘’value added services’’
Pharmaceutical companies, and distributors to invest in
infrastructure to facilitate stock, better monitoring of the
supply chain and improved compliance
QC processes to prevent counterfeit drugs
Employment of qualified pharmacists at point of sale
would assist patient’s in making educated decisions
Economics of scale in purchasing drugs would benefit the
consumer through potentially lower drug prices
Evolution of multiple formats - specially (disease-
focussed), hospital pharmacy, clinic-cum-path lab
pharmacy, wellness centres (for all preventive and curative
solutions), as also one-stop-shops for medical sciences -
allopathy, ayurveda, homeopathy
Convenience as a value proposition: Loyalty programs,
health awareness compaigns, emergency doctors on call,
free collection of diagnostic samples and home delivery
19
19
 However, the sector is witnessing rapid
growth, mainly due to organized players;
in terms of value the overall organized
market grew by 47% to USD 520 MN, one
of the fastest segmental growth rates in
the organized sector.
Prescribed drugs showed the highest
growth rate amongst all products sold
at the pharmacies, registering a 35%
CAGR between 2006 and 2007; sales are
expected to continue growing at a CAGR
of 28% till 2012 (this can be explained by
the increase in the number of patented
drugs).
This will result in a structural shift from
the current pharmacy retailing value
chain. As penetration of larger regional
and national players is increasing
through expansion of infrastructure,
hospital based pharmacies is fast gaining
prominence in addition to standalone
pharmacy outlets. The industry is
expected to consolidate significantly
across two aspects:
 Distribution: Distribution is currently
comprised of C&F agents with 25-30
distributors at a regional / local level
(2-tiered). With the implementation
of VAT, this could give way to a single
tiered structure of larger national level
distributors
 Retailing: With over 700,000 retail
outlets of the unorganized nature
(additionally 30-40% of total pharmacy
sales in retail happens through stores
located near hospitals), and a small
fraction of organized retail players (<3,000
outlets), we expect pharmacy chains by
20
20
organized players, hospital based pharmacies
and unorganized players to co-exist. However,
we do not expect the share of the latter to
shift drastically in the near future given their
sheer size and scale.
The challenges in pharmacy retailing will
continue to be sustaining profitability by
organized players, especially in the stand-
alone pharmacy format. Given that this is a
real estate play, and also that a greater share
of sales for the industry takes place in strategic
locations, one would need to ascertain a cost
structure that would enable competitiveness
with unorganized and established players
in these micro-markets, as well as seek
opportunities to improve realizations through
category management.
Diagnostic Services
One of the fastest growing segments in
healthcare services, diagnostic services are an
integral component of the overall value chain
as 70% of treatment decisions are based on
lab results. The current market comprises
45,000 50,000 laboratories, with around 1.8
2 million tests per day. Given this, less than
1% of the laboratories in India are accredited
by either NABL or CAP and approximately
10% of the laboratories in India are located
inside hospitals. This signals a huge latent
opportunity for growth in this sector.
The market is highly fragmented with
unorganized players accounting for 90%
of the total share, and large national /
multi-regional players for the balance.
Business models for the players could be
corporate laboratories or even hospital lab
management.
 We expec t growth in hospitals and
consolidation of chains to be key growth
hypothesis for this segment. While larger
players are growing through a combination
of greenfield and acquisition/ franchisee
models, we expect brands to establish
themselves in the marketplace in the medium
term. An added synergy of this business
would be their role in clinical trials and
analysis.
Investment options and
considerations
The sector has witnessed several transactions
in the last few years across private equity
and strategic investments. Additionally,
while multi-sector focused funds have been
active in this space, healthcare focused PE
firms have emerged to invest exclusively in
this segment
Typical investment considerations across
healthcare services have been based on
growth and expansion (both greenfield
and brownfield) in the case of hospitals,
and chain expansion in diagnostic centres
and pharmacy chains. Several investments
have taken place at an overall group
level that includes one or more of these
businesses under the group umbrella (e.g.
Apollo Hospitals).
One of the key challenges for investment
into hospitals has been the underlying real
estate costs and associated high CapEx
per bed especially for tier 1 and even
some tier 2 cities. This raises the cost bar
significantly upwards hence necessitating
a careful review of underlying margins
and break even periods. Additionally, the
ability of a standalone hospital to expand
in multiple locations both profitably and
in the expected timeframe with limited
experience in building and scaling up
remain challenges that need to be
addressed while making the investment
decision.

Diagnostic and Pathology

Laboratory

Corporate Labs Hospital Lab Management

Hub lab with Tie ups with Fee based lab Entire lab
Franchises
collection existing labs management management

Franchisee Collection centers Considering lab services are a profitable area for hospitals,
provides the Referrel lab
serve as sattlites they are reluctant to outsource it. However, given the capital
capital an the ties up with
spread across intensive nature with high technology redundancy of
referral lab in local pathology
the country and diagnostic services and need for hospital to focus on their core
turn is given the labs; referral
send samples to services, outsourcing lab management in hospitals is catching
technical know lab hanles only
a centra/regional on in India.
how by the parent specialized tests
lab
company
Metropolis manages 25 lab inside hospitals across India. Its
Corporate laboratories depend on referrals from doctors for clients include MS Ramiah Hospital in Bangalore, Shakti Mukund
a large portion of their business. Therefore, while corporate Hospital in Delhi and Mallar Hospital in Mumbai
help in effective management, local doctors are key to drive
business. This has led to national chains acquiring local (that
Wellspring recently took over the radiology and pathology tests
have goodwill and brand in a local market), as this brings them
at Goa’s Victor Apollo hospital
visibility and business from day one.

21
21
 The other key question arises with respect Conclusion
to achievement of the appropriate scale To conclude, healthcare in India is at an
in order to gain exit feasibility in terms of
inflexion point given the themes of under-
size and value. The market is extremely
penetration and extreme fragmentation.
fragmented and local and few regional or
Hence growth of these segments is inevitable,
even multi-regional players exist. Hence
and so is the penetration of organized sector
the story does revolve around greenfield
across services. However, there are certain
expansion or even acquisitions / alliances
structural and regulatory issues that will
in other towns and cities, which raises
continue to sober the same (licensing norms
concerns as stated earlier.
for retail, lack of a health insurance market,
Margins for healthcare businesses also availability of talent etc.), and hence players
vary significantly based on type, age and would need to adopt focused strategies in
location. Hence a growing chain could order to seek profitable expansion across
face margin pressures in the initial years segments.
of ramp-up indicating preference for
investors towards a portfolio including
a few completed and mature assets.
Pharmacy chains, on the other hand, have
struggled traditionally to maintain high
margins given cost pressures of real estate,
low realizations and optimize category
and formats. With emerging organized
retail, this would be an interesting space
to watch out for.

About the Author

Amit Mookim Amit brings with him over 9 years of management
Associate Director and transactions consulting experience. He has
led strategic, operational and M&A/Private Equity
Strategic and Commercial Intelligence
assignments across a host of sectors and industry
KPMG India
segments. In the last two years, he has worked on more
Mumbai, India than twenty Private Equity deals across industries in
terms of pre-deal strategic assistance and business
Office Phone : 91 22 3989 6000 6000 due diligence.
Mobile : 91 99671 51100 Amit focuses on strategic advisory, market entry and
E-mail : amookim@kpmg.com outbound acquisition advisory for private equity and
corporate segments. He has worked across several
industries and niche segments in executing more than
50 engagements during his career, across India, Europe
and the USA. Amit holds a Bachelor’s in Economics and
is an MBA from the Faculty of Management Studies,
Delhi.

22
22
India’s Healthcare Sector
India’s healthcare sector is worth about $45
billion a year and is growing at an annual rate of
16%. The country’s 1.15 billion people account
for one-sixth of the world’s population; yet
expenditure on healthcare amounts to only $40
per person per year, or around 5% of GDP. Public
expenditure on healthcare is unusually low,
accounting for only 20% of the total, and is heavily
skewed towards providing care in the rural areas
where more than 70% of the population resides.
The bulk of spending is in the private sector; is
focused on providing care in the urban areas;
and to a large extent comprises out of pocket
spending by the more affluent segments of the
population.
Private Equity interest in India’s healthcare
sector has focused principally on life sciences.
In 2008 there were some 34 investments in
healthcare and life sciences worth in total USD
550 million, with around 60% of this investment
in life sciences. While there has been investment
in the provider sectors, investors have typically
been disappointed by returns, particularly in
hospitals — citing high capital requirements,
poor operating performance and long payback
periods.
Exhibit 1 outlines the financial performance of
the Indian hospital sector in 2008. The sector
is characterized by modest typical returns but
also by wide performance variations. While
the average chain of corporate hospitals is
generating EBIT margins of ~12% – 15%,
best in class performance is almost twice
this level at up to 30%. EBITDA margins
are typically 5 – 7% above this. While on
average ROCE is in mid-single figures, best
performing businesses are generating 15%,
which with appropriate leverage can provide
very attractive returns for Private Equity.
However, these returns will be contingent
on investors making smart choices; picking
winners is key to success in this sector.
Exhibit 1: Financial Performance of Indian
Private Hospitals, 2008
Ratio Typical Best in Class
EBITDA 17 – 20% 35%
EBIT 12 – 15% 30%
ROCE 4 – 7% 15%
Investors May Need to Re-think
Existing Models in Search of Returns
Since the 90’s there has been considerable
private investment in the Indian hospital
sector,encouraged by regulatory moderation.
Most of the large corporate chains focused on
the metropolitan areas of the country and on
large high-quality multi-specialty hospitals.
Their target customer base is the high-
income segment of the urban population
with an annual disposable household income
of greater than INR 5 lakh ($10K).
23
23
 A result of this activity has been a rapid
expansion in high quality beds catering
to this segment leading to a degree of
saturation particularly in the five metros.
The WHO benchmark for bed / person ratio
in a developed healthcare system is 35 per
10,000. Overall, India has an average of 10
beds per 10,000. In Mumbai as a whole, the
ratio is 20 beds per 10,000; but for the high
income segment targeted by the corporate
hospitals the ratio is already 32 beds per
10,000 with current investment increasing
this ratio further over the next 5 years.
Exhibit 2 below illustrates this. As this market
becomes saturated and more competitive,
attractive returns are harder to come by and
we are increasingly seeing the performance
of hospitals groups diverge, with those with
winning strategies and business models
pulling away from the pack.
Exhibit 2: Hospital Beds per 10,000
Membersof the Population vis-à-vis WHO
Benchmarks, All-India and Mumbai, 2008
40
WHO Recommended
Hospital Beds per 10K Population
30
20
10
10
0 successful management team as assessing the
All-India
Income Segment Income Segment Income Segment
The exhibit also highlights that the rapidly
growing middle income group (INR 3 lakh
– 5 lakh / US$ 6K – 10K annual income) is
currently poorly served. Exhibit 3 illustrates
the size of this group, which represents a far
larger market than the high income group
currently targeted.
Successfully serving this group would be
a big prize for the hospital sector, but it
requires delivery of treatment at price points
considerably below those currently on offer.
Many groups are already targeting a less rich
income mix as they expand into Tier II cities,
taking advantage of the lower costs they
can achieve. However, with their current
business models, cost savings available will
typically only compensate for the lower
prices realized.
24
24
Providers who have built their business models
specifically to address the middle income market
have been far more successful at generating
attractive returns.
Exhibit 3: Tier I and Tier II City Population
Distribution by Annual Household Income, 2008
78M 97M
100% > $20K
$10K–$20K
80% $6K–$10K
60%
40%
<$6K
20%
0%
Tier I Cities Tier II Cities
Middle Income
15.8M 9.0M
Segment
Picking Winners In Hospital Sector
Investment
32 The Indian hospital sector offers substantial
opportunities for investors but requires care to
invest behind those business models that target
20
key growth sectors, have manageable capital
15
requirements and deliver high performance
within a reasonable time horizon. Picking a
winner is always as much about backing a
Mumbai Low Mumbai Middle Mumbai High
strategy, but below are five strategic questions
that will highlight whether the characteristics of
an investment in the sector are likely to produce
a winner.
1. Does the business focus on particular
specialties or areas of expertise?
It is well-established internationally that hospitals
focusing on a limited number of specialties
demonstrate superior performance both
therapeutically and financially. This is typically
driven by three factors:
 Experienced teams that focus on a limited
range of treatments show improved outcomes,
increasing the quality and the efficiency with
which the hospital operates. For example in
some specialisms internationally, specialist
hospitals achieve an average unanticipated
complication rate of less than 1% compared
to ~10% in general hospitals.
 Specialised units have lower overheads and
require less capital expenditure. Exhibit 4
below illustrates that in the US, specialist
hospitals have a 3X lower overhead burden
rate overhead/direct labor cost) than tertiary
care hospitals.
Exhibit 4: Overhead Burden Rate (Overhead
Costs/Direct Labor Costs) US Hospitals
Overhead Costs/Direct Labor Costs (US Hospitals)
In existing markets, application of this
framework can determine what returns
a business should be able to achieve and
therefore whether there is potential to improve
its current performance. The framework can
also help optimize new market entry strategy
by determining the potential of individual
new markets. For example, the attractiveness
of Tier II cities for market entry in a specific
speciality can be assessed by consideration of

10 the size of the target population in those cities

8.0
and the strength of incumbent competition.
8
Exhibit 5 below illustrates the variation in
6.0
attractiveness of Indian Tier II cities for market
6
entry in a specific specialty.
4
2.6
Exhibit 5: Attractiveness of Tier II Cities
2
forHospital Investment (Disguised Example)
Low R Q
TS
0
Specialist Hospital Community (Secondary) Tertiary Hospital
Hospital Beds in Specialty

B EO I H G
Hospital P
D
Number of Quality

Level of J
L
Attractiveness
High
ess N
 Specialist marketing builds reputation Moderate iven K M A
Low act
ttr
faster allowing for premium pricing and l ofA
e F
g Lev
positioning rea
sin
Inc
C
In the Indian market too it is the specialist High
Low High
hospitals and clinics that are among the best Size of Middle Income Population

performers both clinically and financially. The

hub and spoke model of treatment centres 3. Does the business have the cost
feeding a single centre of excellence is also position to deliver service to its target
emerging as a way of efficiently leveraging the segments economically?
core specialist asset. While the middle market represents the
largest growth segment in the Indian market,
2. Does the business have strong market accessing this market requires providers to
positions in its specialty areas? deliver services at price points some 25% –
In competitive markets, local market strength 50% below those prevailing in the high end
by specialty is a principal driver of long-term segments today.
performance. Investors can use this metric to Using current business models, large
assess the potential both of a target company’s hospital groups can typically reduce their
current market position and of its growth costs by around 25% moving to tier 2 cities;
strategy. Assessment of market strength requires making the economics marginal at best.
consideration of three main factors: However, new business models — including
specialization in customer segment/disease
 What is the true accessible market for the segment e.g.: pediatrics, greater use of day
specialty? How many households can afford surgery, focus on providing secondary
it and how far will they travel to access the services, hub and spoke models — are
service? emerging that can provide a step change in
 What share of that accessible market is the delivery economics and make the potential
target capturing, or does it plan to capture? returns from delivering to this market far
more attractive.
 How large is that share relative to its major
competitors in the same market? Does it or To be confident of attractive returns, investors
will it have a leadership position? need to understand the true cost position of

25
25
 the target at a procedure level, how that cost group because while equipment is imported at
position is achieved and at what procedure international prices the realization (revenue per
volume it can be sustained bed) is ~1/5 that of US hospitals.

4. Does the business acquire its customers Exhibit 6: Total Asset Turnover Ratios of Select
cost-effectively? Indian Corporate Hospital Chains, 2008
0.6X
Effective customer acquisition is critical, 0.53X
0.56X

both to the long term performance of a

hospital and to its time to breakeven. In

Total Asset Turnover

India, the cost of customer acquisition 0.4X

has three principal components: (1) direct 0.28X

investment in marketing campaigns and
community outreach initiatives; (2) discounts 0.2X

to corporates and insurance companies

for volume business and; (3) referral fees to
GPs for individual referrals. This latter, while 0.0X
Indian Hospital Indian Hospital Indian Hospital
controversial and rarely acknowledged Chain 1 Chain 2 Chain 3
publicly, is an intrinsic part of the Indian
healthcare system today, and is probably
a factor in up to two thirds of all hospital Approaches to improving asset utilization may
surgical procedures. Referral fees may be up include: Multi-shift operation of the equipment
to 30% of direct procedure costs. Time-specific pricing i.e. offering discounts
to patients or physicians who make use of
Only by acknowledging the true costs and the equipment at night or during weekends
nature of its customer acquisition processes Reducing cycle times from “patient-out to next-
can a business optimize its strategy in this patient-in”
area. Most hospital groups are investing
in marketing and outreach campaigns to Reducing downtime by scheduling routine
reduce their dependence on referral fees; maintenance overnight or during weekends
only through a detailed assessment of the
likely outcome of such investments can their In Conclusion
true worth be determined. India’s hospital sector is poised on the edge of a
tremendous growth opportunity, driven by the
5. Does the business systematically drive growth of the middle class with an increasing
high utilization of its core assets? capability to afford private care. Investors can
Hospitals are capital intensive businesses, benefit from this opportunity but need to
with capital equipment costs accounting select carefully from the propositions on offer
for as much as 35% of the cost per bed. to be sure that they will make attractive returns.
Equipment acquisition and utilization are Hospital businesses that satisfy the five key
therefore critical factors in overall hospital strategic criteria set out in the questions above
performance. Many investment decisions are are likely to emerge as winners in the market.
driven as much by senior physicians’ desire
for state of the art equipment as by either
clinical or economic reasons. Adjusting for
price levels, the Total Asset Turnover ratio
exhibited by the leading chains in the Indian
market are in line with some of the best
hospitals internationally. The Total Asset
Turnover ratios in Exhibit 6 not only reflects
the rapid growth and expansion by hospital
groups but also the wide variations in asset
utilization between market participants.
There needs to be greater emphasis on asset
utilization for the Indian private hospital

26
26
 The Authors: Alistair Stranack is a
Partner in the Parthenon Group’s
London Office and is Head of the firm’s
Global Healthcare Practice; Dr. Anne
Margo Reintsema and Viren Pereira
are both Principals in the Parthenon
Group’s Mumbai Office.

About Parthenon:
The Parthenon Group is a leading advisory firm
focused on strategy consulting with offices in
Boston, London, Mumbai, and San Francisco.
Since its inception in 1991, the firm has embraced
a unique approach to strategic advisory services.
Long-term client relationships; customized data-
driven insights; and a willingness to share risk
with our clients are the hallmarks for which the
Parthenon Group has become recognized in the
industry.
This unique approach has established the firm
as the strategic advisor of choice for CEOs
and business leaders of major corporations,
private equity firms, high potential growth
companies and education and healthcare
institutions world-wide. As a leading advisor to
the healthcare industry, our Global Healthcare
Practice offers unparallel services to clients
across many markets, including investors in
healthcare, governments, hospitals/outpatient
clinics, insurers, pharmaceutical and medical
device companies.

Contact Info:
Priti Ahuja
pritia@parthenon.com
+91 22 6744 2500 or
+91 22 6744 2506

27
27
 - By Siddharth Dhondiyal, India Value Fund

The Indian hospital industry is a large and
high long-term growth industry which
is expected to grow at 15% pa from
$25 billion in 2009 to over $60 billion by
2016.
The fundamental demand growth drivers
for the industry and their linkage to the
growth of the industry are well known
and clearly irreversible. These are:
 Increasing per capita incomes and
+ve income elasticity of healthcare
spends
 Increasing urbanization and salience
of lifestyle diseases.
 Increasing literacy and awareness
 Increasing healthcare penetration
and organized sector employment
India currently lags behind other
developing economies in almost all
aspects of healthcare infrastructure. The
private sector, which already accounts
for about 75% of the healthcare services
delivered, is expected to account for over
90% of future investments in developing
the country’s hospital infrastructure.
The role of the government will largely
be focused towards disease prevention,
improving access to primary care,

28
28
increasing and improving the quality of the
country’s pool of medical manpower and
incentivizing the private sector to invest in
capacity building and improving access to
healthcare services. Clearly there is a great
opportunity available for private equity
investors in healthcare delivery or hospital
services sector due to:
 Robust growth in demand for services
 Significant supply shortfall in terms of
quantum and quality.
 Ability to absorb significant amounts of
capital due to high capital intensity.
 Predictable demand and recession proof
nature of the industry.
The question then shifts from whether to
invest in increasing hospital capacities to the
question of the most capital efficient and least
risky way of doing so in terms of generating
returns on the capital invested.
It is in the context of answering this question
that investing in hospital consolidation starts
looking attractive vis-à-vis other hospital
capacity expansion related investment
themes.
Hospital Consolidation:
The Opportunity
Expansion of hospital capacity requires the
coming together of two key resources -
physical infrastructure and skill infrastructure
in terms of medical professionals like doctors,
nurses and medical technicians. These
resources complement each other – good
hospital infrastructure improves productivity
of medical professionals and skilled medical
professionals drive optimal utilization
of physical infrastructure. Recognizing
this fundamental relationship is critical
to understanding the economics
of investing in healthcare delivery
infrastructure.
While the process of scaling up physical
infrastructure is easy to speed up with
significant capital infusion, the scaling
up of skill infrastructure is a longer
term process. It requires systemic
improvements in the quantum and quality
of the current medical education and
training infrastructure and the underlying
regulatory framework governing it.
An investor has two routes to invest in
capacity building in the hospital industry,
namely:
a) Setting up greenfield physical hospital
infrastructure and attracting medical
professionals from existing hospitals or
independent doctors currently running
their own private practice.
b) Improving utilization of existing hospital
infrastructure through a combination
of (i) de-bottle necking / upgradation
of existing infrastructure and process
improvements to improve productivity
of existing doctor teams and (ii) attracting
skilled medical professionals in relevant
areas of practice.
Given the high costs of real estate and long
gestation periods associated with setting
up greenfield hospitals it makes sense to
set up or at least plan for larger capacities
to get economies of scale. These two
characteristics – high investment outlay
and large chunky capacity addition drive
the decision to locate these facilities in
29
29
 large metros or tier-I cities which have
enough demand locally to make such an
investment viable. This chunky addition
of capacity with a large investment in a
competitive metro/ tier-I market increases
the risk associated with the investment
significantly.
The second option, i.e. improving
utilization of existing infrastructure and
productivity of medical professionals, does
not impose any such constraints in terms
of size and location. The limited availability
and high demand for healthcare services
coupled with the availability of a good
number of small hospitals looking to scale
up capacity in tier-II cities make them an
ideal choice for a hospital consolidation
investment thesis.
Clearly the hospital consolidation
approach vs. the greenfield approach is
 More capital efficient
 Gives returns faster – limited or no
gestation period
 Less risky since there is an existing
doctor team from day one. Attracting
skilled doctors to a new hospital with
limited initial patient flow takes a lot
more time and costs significantly
more.
 The natural focus on smaller facilities
in Tier-II cities enables the overall
investment to be diversified across
geographies and practice areas
with the same amount of capital as
compared to a large investment in a
greenfield project.
Hospital consolidation as explained
provides these benefits to an investor
30
30
willing to take up the challenge of executing
this investment theme in addition - to
the obvious benefits of scale in terms
of bargaining power with suppliers and
healthcare insurance companies.
Currently in India, over 90% of the hospital
bed capacity is accounted for by hospitals
with less than 100 beds, those with less
than 30 beds account for ~ 80% of bed
capacity. Most of these hospitals are sub-
scale, have capable doctor teams but lack the
managerial and financial resources to expand
and upgrade their infrastructure.
These hospitals represent an ideal pool
of candidates for a hospital consolidation
investment theme. Typically they are
often unable to perform more advanced
procedures or offer specialized treatment
requiring heavy investment in equipment.
The local patient population is often forced
to travel to nearby Tier-I cities or metros for
treatment due to the lack of these facilities
in their own community. This showcases
the compelling value proposition for
investment in expansion and upgradation
of facilities in Tier-II cities via hospital
consolidation.
This approach also ties in neatly with the
idea of building a hub and spoke model
with the spokes in tier-II cities providing
referrals to larger and more advanced tertiary
care facilities in metros/tier-I cities. Most
importantly, hospital consolidation enables
the creation of a hospital network, which
can leverage the benefits of investments in
IT, standardized processes, common medical
protocols, branding and sharing of medical
expertise across the network.
Hospital Consolidation:
The Challenges
The benefits of hospital consolidation are
compelling, so why don’t we see many more
such consolidation investment themes in the
Indian market?
The hospital consolidation investment
thesis faces several execution challenges
and the degree of success in overcoming
them will reflect the value created through
consolidation.
These challenges can be broadly classified
into two areas
 Transaction related
 Integration related
Transaction Related Challenges
A successful transaction requires the
successful execution of a few critical activities
like
 Finding the right opportunity in a
Tier-II/ Tier-III city takes time and effort
since most of these hospitals are small
in revenue terms, the promoters are
usually not actively looking for external
equity investors and typically investment
bankers do not find this segment
worthwhile in terms of effort, probability
of concluding a deal and the time/cost of
covering tier-II cities. These transactions
have to be sourced directly or through
surveys or through word of mouth.
 Convincing entrepreneurs who are not
familiar with raising equity to part with
a majority stake to enable financial
consolidation takes a lot of time and
effort to build a relationship based on
trust and transparency.
· Most of the small hospitals are
structured as trusts, have fairly weak
systems and processes and are
managed by the doctor team who
also are part time managers. Hence
the typical diligence process takes
longer and more importantly the
entrepreneurs have to be convinced
of the benefits of corporatization and
the changes that come along with
it.
 Lastly the transaction structuring
needs to be done in such a way that
the doctor team remains committed
to building the business but should
be flexible enough to meet current or
future aspirations of the promoters.
Integration Related Challenges
Eventually the successful integration of
network hospitals to capture the benefits
of economies of scale and scope in terms
of purchasing, acquiring talent, sharing
knowledge and patient referrals lies at the
heart of the hospital consolidation value
proposition.
Successful integration requires
 Alignment of all stakeholders to a
common vision in terms of the size
and quality of the network to be
built, how decisions will be made,
and timeframe for achieving defined
goals and responsibilities of various
stakeholders.
 A strong project management team
capable of executing multiple projects
simultaneously across geographies.
 Robust and well defined common
systems and processes across the
network
31
31
  Transparent guidelines and role
definitions for doctors in their role
as medical professionals, as business
managers and as shareholders.
Investors can overcome these challenges
– but it requires patience, a sense of
fairness, transparency in relationships,
mutual respect & trust and a well thought
out yet flexible integration plan.
The challenges are clearly daunting but if
overcome can create significant value for
all stakeholders.
IVFA: Healthcare Experience
Healthcare has been a focus area for IVF since its
inception. IVF has and continues to partner with
healthcare companies in the development of the
Indian healthcare industry. IVF’s past investments
in healthcare include
Care Hospitals : 1st Indian PE investment
in Hospitals
Biocon : India’s first listed bio-tech
company
TTK Healthcare Services : One of India’s largest
TPAs
IVF is currently invested in DM Healthcare, a
healthcare company offering primary, secondary
and tertiary healthcare services across India and
the GCC countries. IVF works closely with DM
Healthcare to execute its “Hospital Consolidation”
strategy in India.
About the Author
Siddharth Dhondiyal
Vice President
India Value Fund Advisors
Office Phone : +91 80 4132 1845
Mobile : +91 99 4519 4541
Fax : +91 80 2559 0800
E-mail : siddharth@IVFA.COM
32
32
About India Value Fund Advisors
India Value Fund Advisors (IVFA) was established
in 2000 and is one of the most experienced private
equity fund managers in India. IVFA manages over
US$ 1.5 billion in assets across four funds of India
Value Fund (IVF).
IVF investment strategy is to acquire majority /
significant minority stakes in mid-size companies in
India to build high growth and enduring businesses,
which are admired by all stakeholders. An in-house
business management team supports IVF’s unique
value creation approach of partnering with portfolio
companies to ‘invest & build’ great businesses.
The business management team provides deep
management & operating experience, access to
best-in-class processes & systems and a network of
service providers to portfolio companies to enable
their growth.
IVF’s framework for engaging with portfolio companies
is based on building resilient partnerships with
management teams based on mutual respect,
integrity, and transparency. IVF investments include
a diverse range of industries such as healthcare,
retailing, outsourced services, media & entertainment
and manufacturing.
For more information visit the IVF website at
www.ivfa.com
Siddharth is a Vice President at India Value Fund and
is based out of Bangalore. Siddharth looks at the
Healthcare and Education sectors amongst other
sectors for investments within IVF and has been
instrumental in developing the firm’s viewpoint and
investment thesis in these sectors. He supports DM
Healthcare, an IVF portfolio company, in executing
its hospital consolidation strategy in India. Siddharth
has a Bachelor’s degree in Mechanical Engineering
from the Indian Institute of Technology, Kanpur, Post
Graduate Diploma in Management from the Indian
Institute of Management, Calcutta and an MBA from
INSEAD, France.
 - By Muralidharan Nair, Ernst & Young
The Indian healthcare market is witnessing
dynamic changes with increasing bed
density in existing markets and geographic
expansion into tier II markets. With existing
healthcare chains becoming larger,
established hospitals expanding themselves
into chains and new models in organized
healthcare delivery being introduced. This
trend is only expected to get stronger
considering an underdeveloped healthcare
infrastructure and increasing propensity to
pay for healthcare, which will unleash an
unprecedented latent demand in the time
to come.
However, the statistics clearly indicate
(refer chart 1) that in large pan-regional
and national healthcare chains, there is a
significant difference in the performance
level of different entities within a chain
with a very few flagship entities that are
value accretive.
Other entities are either unable to
perform at the same level or they are new
entrants and in the process of ramping
up. Replicating pockets of excellence at an
entity level, across all owned and operated
hospitals consistently and uniformly,
is a compelling imperative that most
healthcare chains need to work toward.
33
33
 Chart 1:

Financials for hospital chains in India having more than 8 hospital entities:

 Chain 1: Flagship hospital accounts for 73% of consolidated revenue and 176% of
consolidated EBITDA
 Chain 2: Flagship hospital accounts for 20% of consolidated revenues and 60% of
consolidated EBITDA
 Chain 3: Flagship hospital accounts for 32% of consolidated revenues and 45% of
consolidated EBITDA

Essentially, the success of a healthcare model depends on the ability to strike an optimal
balance between the following “three core value propositions” of a healthcare entity to its
patients, which at times, can be conflicting (Refer Chart 2).

 Emotional : Managing patient experience by offering a differentiated experience

 Functional : Managing patient care by offering medical care and clinical practices
of he highest quality
 Financial : Managing patient economics i.e. delivering medical care at competitive
prices in most cost efficient way.

Chart 2: Developing the appropriate value proposition and business model

‘’Emotional ‘’Financial
offering Deliver the care
differential at competitive
experience’’ prices’’
Patient Patient
Experience Economics

Business
Patient Economics
centricity
Capex per bed
Revenue per bed
EBITDA

Patient care

‘’Functional - Providing the best possible medical

care’’
Source: EY Analysis

34
34
A trade-off between these value levers drives
the core value proposition of a healthcare
model and its business economics, which,
in turn, is determined by metrics such
as revenue per bed, EBITDA and capital
expenditure per bed. Earlier, in the absence
of insurance and limited quality healthcare
provider options, patient care was largely the
focus under healthcare delivery.
With the increasing penetration of both
private and government insurance along
with a variety of quality healthcare options
available with patients, balancing the
elements of patient experience with patient
economics will become a critical imperative
for a healthcare entity to be successful and
sustainable going forward.
Balancing these value propositions at
the entity level in a resource-constrained
environment is challenging enough. However,
replication across the chain is a bigger
challenge with very limited success.The
challenges that limit replication for a
chain to be successful are multiple, as
mentioned below (refer Chart 3)
The below mentioned challenges
are “unique” to healthcare industry,
perhaps due to the fact that there is no
other single industry that collectively
manages this set of diverse challenges
and imperatives. However, some of these
diverse challenges, individually, find
parallels in other industries that are ahead
in the evolution curve. These industries
can act as a key source of learning and
inspiration for the healthcare industry.
A scalable healthcare model would
need to imbibe learnings from, and
draw parallels with, other more mature
industries, and ones that have managed
similar challenges (refer Chart 4)

Chart 3: Challenges in replicating success across all entities within a healthcare

chain

Breaking knowledge silos

Offerings aligned with local and transporting pockets of
needs excellence across the chain
Back end consolidation for
Leveraging Managing highly qualified
economies of scale
scale while Leveraging entity and skilled personnel
being sensitive wisdom across
to diverse local the enterprise
context

Challenges
Converting local brands into
regional brands and regional
brands into pan India brands Governance
Ensuring Optimal de-centralization
O ffering consistent and and
brand with strong governance
standardized patient performance
portability management Timely and granular
experience
performance measurement
Building “enterprise” brand and reporting

Source: EY Analysis

35
35
 Chart 4: Other mature industries with similar challenges

4
Offerings/ 4
Effectively leveraging
practices organization’s wisdom
aligned with across entities
local needs through knowledge
Organized Knowledge management
4
Optimal Retail industry
decentralization 4
Managing highly
with strong qualified
governance Healthcare and skilled personnel
4
Managing
4
Back end aspiration
consolidation 4
Continuous
for economies of education
scale
4
De-risk from “Prima
Donnas”
Hospitality
4
Managing attrition
4
Building brands
stronger than
individual star talents

4
Creating differentiated customer
experience
4
Asset sweating is the key
4
“Branding” is a critical requirement
Source: EY Analysis

The metamorphosis which the healthcare
industry is under-going is no different
from what the “organized retail industry”
has witnessed. Like retail, healthcare too
is predominantly a “local” business which
caters to the specific therapeutic needs of
the target population at affordable prices.
A localized model would require adequate
decentralization, albeit controlled by
a robust governance and compliance
bedrock. While the front end of healthcare
delivery is local, the backend, which covers
the functions of supply chain, finance and
IT, offers significant scope to consolidate
and leverage economies of scale in order
to generate significant cost efficiencies.
Healthcare is a knowledge driven industry
where human resources are the key
assets. As for any knowledge driven
industry, certain critical success factors need
to be adequately addressed:
 Managing the aspirations of highly
qualified and skilled personnel – doctors
and nurses, their continuous training and
capability enhancement
 De-risking from “prima donnas” or “star
doctors” as many successful entities are
dependent on a few star doctors which
exposes them to revenue risk in the event
of the loss of the doctor
 Creating an environment where best
practices, individual wisdom and skills
are harnessed and leveraged for the
collective benefit of all entities within a
group
The healthcare industry can also draw
parallels from the hospitality industry. Like

36
36
 Chart 5: Effective management of patient stay

Pre-admission Admission Surgery/Therapy Post Surgery stay Post-Discharge

 Operator  Insta-care  Consultant time  Cleanliness and  Discharge
support for  Admission per relative housekeeping Advice
booking process  Patient counseling  Visiting hours  Follow up care
Processes
 Web portal  Billing/  Information  Staff hospitality  Post discharge
support Information sharing (nurses) calls and
 Ease in getting  Transparency  Waiting Area  Consultant / support
Anxiety

information  Start  Accommodation resident doctor  Grievance

 Awareness hospitality for relatives counseling redressal
 Positioning  Need  Discharge process

understanding  Billing process

 Signages  Patient satisfaction

in multiple surveys
languages

OPD / Home Patient Stay with in Hospital (Time Lines) OPD / Home

Who matters Influencer > Patient Relative>Patient Patient = Relative Patient > Relative Patient

Source: EY Analysis

hotels, hospitals need to exhibit service (a) Imperatives that needs to be

consciousness and provide a differentiated
patient experience during a patient’s
entire stay lifecycle, which can extend
up to several days, from pre-admission,
admission and surgery/ therapy to post
surgery and post-discharge (refer Chart
5). Healthcare chains, like hotels, face the
challenge of establishing and managing
a brand across geographically dispersed
locations. While many healthcare providers
have not thoroughly embraced branding as
a critical asset, this is now changing with
board rooms of hospitals today increasingly
echoing with discussions on the importance
of brand building.
Managing all these success factors will need
an enterprise framework where entities
leverage synergy between them even while
strengthening the entity and its brand locally
(refer chart 6)
addressed at an entity level
Managing patient economics by better
asset utilization and by rationalizing cost
of delivering quality care
A hospital should look at rationalizing
cost of delivery right from the stage the
capital expenditure incurred at the time
of establishing the hospital. Frequently
construction of hospitals mirrors the cost
structures of the flagship hospital and does
not reflect a target cost of construction
based on local business economics.
E.g. a tier II hospital had opted for high
end medical equipment which could not
be justified by the business case, resulting
in low utilization and high costs. Based on
our experience, a 10% reduction in capital
costs of a hospital can reduce the pay back
period by six months.

37
37
 Once the asset has been built, as the operational excellence indicated by
hospital matures, broad operational parameters such as reduction of Average
imperatives that a hospital undertakes Length Of Stay (ALOS). Operational
for better asset utilization also change. constraints, such as availability of beds
On an immediate basis for a new hospital (ICU and non ICU), operation theaters
with low occupancy rates would need (OT), that limit revenue enhancement
to enhance its revenues from its chosen would need to be streamlined. For
set of specialty offerings by critically example, by addressing operational
reviewing the mix of strategic elements issues that delay a procedure, an
such as mix of services and room, pricing additional two hour surgery can be
strategy, marketing strategy and doctor conducted in an OT in a day.
engagement model.
These initiatives have to be further
However, for a mature hospital with supported by enhancing cost
higher occupancy rates, the focus would efficiencies by reviewing cost drivers
shift to refinement of specialty offerings such as productivity, wage, and cost
towards higher price points and towards of supplies.

Chart 6: An effective enterprise framework for hospital chains

4
Define performance measures (balance score card), enterprise
structure, measurement, reporting and review mechanisms
4
Deploy incentive systems
4
Establish robust costing system (granular, accurate, timely)
4
Create an enabling
environment to share 4
Enhance revenue from a
knowledge across silos given asset
of wisdom 4
Rationalize cost of
nt Pe delivery quality care
rfo
eme rm 4 Rationalize capital
n ag an
ce
e ma man
expenditure
le dg ag 4 Rationalize
4
Retain the right w em
K no en operational expenses
t
talent
4
Continuous education Patient care
Patient
4
Competitive Economics 4
Leverage volumes to
compensation Patient centralize operations
structure centricity 4
Enhance replication by
ce

4
Appropriate
Cen
Sta lizatio
n

standardizing clinical
erna

infrastructure to
n
tra

and business processes

d ardi n and
Gov

deliver quality care

Patient
zati

Experience
on

4
Define the right 4
Enhance customer
organization structure experience across
4
Define the rules of Branding different touch points
engagement between by:
the HO and individual 4
Enhancing effectiveness
entities of customer facing
4
Ensure compliance processes

4
Create an over-arching enterprise brand
4
Create environment to nurture multiple star talents
4
Effective media promotion
Source: EY Analysis

38
38
Managing patient experience
It is estimated that while 20% of perceived
value to a patient comes from physical
appearance and amenities, 60% is derived
from attributes that can be enhanced
through effective processes (Refer exhibit 7).
Patient experience often varies significantly
across different entities of a chain – it could
vary in magnitude starting from differences
in patient registration forms, processes
followed or the ethos driving the patient care.
Each chain needs to define the experience it
intends to deliver to the patient at various
touch points and drive it by enhancing the
effectiveness of patient facing processes to
leave a unique emotional fingerprint on the
patient’s psyche.
Deliver quality patient care consistently
For an entity to start delivering quality care,
it needs to define measurement metrics for
quality of care (such as ALOS, hospital acquired
Chart 7: Attributes that provide perceived value to patients
infection rates, surgical side infections,
adverse drug reactions), work towards
standardization of clinical processes to
facilitate consistency of delivered care,
institute a rigorous measurement process
for clinical performance and analyze
performance failure for continuous
improvement.
(b) To deliver the core value proposition
across all entities, healthcare chains
need to work on five key enablers:
Knowledge management: This refers to
the creation of an enabling environment in
which to share and incentivize knowledge
across silos of wisdom, both on clinical and
managerial aspects. Typically, in a chain, a
hospital would have a head of department
rather than a head of department for the
entire chain — someone entrusted with
the dissemination of experience and
talent development across the chain.
Keeping pts informed about treatment
Conducting appointments on time
Room appearance & furnishings
Convenience & ease of access
Simplicity of registration & access to MR
Value for money
Food & entertainment
Ease of understanding bill
Ease of scheduling appointments
Source: MGI & EY Analysis
39
39
 Initiatives like creating a “benchmarked
MIS” for peer groups to promote healthy
competition, creating a monthly platform
for sharing knowledge & learnings from
medical audit to bring parity in clinical
performance.
Performance management: Despite
instituting business systems and
organization structure, hospitals continue
to face challenges in the effective
implementation of their strategies, more
so if the hospitals are geographically
dispersed.
For a chain to effectively execute its
strategy, it needs to clearly define
performance and ownership of outcomes,
institute timely measurement and
monitoring of performance and enable
the review and re-alignment of execution.
Seldom does a hospital know the costs
incurred to deliver a service to a patient.
The bedrock of the proposed system
would be performance management
infrastructure comprising well defined
enterprise structure (profit and cost
center hierarchy), robust costing model
and transparent MIS.
A remuneration model with an option for
owning equity in the enterprise, similar
to the practice in knowledge industry,
may be an effective solution not only
for attracting, motivating and retaining
talent but can also facilitate an “enterprise
approach” with focus on replicating
success across entities.
Governance: Lack of clarity in a chain on
the rules of engagement among different
entities, and between entities and the
corporate office, has often been observed.
This blunts the sharpness required for
effective execution and to effective
compliance. Establishing effective
governance and compliance requires
the establishment of an appropriate
40
40
organization structure and the clear definition
of the rules of engagement, which in turn,
are aligned to an organization’s overall
philosophy and style of management
Centralization and standardization:
More than 50% of total hospital costs are
related to supply chain, finance, IT and
other support functions with supply chain
accounting for 35% of cost base. Hospital
chains witness significant value leakage
when their practices, processes, systems
and capabilities are not harmonized across
all entities. Around 25 to 30% improvement
in supply chain costs can be expected
through initiatives aimed at standardization
of supplies, increased portfolio of centralized
buying, and investments in technology to
create linkage between financial and supply
chain systems.
Branding: A key aspect of the branding
agenda will be to create an overarching
“enterprise brand” that is not eclipsed by the
brightness of individual star talent(s) and that
has connect transgressing geographies. This
will require, in addition to traditional media
promotion activities, a two fold approach -
Employing standardized business and clinical
processes to ensure a differentiated and
consistent patient experience across entities
and geographies and secondly, creating
a professional environment that aims at
nurturing multiple star talents.
The verdict
The critical success factors for a healthcare
chain will be its ability to build an enterprise
brand, stronger than its star talents, where
individual entities draw from the power of
the brand in its early stage and with time,
increasingly, lend itself to strengthening
the brand by virtue of its performance and
perception.
(Views expressed are personal)
Company Profile :
Ernst & Young India’s Life Science Industry
group brings together a network of
professionals to help you achieve your
potential. We have extensive technical
experience in assurance, tax, transaction
and advisory services. We work to anticipate
market trends, identify their implications
and to develop points of view on relevant
industry issues, and to weave this knowledge
into our work with you.

Our Transaction Advisory Services team,

which has been rated as the best lead
advisory practice by Bloombery League
Tables for 7 consecutive years in number of
deals, works with you on your businesses
and investments, while mitigating the risks
in transacting in an uncertain and changing
climate. We work with Life Sciences
companies on a range of transaction related
areas including raising private equity, debt
capital, buyside & sell side advise, joint
ventures, financial due diligence, transaction
and tax structuring and valuations.

About the Author Murali Nair is a Partner with the Business Advisory
Services practice in India and has been with
Ernst and Young for over 8 years. Most of his
Muralidharan Nair advisory experience is in the healthsciences sector
Partner covering Pharmaceutical, Provider Care, Medical
Ernst & Young Technology, CRO and Retail Pharmacy. He has been
involved in providing both strategic,operations
Office Phone : +91 22 4035 6527 improvement and risk advisory services to several
E-mail : murali.nair@in.ey.com large and medium clients and also to several PE
firms with investment interest in the healthscience
sector. Recently, he has also led two Thought
Leadership initiative, along with FICCI, focussed
on imperatives for inclusive healthcare reforms
in India and positioning India as a destination for
Global Clinical Trials in the years to come. He is
also a member on several committes in OPPI and
FICCI. Prior to joining Ernst and Young, Murali has
worked with Aventis Pharma for 8 years.

41
41
 - Sujay Shetty, PricewaterhouseCoopers
The pharmaceutical marketplace is
undergoing huge changes. Demographic,
epidemiological and economic shifts
are transforming the pharmaceuticals
market. The population is growing and
aging; new areas of medical need are
emerging; and the diseases from which
people in developing countries suffer
are increasingly like those that trouble
people living in the developed world
(See fig 1). These changes will have a
major bearing on the kind of business
models pharmaceutical companies need
to employ.
42
42
M ost Big Phar ma companies have
traditionally done ever ything from
research and development (R&D) through
to commercialisation themselves. But we
predict that, by 2020, this model will no
longer work for many organisations. If
they are to prosper, they will need to
improve their R&D productivity, reduce
their costs, tap the potential of the
emerging economies and switch from
selling medicines to managing outcomes
– activities few, if any, companies can
accomplish on their own.
 Figure 1: The key trends now emerging and their implications for Pharma
Market trends Health and healthcare trends Scientific and technological trends
 Patients are becoming better informed
 Patients are picking up a bigger share of the
bill
 Demand for personalised medicine is
increasing
 Patients want curse, not treatments
 The emerging markets are becoming more
important
Pharma will need to go ‘beyond the
medicine’
 Pharma will be paid for outcomes, not
products
 Outcomes data will drive healthcare policy
 Prevention will gain a higher healthcare
profile
 Pharma will need to offer ‘medicine-plus’
package of care
 Pharma will have to adopt more flexible pricing
strategies
Business models based on collaboration
Even the largest pharmaceutical companies
will have to collaborate with other
organisations to develop effective new
medicines more economically, help patients
manage their health and ensure that the
products and services they provide really
make a difference, according to new research
by PricewaterhouseCoopers (PwC).
Collaborating much more closely with the
key stakeholders in the healthcare sector will
enable the industry both to expand its remit
and to align its value chain more closely with
those healthcare payers and providers (See
fig 2). Moreover, they may have to step far
outside the sector to find some of the partners
Trends
 The burden of – and bill for – chronic disease is Scientific and technological trends
soaring  R&D is becoming more virtualized
 Healthcare payers are establishing treatment  The research base is shifting to Asia
protocols
 Remote monitoring is improving rapidly
 Pay – for – performance is one the rise
 The boundaries between different forms of care
are blurring
 Financial constraints on payers are increasing
Implications
R&D will need to go beyond the lab The Pharma and healthcare value chains
 Pharma will need access to outcomes data will become much more interwined
 Pharma will have to work with technology to  Pharma will have to work more closely with the
virtualise R&D regulations
 Pharma will need a wider, more multi-  Pharma will have to collaborate with payers and
disciplinary skills base providers to perform continuous trials
 Pharma will need to expand its presence in  Pharma will have to collaborate with numerous
Asia service providers to deliver package of care
 Pharma will need to demonstrate ‘real’ value-
for-money
they need. Recently announced activity
such as GSK and Pfizer’s new HIV-focused
venture confirms that pharmaceutical
companies are exploring new ways to
collaborate.
Several pharmaceutical firms have already
begun to use more collaborative models.
One such instance is Lilly, which is currently
transforming itself from a traditional fully
integrated pharmaceutical company
into a fully integrated pharmaceutical
network, so that it draws on a wide
range of resources beyond its own
walls. Lilly hopes teaming up with other
organisations to create virtual R&D
43
43
 Figure 2: By 2020, the pharmaceutical, payer and provider value chains will be much more closely intertwined

Primary care
Se
ion Te cond
nt rti
ary ary
e ve
Pr ca &
re

Lon
f
pop lysis o
at r tion

g-te
isk
ula

rm
Ana

care
Patient
Mark les

Fina g of
nce
Sa
eting

in
Rais
&

M
& anu
Di fa
str ctu h
ib rin arc
ut g se
io
n Re
Development

Payer
Provider
Pharma
Source: PricewaterhouseCoopers

programmes will enable it to get
better access innovation, reduce its
costs, manage risks more effectively
and enhance its productivity. For
example, the Chorus Project is a
virtual organisation to take molecules
quickly to Proof of Concept. Lilly also
uses external networks comprising
third parties as Piramal Life Sciences,
Hutchison MediPharma and Suven
Life Sciences in the development of
molecules.
At the same time, a flurry of merger
and acquisition (M&A) deals have been
triggered. While M&A will continue there
are alternatives, such as collaboration,
that PwC believes will actually be more
flexible and value-enhancing in the
long term.
We believe that two principal business models
– federated and fully diversified – will emerge,
as Pharma prepares for the future. Federated
model (See Fig 4), whereby a company
creates a network of separate entities with
a common supporting infrastructure. These
might include universities, hospitals, clinics,
technology suppliers, data analysis firms and
lifestyle service providers based in numerous
countries.
An example of this would be a federation
to address cardiovascular disease. Here the
federation could include drugs companies,
clinics and diagnostics to provide diagnosis
and treatment but also nutritional advisors
and stress management services to prevent
disease. All the players would be rewarded
based on patient-centred measures such as
increased quality of life.

44
44
The fully diversified model (See Fig 7), will Figure 4: The federated model

only be followed by the largest of pharma gy

nolo Dat
Tech pliers Ana a
companies. Here, a company expands from Sup lysts

rs
ac cs
its core business into the provision of related

Ph Cen
re
uf ri
tu
an ene

ys
iot tres
G
products and services, such as diagnostics

he
rap
tre M
and devices, generics, neutraceuticals and

y
Call Cen e
anc
Compli
health management. Johnson & Johnson is

Hospitals
Federation
Pharma’s leading exponent of this approach.

t t
We emen
This model enables companies to reduce

s
Ma Centre
igh
g
their reliance on blockbuster medicines and

Cli
na

nic
s
spread their risk by moving into other areas s
lub
sC Un
of the market.
s ive
ne rsit
Company Fit ies
Pharmaceutical

Clearly, the business model, or models, Source: PricewaterhouseCoopers

a company chooses will depend on its
individual circumstances, including the
particular challenges it faces, the expertise it
possesses and the markets in which it wants
to operate.
We think that many companies which choose
the federated model will adopt a progressive
approach. They will start with opportunistic
alliances; use the most successful alliances
as building blocks to create more strategic,
longer-lasting coalitions; and, finally, use the
most successful coalitions to create a fully
federated network of long-term partners.
Taking incremental steps will not only help
them to identify the organisations with which
they can work most effectively, but also give
them time to establish the technological
infrastructure that is essential to manage
the interfaces between two or more different
parties.
We also think that the financial crisis may force
many more companies into collaboration. In
fact the US government’s response to the
economic climate has allowed collaboration
outside the pharma sector that would
have been unthinkable before, such as
waiving competition issues for mergers.
Collaboration could address the current
funding crisis for biotech firms but this
requires an immediate response. In fact
the pressure to change to new business
models could come from outside the
pharmaceutical sector, perhaps triggered
by regulators, investors, and healthcare
payers.
There is plenty of evidence to suggest
that there are significant benefits from
a collaborative approach with longer
term aims. A study by RAND Corporation
estimated the financial savings from
having 100% participation in disease
management programmes for four
diseases (asthma, chronic obstructive
pulmonar y disease, diabetes and
congestive heart failure) in the US. They
estimate the net savings to the health
system to be $28bn (around 2% of total
US health expenditure), with additional
benefits to the economy in terms of
working days saved.

45
45
 Figure 7: The fully diversified model

Ethical Diagnostics Health

Generics Consumer Health
Pharmaceuticals & Divices Management

 Mass-Market  Molecular testing  Branded generics  Over-the-counter  Patient education

medicines
 Primary-care products  Clinical biomarkers  Commodity generics  Delivery and drug
(including patches,  Consumer diagnostics administration
inhalants and  Medical devices  Super-generics services
controlled-release  Nutraceuticals
implants)  Follow-on biologicals  Monitoring and
counselling
 Polly-pills
 Physiotherapy
 Specialised-Market
 Nutritional advice
 Biologicals
 Wellness
 Orphan drugs Management

 Vaccines

Moreover, companies will need to move
fast, because several non-pharmaceutical
companies have already entered the
arena. Vodafone has, for example,
joined forces with Spanish telemedicine
provider Medicronic Salud and device
manufacturer Aerotel Medical Systems to
offer a wireless home monitoring service.
Similarly, Prudential is collaborating with
Virgin Active Health Club to offer a critical
illness policy that provides subsidised
gym membership and rewards people
who exercise regularly by reducing their
premiums.
The changing face of the wider healthcare
model globally, the demands from different
stakeholder communities, including the
patient, will demand that pharmaceutical
companies provide holistic solutions, not
narrow treatments. In tomorrow’s world
this means that pharmaceutical companies
must work more with other parties. To do so
they will have to ‘profit together’, by joining
forces with a wide range of organisations,
from academic institutions, hospitals and
technology providers to companies offering
compliance programmes, nutritional advice,
stress management, physiotherapy, exercise
facilities and health screening.

46
46
References
1. For a detailed look at the future outlook for the
pharmaceutical industry see PricewaterhouseCoopers,
Pharma 2020: Challenging Business Models, Which
path will you take? 2009.

About PricewaterhouseCoopers
PricewaterhouseCoopers’(PwC)Global
Pharmaceuticals and Life Sciences Industry Group
is dedicated to delivering effective solutions to the
complex business challenges facing pharmaceutical
and life sciences companies. A global leader in serving
the pharmaceuticals and life sciences industry PwC
has extensive experience working with companies on
industry-specific strategic, operational, and financial
issues.

Our expertise includes assurance, tax and advisory

services, as well as specialised capabilities in regulatory
compliance, risk management, per formance
improvement and transaction support. In helping
our clients, we draw on the full knowledge and skills
of PwC’s professionals. More than 155,000 people in
153 countries connect their thinking, experience and
solutions to build public trust and enhance value for
clients and their stakeholders.

www.pwc.com/pharma

About the Author

Sujay Shetty Sujay leads India Pharmaceutical & Life Sciences
Associate Director Advisory practice of PricewaterhouseCoopers,
Advisory Pharmaceuticals/Life Sciences, India based out of Mumbai.

Office Phone : +91 22 6669 1305 His role involves assisting MNC & Indian clients
of the firm with respect to Corporate Finance,
Mobile : +91 98 6770 0030
Mergers & Acquisitons, Strategy Consulting and
E-mail : sujay.shetty@in.pwc.com
outsourcing for the Research, Development &
Manufacturing.
Sujay is a member of Pharmaceutical Committee
of FICCI and OPPI.

47
47
 - By Akhil Awasthi, Baring Private Equity
Understanding Innovation in the
context of a resource poor but
idea rich country
Intellectual capital always triumphs
financial capital in developed / advanced
markets but the situation is quite different
if not opposite in India. Before elaborating
on the above, it is a good idea to look at
the road map for innovation.
Unstructured Innovations
Let’s take the case of unstructured
innovations first. In the advanced
48
48
economies recognition of an innovation
and the accrual of rewards thereof is fair and
transparent. All innovations can be clearly
judged on this benchmark providing a
strong incentive to innovate to the scientific
community. Apart from the monetary
rewards, a well respected and long running
non-monetary reward system also exists
which gives stature and standing in the
scientific community. Further from idea
generation, enough bandwidth in form of
experienced manager and entrepreneur exits
who can provide the appropriate context
increasing the chances of success of ideas.
 A Roadmap of Innovation

Unstructured Structured

Scientific Managerial
infrastructure infrastructure
Define (ability to
(ability to Ideation or
Problem understand
recognize / value
idea) problem)

Establish Cultural Generate

Structural Social Alternatives
Contexts Capability

Leadership &
Choose context / Alternatives Discipline

Intellectual Capital

Financial Capital Application Execution Capability

Infrastructure

Finally, a teeming venture capital community non-monetary in nature is perceived

not only provides finance but risk taking
capability or the leap of faith to bring these
ideas to life.
In contrast, many if not substantially all of
these pieces are missing or are not present
in a critical mass in India. Our system of
recognition of reward, be it monetary or
to be political, faction ridden and not
cognizant of merit. Appropriation of
ideas is frequently alleged and good
ideas are not recognised. The idea funnel
therefore has an input problem which
get compounded by the absence of next
step. India does not have enough number

49
49
 of credible advisors and the appropriate
cultural-social capability to accept the
risks associated with innovations (Failure
is not accepted as one of life’s essential
experiences).
Finally, the choice set available for
next step gets adversely impacted by
leadership and discipline / conviction
issues. The best ideas therefore never
come seeking capital, a phenomenon
that has turned most PE players off the
Venture Capital market. This leaves HNI’s
and angels as the most likely investors
resulting in shrinkage of the feasible deal
size.
Structured Innovations
These innovations are often in terms of
process innovation, business models
and not restricted to scientific innovation
alone. Fundamental attribute of success
of structured innovation is a clear and
unambiguous definition of the problem.
This clarity is in turn governed by good
management thinking and a robust
experience curve. Here the difference in
rate of innovations in India as compared
to the advanced economics seems to be
far less.
The reason attributable, so far as I can
ascertain, are management thinking
being at par with the best in the world
and the presence of an experience curve
to an equal degree in India especially in
the large corporations.
I n n ovat i o n s, b e t h e y s t r u c t u re d
or unstructured, require a certain
environment and mindset to enable
them to thrive.
50
50
Below is a partial list:-
Alert: Be on the lookout for events /
phenomenon that is different from past.
Open: Have a welcoming mindset for some
things that do not fit a pattern.
Curiosity: Give time and intellectual effort to
explore new phenomenon
Rational+Discipline: Develop objective
criterion to assess new phenomenon and be
disciplined in applying them.
Encourage: Give credit to those who have
the ability to think out of the box.
Reward: Develop a system of recognition
and reward that is perceived to be fair and
transparent
Act: Follow up with an action plan.
Failure: Remove the stigma of failure.
Reader would note that I have come to the end
of this article without mentioning patents,
something normally synonymous with
innovations. The reason is a distinction that I
make between innovation and patents. While
patents are nothing but legal ownership of an
innovations; innovations are much broader
claims, all of which may not be patentable e.g.
the supply chain and inventory innovations
by Asian Paints.
Innovations help in not only creating new
products and services but also engender
efficiency and ultimately superior business
returns.
As one of the oldest PE funds in India, Baring
understands the importance of innovation in
generating returns for our investments. Right
across industry verticals preferred by us, be
it Financial Services, IT & ITES, Engineering,
Power or Healthcare, innovations in product,
process, business structure, HR, Finance,
Quality etc. have helped us capture superior
returns.
In our current fund, we have investments
in the Healthcare sector viz. Reametrix Inc.
and Sphaera Ltd. where these aspects get
demonstrated clearly. Reametrix is a company
founded by serial entrepreneur Dr.Bala
Manian playing in the space of “Affordable
Diagnostics”. The company is committed to
become a leading provider of high quality
research and diagnostic assay solutions
leveraging India costs for value creation in
global biotech and healthcare sector.
Sphaera Pharma, founded by Dr. Sundeep
Dugar, is an integrated drug discovery and
About the Author
Akhil Awasthi
Partner
Healthcare, Media & Education
Office Phone : +91-124-4321103/00
Fax : +91-124-4321155
E-mail : akhil.awasthi@bpepindia.com
development organization led by Pharma
and Biotech Professionals with the goal to
bring innovative therapies by developing
a portfolio of early stage and clinical
progress through a unique execution
model.
The ideation as well as establishment of
structural context, for both companies,
is done with western cultural/social
capabilities while establishing proof and
execution of tasks has been done more
efficiently in India.
We at Barings are hopeful that the success
of these companies would give fillip to
Innovation in Healthcare Sector in India.
Akhil Awasthi is a Partner with Baring Private
Equity Partners India and leads the investments
in Pharmaceutical & Healthcare, Media and
Education sectors and serves on the boards of
several portfolio companies. He has nearly two
decades of experience in Asset Management and
Corporate Banking.
Akhil began his career with the former ANZ
Grindlays Bank in corporate banking and
was a founding member of ITI Pioneer Asset
Management Company, where he contributed
to the launch of bluechip and prima equity funds.
He is an active speaker on international forums in
Healthcare and is actively engaged in providing
guidance to new entrepreneurs in association
with the Indian Venture Capital Association and
the Delhi chapter of TIE.
Akhil is a Qualified Mechanical Engineer with an
MBA from Faculty of Management Studies, Delhi
University and an AMP from Harvard Business
School.
51
51
 - By Ranjith Menon, IDG Ventures India
Today across most parts of the globe - be
it developed countries like the US or in the
most populous country like China - the
“older” population is the fastest growing
segment. Couple this with the growing
pricing pressures from governments
and third-party insurers for medical
treatments, the medical world hangs on
a balance.
In emerging countries like India with
50% of the population not having access
to healthcare we are still grappling with
the issues of quality of basic healthcare,
our ability to distribute it effectively
across while still keeping it affordable.
52
52
Over the next half-century, these trends
will drive fundamental changes and impact
the way companies primarily design and
manufacture medical technology equipment
and the ones that are into drug development
and distribution. It is no more in the realm
of taking an existing technology from the
developed markets and repurpose it for the
emerging markets. Companies will need to
go back to the drawing board to develop
newer technologies that are cost effective but
at the same time maintain global standards
in delivering quality healthcare. This is an
opportunity for younger companies in the
emerging markets who understand the
requirements better to develop technologies
to address these issues.
Perfint- Perfect Example
Cancer is amongst the top reasons for death
worldwide and among them Lung Cancer
is number one. Globally reported cases
are 11M in ’00 expected to grow to 27M in
2030. Suspected cases that are investigated
are usually 50% more. Early stage cancer
detection can improve one’s chances of
survival by about 70%-80%. IDG Ventures
India invested in Perfint based in Chennai
started by a team of professionals who have
spent considerable part of their career in
building healthcare products at GE.
Their first product, PIGA-CT, is a tool positioner
that can help a regular radiologist do
interventional procedures which were
hitherto not possible (lesions of less than
20mm) because of lack of guidance tools.
This will be of tremendous help in a country
where there is a definite shortage of expert
radiologists. Given that tool helps in intelligent
planning it results in no repeat passes which
means less pain, less radiation & less post-
procedure complications. It also reduces time
of procedure improving clinical productivity
and lesser risk of pneumothorax
The fact that the team has been able to
design and develop a diagnostic platform,
taking it through clinical trials to installations
at hospitals in under $5M is a testimony to
the innovation in product development
and manufacturing. With customers across
the country today including prestigious
names like the AIIMS, Jaslok, etc PIGA is well
positioned to take a leadership position in
this space. The platform that the company
has built to address early stage cancer
procedures and other Minimally Invasive
and guided procedures like drug delivery,
pedicle screw, radiation etc, is estimated to
grow from under 10% of total procedures
done to about 60% by ’10.
Opportunities – Our View
At IDG Ventures we are focused on the
healthcare domain. Our focus has been
to look for companies that have some
disruptive technology that can change
the way healthcare is delivered. Another
important criterion for us is that the
company must address the Indian market
and have the potential to dominate this
market.
Apart from medical devices space we are
also exploring opportunities in the lost
cost hospital network that can address the
rural requirements. According to recent
estimates, there are only 4.48 hospitals,
6.16 dispensaries and 308 beds for every
100,000 of India ’s urban population.
In rural areas, the situation is worse,
with 0.77 hospitals, 1.37 dispensaries,
3.2 Public Health Centres and just 44
beds for every 100,000 people. There is
an opportunity here a few people are
beginning to address.
Very little R&D happens in India with
respect to new drug development.
But given the huge patient population
that India has and the more number of
trials that are required by FDA, this is
an opportunity for CROs to capitalize.
Growing from the traditional BA/BE studies
to conducting Phase II, III trials will be the
53
53
 new growth areas for CROs. With some of
the blockbuster drugs going off patent
soon and with the regulators working on
the proposal of allowing Phase I trials in
India for global drug firms, the prospects
for this industry look brighter.
Of the many challenges the critical
one has been the lack of talent which
can build medical devices that meet
global standards. But it is encouraging
to see teams from majors like GE , Phillips
who have been here for a long time
now, having the necessary expertise
starting companies to address emerging
markets.
About IDG Ventures India
Formed in September 2006, IDG Ventures India
manages a US$150 Million venture capital fund
focused on helping entrepreneurs grow innovative
companies on a global basis. IDG Ventures India
focuses on early-stage investments in technology
and technology- enabled companies. We typically
invest between US$0.5 Million to US$5 Million in early-
stage companies and opportunistically up to US$10
Million in compelling growth-stage companies. These
companies will cover a wide range of sectors such as
outsourced services, design engineering, electronics
and hi-tech manufacturing, consumer internet and
digital media, software products, semiconductors,
telecom infrastructure, consumer mobile services,
retail financial services, healthcare and other emerging
technology-enabled sectors.

Bottomline: Today we have the global

healthcare device makers like GE, Siemens
and Phillips looking eastward to fuel
growth. Phillips has already made a few
acquisitions including Alpha X ray and
Medtronics.

Building a medical devices company

from India takes lot of time, involves high
risk and definitely requires more capital.
If we can build a company addressing
the emerging market requirements and
meeting the global standards we not only
expect to make good returns but can also
make a difference socially.

About the Author

Ranjith Menon Mr. Ranjith Menon, is a Senior Investment Advisor

Senior Investment Advisor
IDG Ventures India
E-mail : ranjith_menon@idgvcindia.com
at IDG Ventures India, a US$150 Million early-stage
technology venture capital fund backed by IDG,
the world’s largest IT-focused media company. He
currently serves on the Board of Directors at Perfint
and is a Board Observer at ConnectM and Myntra.

54
54

What are the new regulations that PE
investors and HLS companies should
watch out for?
Apart from the Drugs and Cosmetics Act,
1940, and the regulatory body i.e the Indian
Council of Medical Research which regulates
clinical labs through its guidelines, clinical
establishments in India are now proposed to be
subjected to the new Clinical Establishments
(Registration and Regulation) Bill, 2007.
The Bill aims to provide for registration and
regulation of clinical establishments i.e.
hospitals, nursing homes, maternity homes
etc. It is interesting to note that obtaining
registration is made mandatory under the Bill,
including for clinical establishments already
in existence on the date of commencement of
the Act, when brought into force. PE investors
therefore would be required to ensure that
the clinical establishments in which they seek
to invest have in fact been registered. Any
change of ownership or management
in a clinical establishment would also
require obtaining a fresh certificate of
registration.
The most significant outcome of the
above Bill would be that upon registration,
clinical establishments would be required
to fulfill certain minimum standards of
facilities and services as prescribed by
the Government. This would definitely
go a long way in inspiring confidence
in the PE investors about the quality of
their investment. However, PE investors
must watch out as the above Bill would
not be applicable throughout India. Each
state is required to pass the necessary
resolutions to adopt the Bill/Act, once
in force. At present, only the states of
Himachal Pradesh, Mizoram, Sikkim
and the Union Territories have adopted
the Bill. Unless the Bill is adopted by a
majority of the states, it may not achieve
its intended purpose of providing a
uniform regulatory framework for clinical
establishments in India.
55
55
 When it comes to HLS investments,
investors feel the need for extra domain
expertise in doing due diligence. Plus,
Life Sciences often look to engage in
partnerships with various MNC firms in
the form of Joint Ventures, etc. How can
law firms add value in these areas?
Law firms can certainly contribute
effectively in due diligence required for
making HLS industry deals. It is often seen
that companies are largely focused on
the commercial aspects of a transaction
rather than due diligence with respect
to the legal issues governing the same.
For instance, it is always advisable for
companies to execute a confidentiality
agreement before even undertaking
the due diligence. However, in their
zeal to reach a deal, companies often
do not pay attention to matters relating
to confidentiality, Intellectual Property
Rights, i.e. assignment, licensing, etc.
Particularly for investments in Life
Sciences, undertaking an Intellectual
Property (IP) Audit is critical to determine
the value of the intellectual capital of
an organization. Further, it also helps
organizations strategically increase their
net wealth. An effective and correct
valuation of the intellectual property of
an organization will lessen the risks for PE
investors and prevent deals from being
negotiated on lesser financial terms.
Law firms with their experience and
vast knowledge about the regulations
governing the HLS Industry, apart from
the general legal framework, can also
assist companies in dispute resolution
by incorporating appropriate arbitration
clauses where necessary, thus preventing
56
56
companies from long and laborious litigation
in courts in India.
What are the new trends to watch out for
in patent-related matters for Indian Life
Science Companies?
The rejection of the claims of novelty
for the drug Gleevec/Glivic of the Swiss
pharmaceutical major Novartis by the Madras
High Court has set an important precedent
for the Indian drug industry and for millions
of patients worldwide who are able to use
cheaper Indian generic drugs to treat life-
threatening diseases. This has resulted in the
creation of a vibrant domestic industry for
producing generic drugs at much lower prices
as compared to international standards.
The Delhi High Court too has refused to
restrain Indian drug maker Cipla from selling
cheaper copies of a patented lung cancer
drug, quashing a plea from its patent holder,
Swiss drug maker, F. Hoffman La Roche. The
above clearly point to the emerging trend
in the Indian Judiciary, which is, to strike
an effective balance between larger public
health concerns vis-à-vis the individual rights
of a patentee.
Contact Details:
KIRIT S. JAVALI
Partner
Jafa & Javali
Advocates
B-104, Gulmohar Park
New Delhi 110 049
India
Tel : 91 11 41641757 / 41640381
Fax : 91 11 41640380
E-mail: advocates@jafajavali.com
Jafa & Javali is a full fledged Corporate & IPR law firm
 Listing of Investors focused on Healthcare & Life Sciences

Baring Private Equity Partners India

www.bpepindia.com

Contact
Akhil Awasthi Amit Chander
Partner – Healthcare, Media & Education Head of Investments – Healthcare
akhil.awasthi@bpepindia.com amit.chander@bpepindia.com
+91-124 432 1103 +91-124 432 1100

Office Address
Baring Private Equity Partners India
9th Floor, Infinity Tower A, DLF Phase II, Gurgaon – 122 002
Email ID: partnerships@bpepindia.com

Tel: +91-124-432 1100/11/22/33/44 Fax: +91-124-432 1155

Evolvence India Life sciences Fund

Contact
Hari Buggana T P Devarajan
hari.buggana@invascent.com tp.devarajan@invascent.com
+91-40 2354 1305 +91-40 2354 1305

Office Address
8-2-293/82/A/512-F1/A, B-Block, Road No 30, Jubilee Hills, Hyderabad – 500 033
Tel: +91-40 2354 1305 Fax: +91-40 2354 1315

57
57
 Listing of Investors focused on Healthcare & Life Sciences

IDG Ventures India

www.idgvcindia.com

Contact
Sudhir Sethi Manik Arora T C Meenakshisundaram
sudhir_sethi@idgvcindia.com manik_arora@idgvcindia.com tcm_sundaram@idgvcindia.com
+91-80 4043 4836 +91-22 6630 6009 +91-80 4043 4836 

Office Address
7B, 7th Floor, Sobha Pearl, No. 1, Commissariat Road, Bangalore - 560 025

We are interested in
Early and growth stage companies led by good management team and having revenue
traction.

India Value Fund

www.ivfa.com
Contact
Sunil Theckath Rupali Siddharth
sunil@ivfa.com rupali@ivfa.com siddharth@ivfa.com
+91-80 4132 1845 +91-80 4132 1845 +91-80 4132 1845

Office Address
Bangalore
Rocklines House (Ground Floor), 9/2, Museum Road, Bangalore - 560 001
Tel: +91-80 4132 1845 Fax: +91-80 2559 0800
Mumbai
Suite F9C, Grand Hyatt Plaza, Santacruz East, Mumbai - 400 055
Tel: +91-22 6695 4888 Fax: +91-22 6695 4777
We are interested in
Looking at hospitals with 50-300 beds in Tier-I or Tier-II cities.

58
58
 Listing of Investors focused on Healthcare & Life Sciences

Life Fund III

www.ventureast.net
Contact
Sarath Naru Alur Ramesh Chandra Shekhar Reddy
sarath.naru@ventureast.net alur.ramesh@ventureast.net shekhar.reddy@ventureast.net
+91-40 2355 0481 +91-98666 56900 +91-98666 19053

Office Address
20B ASCI College Park, Road No 3, Banjara Hills, Hyderabad 500 034

We are interested in
Early / growth stage companies (preferably with revenues) in the following areas:
Healthcare (services and pharma innovation), Food/Agri, Clean Environment (adoption)

Standard Chartered Private Equity

www.standardchartered.com

Contact
Nainesh Jaisingh Mukul Nag Udai Dhawan Dhiraj Poddar
nainesh.jaisingh@sc.com mukul.nag@sc.com udai.dhawan@sc.com dhiraj.poddar@sc.com
+91-22 6735 5613 +91-22 6735 5614 +91-22 6735 5616 +91-22 6735 5615

Office Address
4th floor, Standard Chartered Bank Building, 23-25 Mahatma Gandhi Road, Fort
Mumbai - 400 001

We are interested in
Standard Chartered Private Equity Advisory typically invests between US$25-200 million
in mid to late stage companies

59
59
 Looking to raise funds for your Healthcare & Life Sciences
venture?
Venture Intelligence is your one-stop information point for your
fund raising process.

The Venture Intelligence “Entrepreneur - Fund Raising” package includes:

 List of PE/VC investments in Healthcare & Life Sciences during the previous
year
 Latest Directory of PE-VC Firms (or Early Stage Investors Directory) active in
India
 6-month Subscription to Venture Intelligence Deal Digest Daily & Weekly
Newsletters

For more details, contact us at

info@ventureintelligence.in or call us at 044-4553 4303

Looking to acquire Healthcare & Life Sciences companies?

As India’s largest Deal information Bank, Venture Intelligence provides
the most exhaustive information on Private Equity and M&A activity in
the Healthcare & Life Sciences industry.

The Venture Intelligence “HLS Industry Package” includes:

 Quarterly Digest of PE and M&A deals in the Healthcare & Life Sciences indus-
try in a spreadsheet format

 Annual Subscription to Venture Intelligence Deal Digest newsletters, summa-

rizing all the PE and M&A action in India on a daily and a weekly basis.

For more details, contact us at

info@ventureintelligence.in or call us at 044-4553 4303

60
60
 Listing of Advisors focused on Healthcare & Life Sciences

Accelerator Group LLC

www.agroupllc.com
Contact
Seema Chaturvedi Shivam Trivedi
seema@agroupllc.com strivedi@agroupllc.com
+1 248 723 0808 +91-124 404 9479

Office Address
USA India
4848, Adams Pointe Court, Troy, MI 48098 916, Galleria, DLF Phase IV, Gurgaon -122 002

We are interested in
We are interested in Healthcare companies such as Hospitals (<350 beds in Tier 1, 2, 3 cities in India),
medical equipment companies, diagnostic chains, pharmacies seeking funding and/or strategic
alliances (mergers, acquisitions, joint ventures and collaborations).

Almondz Global Securities

www.almondzglobal.com
www.almondz.com
Contact
Sunit Shangle Saurabh Ahuja
sunit.shangle@almondz.com saurabh.ahuja@almondz.com
+91-93126 67398 +91-98181 54644

Office Address
2nd Floor, 3-Scindia House, Janpath, New Delhi – 110 001

We are interested in
Offering Financial Advisory to Healthcare, Medical devices and Diagnostic service businesses
seeking Growth capital, PE investment or Inorganic M&A expansion.

61
61
 Listing of Advisors focused on Healthcare & Life Sciences

BMR Advisors
www.bmradvisors.com

Contact
Vivek Gupta Gaurav Gulati
vivek.gupta@bmradvisors.com gaurav.gulati@bmradvisors.com
+91-98104 04411 +91-98106 77969

Office Address
The Great Eastern Centre, 1st Floor, 70 Nehru Place, New Delhi – 110 019
Tel: +91-11 3081 5000

We are interested in
Providing M&A and advisory services to companies seeking acquisitions, divestures and
fund raising.

Collins Stewart Inga

www.csin.co.in

Contact
S. Karthikeyan Kavita Shah
karthikeyan@csin.co.in kavita@csin.co.in
+91-98675 01270 +91-98675 01267

Office Address
A-404, Neelam Center, Hind Cycle Road, Worli, Mumbai - 400 013

62
62
 Listing of Advisors focused on Healthcare & Life Sciences

Cipher Capital Advisors

www.cipher.in
Contact
Rajeev Kalambi Abhay Anand Siddharth Jaswa
rajeev.kalambi@cipher.in abhay@cipher.in siddharth@cipher.in
+91-98733 44641 +91-98205 35140 +91-98209 12181

Office Address
Mumbai
A122, Gokul Arcade, Sahar Road, Vile Parle (E), Mumbai - 400 057
Tel: +91-22 6777 4777 Fax: +91-22 6777 4778
New Delhi
424, Regus Business Centre, District Commercial Complex-D4, Saket, New Delhi - 110 017
Tel: +91-11 4051 4163
USA
5820 Stoneridge Mall Road, Suite 100, Pleasanton, CA 94588, USA.
Tel: +1-925 847 4024 Fax: +1-925 847 4023
We are interested in
 Differentiated Research/ Services/ Distribution/ Manufacturing plays within
Pharmaceuticals/ Vet Care/ Nutraceuticals/ CRAMS/ CRO’s.
 Specialized Single / Multi site Hospitals / Speciality Clinics.

Ernst & Young

www.ey.com
Contact
Hitesh Sharma Muralidharan Nair Rajeev Dalal
hitesh.sharma@in.ey.com murali.nair@in.ey.com rajeev.dalal@in.ey.com
+91-22 4035 6300 +91-22 4035 6300 +91-22 4035 6300

Office Address
First floor, Jalan Mills compound, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013

We are interested in
Providing services to Life Sciences companies on a range of transaction related areas
including raising private equity, debt capital, buyside & sell side advise, joint ventures,
financial due diligence, transaction and tax structuring and valuations.

63
63
 Listing of Advisors focused on Healthcare & Life Sciences

Enarr Capital
www.enarr.com

Contact
Shhyam R Singhania Padaam R Singhania Hemant Gupta
shhyam@enarr.com padaam@enarr.com hemant@enarr.com
+91-22 4035 8585 +91-22 4035 8585 +91-22 4035 8585

Office Address
324, A to Z Estate, G. K. Kadam Marg, Lower Parel (W), Mumbai - 400 013

We are interested in
Organizations traversing Healthcare Space looking for Financial/Strategic Partners.

KPMG India
www.in.kpmg.com

Contact
Amit Mookim Vikram Hosangady
amookim@kpmg.com vhosangady@kpmg.com
+91-22 3989 6000 +91-22 3989 6000

Office Address
KPMG City Studio II, Kamala Mills, Lower Parel, Mumbai - 400 013
Tel: +91-22 3989 6000 Fax: +91-22 3983 6000

We are interested in
Providing advisory support to Private Equity and Corporate in Healthcare transactions and
M&A in India and globally.

64
64
 Listing of Advisors focused on Healthcare & Life Sciences

Ozone Capital Advisors

www.o3capital.com

Contact
Shyam Shenthar Shiraz Bugwadia Adam Larkey
bangalore@o3capital.com mumbai@o3capital.com newyork@o3capital.com
+91-80 4241 0000 +91-22 3262 6294 +1 212 826 0303

Office Address
Suite 5367, Grand Hyatt Hotel, Santacruz East, Mumbai - 400 055

We are interested in
Companies across all segments of Life Sciences and Healthcare delivery, viz API, Formulations,
CRAMs, CROs, Hospitals, Diagnostic Services, Pharmacy Chains and Medical Equipments.

Pricewaterhouse Coopers
www.pwc.com/in/

Contact
Sujay Shetty
sujay.shetty@in.pwc.com
+91-22 6669 1305

Office Address
252, Veer Savarkar Marg, Shivaji Park, Dadar, Mumbai - 400 028
Tel: +91-22 6669 1000 Fax: +91-22 6654 7804

We are interested in
 Diagnostic chains with more than 10 centers
 CROs with turnover over Rs. 30 crores, etc.

65
65
 Listing of Advisors focused on Healthcare & Life Sciences

RiverBridge Investment Advisors

Contact
N. Muthuraman V. Satheesh Vivek Jain
muthuraman@riverbridge.in satheesh@riverbridge.in vivek@riverbridge.in
+91-99520 91011 +91-99806 82455 +91-99109 33211

Office Address
A707, Brigade Millennium, J.P Nagar, 7th Phase, Bangalore - 560 076

We are interested in
RiverBridge represents a PE firm in identifying companies within Rs. 50-500 crores turnover
in healthcare sector looking to raise equity.

Why do all leading practitioners subscribe to

Venture Intelligence publications?

An on the ground presence since ’02, makes Venture Intelligence

the most authoritative source of information

With all leading funds sharing data, you get to explore deals
unavailable from public sources.

You get to start your day with a complete update

on all the previous days’ deal action.

Get to track the deal space at 1/30th the cost vis-a-vis doing it internally.

66
66
Venture Intelligence, a division of TSJ Media, is the leading provider of information and networking
services to the Private Equity/Venture Capital - Entrepreneur ecosystem in India.

Our research and analysis is used extensively by PE / VC industry practitioners, Entrepreneurs,

CXOs of large corporations, the media as well as regulatory agencies. Our publication subscribers
include leading PE / VC Firms, Limited Partners, Investment Banks, Law Firms, HR Services Firms
and Consulting Firms.

Venture Intelligence products are a one point source for information and analysis on:

Private Equity, Venture Capital and M&A deals

Companies looking for investors and M&A deals
New Funds being raised

Our products include:

Databases
 Profiles of all Private Equity, Venture Capital and M&A deals since 2004
 Includes searchable profiles of all PE/VC firms and PE/VC-backed companies

Newsletters
 Daily & Weekly formats for practitioners in the deal ecosystem
 Sector-focused monthly format for entrepreneurs

Private Equity & Venture Capital Reports

 Quarterly and Annual reports on PE & VC trends.

Directories
 Private Equity & Venture Capital Directory
 Directory of Early Stage Investors
 Investment Bank Directory

Conferences
Venture Intelligence conferences are a leading platform that bring together investors and
entrepreneurs in a focused manner that facilitates discussion and networking. Speakers at
Venture Intelligence Conferences are typically investors, entrepreneurs and CXO/Board-
level executives from accomplished companies.

Contact :
TSJ Media Pvt. Ltd., 48 (Old No. 29), Ground Floor, Warren Road,
Mylapore, Chennai-600 004 INDIA
Tel: +91 44 45534303 Email: info@ventureintelligence.in
Web: www.ventureintelligence.in

67
1