At this year’s VC Circle Health Summit in Mumbai, over 350 physicians, engineers, entrepreneurs, and investors converged from far corners of India to discuss the challenges and opportunities within the nation’s healthcare economy. A recent Bain report predicts the sector to touch $280Bn by 2020 at a CAGR of 20%. However, Dr. Gurmink Advani, president of TransAsia Bio Medical, believes investors may still be myopic to the prospective potential. While metropolitan regions boast world-class facilities and outcomes, Advani states: “Tier 1 cities are just the tip of the iceberg, as there is huge market potential in Tier 2 and Tier 3 cities. It is a fallacy to think that serving low-income populations needs to be confined to the non-profit sector.”
National statistics back up Dr. Advani’s comments. 70% of Indian health infrastructure is confined to the top 20 urban centers, while 70% of India’s population resides in the rural setting. The lack of access and affordable therapy push 40 million Indians below the poverty line due to healthcare expenditure alone. And while government initiatives like the National Rural Health Mission have done great work to expand access to low-income populations, the private sector accounts for 80% of total health spending in India.
Recently, some corporate hospitals have recognized that lower employee and project costs are now allowing them to expand outside the Tier 1 regions and meet unmet demands of lower-income populations. While break-evens are cited as 2-3 years for hospitals within Tier 1 cities and 4-5 years in tier 3 cities, the opportunity to build brand equity among the vast rural populations has attracted many entrepreneurs, innovators and investors.
The public sector has increased the supply of rural physicians via funding training and recruitment efforts, while the private sector has the ability to innovate solutions that allow healthcare to be delivered using fewer GPs and/or less-costly substitute healthcare workers. Another speaker at the conference was Mr. K. Chandrasekar, who is the CEO of Forus Health, a company that has created low-cost eye pre-screening device that connects rural health workers to tertiary care centers through telemedicine and remote diagnosis. By reducing the costs of screening, Forus’ technology hopes to increase access to quality healthcare. This device is a break-through in diagnosing and connecting patients, but Chandrasekar notes, “Innovation should not only happen at the product level, but also in the context of the target location. We need to design a framework that closes the loop between patients, general practitioners, and specialists.”
Companies like Forus are what panelist Manish Makharia, Executive Director of TVS Capital, referred to as a “category creator,” one that disrupts existing business models to reach large populations.
Entrepreneurs in India are gradually recognizing the needs and opportunities within the healthcare industry. Certain sub-sectors are particularly interesting – these will be highlighted in our forthcoming healthcare blog series. USF is actively investing in the BoP healthcare segment and is looking for entrepreneurs and “category creators” looking to serve large low-income populations. Read more here.