Ayurveda | Kapil Khandelwal KK

2025 Healthcare and Life Sciences Investment Outlook

Mankind versus ChatGPT: Our Caveat for 2025

For the first time in AI’s and mankind’s history, the line between what is human and what is AI-driven technology is increasingly blurring, we are witnessing that ChatGPT and other OpenAI models, can influence the rates of false negatives and false positives in various healthcare and investment applications including algorithms that make investment calls based on future predictions. We have been making annual healthcare and life sciences investment predictions since 2013 with 95% accuracy except during the Covid pandemic years. It seems that ChatGPT itself is turning out to be a black swan event for the algorithms which are predicting the future so accurately in the past. As ChatGPT becomes mainstream, we need to understand the “Confusion Matrix” (see chart below) that will ensure with the power of AI and ChatGPT versus the humans in the future as more and more AI-generated content and analytics proliferates the world in 2025 and beyond.

Confusion Matrix for AI ChatGPT and Human Predictions

As industries including, Healthcare and Lifesciences is adopting AI very rapidly for delivering healthcare and so do the Banking and Financial Services, investment managers using AI-driven algos for investment calls. We would need to take cognizant of the False Negatives and False Positive that would elevate the risks and mitigate accordingly. We have included AI as one of the factors in our 2025 Outlook, India Healthcare and Lifesciences Investment Heatmap.

2025: Heal the World – From Geo Politics to Socio Politics

In our 2024 forecast last year we included Geopolitics for the first time in our investment heatmap as the signals were emerging as early as mid-2023. While 2024 witnessed global geopolitics upheaval with regime changes through democratic elections and other means with over 60 wars and armed conflicts ongoing around the world, we were seeing signals of slowdown in growth and investments in Q12024 itself. As a result, as we exited 2024, the growth and investment climate slowed down significantly.

The broad global theme for 2025 is “Heal the World” for better outlook for 2026 and beyond. If we are able to heal the world with robust socio political agenda it would turn out to be the future prosperity of mankind.

2025: India’s Healthcare and Lifesciences Innovation and Business Models

India was also not insulated with the global geopolitics impact. In 2024, there was ~50% decline in capex and investments in the sector. We expect 2025 to continue to be a weak year for investments in the sector. After our general elections, there were uncertainties in our region and further slowing of investment and capex cycles on the back of global slowdown. Healthcare is a big creator of employment and it should not slow down any further in 2025.

Since Q12024, the signals were towards robust investments in early stage innovations and growth in new age business models which we have been labelling as “cross-domain” investment ideas. In March 2024, we released 2024 – India Healthcare And Life Sciences Investment Manifesto | Kapil Khandelwal KK covering key 40 bets that will be an opportunity to invest in the sector that will witness an upside beyond the market returns for the sector over the next 5 years. This will accelerate the investments that was with USD 857 million in 2024 to reach a unicorn status of over USD 1 billion in 2025. Fortunately, this is the only segment witnessing positive growth in investments in 2024 and continues to attract robust growth and investments.

Hence, we have made attempts to analyse International ‘Geo Politics’ as a separate factor and bolt-on-top of our algo predictive models to adjust our heat map for 2024 to accurately predict whether the heat is on in our 2025 Investment Heat Map.

The wave of optimism for 2025 in Indian healthcare and life sciences stems from the following:

Over half of Indian consumers are increasingly curious to understand their body and well-being by ‘listening to their body’. Innovators and start ups are exploring this opportunity to scale up their ventures.
Many of the start-ups of the Pre Covid India Stack in healthcare are either pivoting to including AI tech or will perish as AI goes turbo. We are expecting around 450 such start ups at this stage of AI upgrade.
Agentic AI effectively turbocharges the Do It For Me (DIFM) healthcare economy. Early adopters include GenZ and Millennials (approx 50% of Indians) users who will have their own bots or AI agents helping them choose products and execute transactions in adoption of healthcare products and services as the line between what is human and what is technology will be blurring. Competition will tick-up as starts-ups grow.
“AI for All is not All” as consumers are getting more consumerised for their health needs. AI cannot solve it all for all of Indian consumers healthcare needs. These include Gen X and Seniors (approx 44% of Indians) are skeptics and late adopters. This innovative products to serve these cohorts is key.
New business models/incubation for investments are emerging (see our 40 Future Bets in Healthcare 2024 – India Healthcare And Life Sciences Investment Manifesto | Kapil Khandelwal KK) that are cross-domain and will be a potential USD 50 billion addition to India’s GPD in next 5 years.
Healthcare real estate will also explore cross-domain concepts to fit consumer needs.
Wellness is now an ‘Avatar’ that is experiential and connects with other lifestyle domains such as beauty, cosmetics, travel, tourism, hospitality, food, technology, wearables tech, work environment and many more. Holistic innovation in experiential longevity is emerging.
Alternative therapies are now body rejuvenation biohacks that traditional and alternative medicine and wellness cannot provide or fulfill completely and which health fascism fuels. Indian GenZ and Millennials are leading this change.
New age innovative medical integrative DIFM models will be a push for medical and wellness tourism repositioning for India medical tourism.
In 2024, the BSE Healthcare Index was one of the standout performers, delivering an impressive 40% year-to-date (YTD) return. This trend continues in 2025.
The valuations have come back to realistic levels to peak by 2026-27.
Private hospitals are now aggressively embarking on increasing bed capacity after a phase of consolidation in 2024.
M&A and buyouts are expected to continue to be buoyant.
Healthcare real estate are expected to launch and kick off innovative cross-domain formats.

The 2025 India Healthcare and Life Sciences Investment Heat Map is as under:

Healthcare Financing

With mental health needs and healthcare fascism at its peak, newer products and services for financing longevity and healthy lifestyle for the Gen Alpha and Gen Z are emerging. Cross domain models of business are emerging to address the needs to finance consumers needs to such emerging products and services.

2025 Outlook: Moderate

What may go wrong: false claims by online influencers, right pricing, reach and penetration to consumers, improper lifestyle based consumer segmentation, business volatility in some NBFCs, newer regulations on consumer credits by RBI, lower consumer spending and financing, outstanding credit cards debt
What’s going right: AI intervention and solutions, lower interest rates,

Medical Education

Medical education content is no longer the marker for better valuation and funding. The market has flipped to buyers’ market. The investors are no longer entering into opportunities at the current valuations and will lead to rerating downwards. Need major reforms in the medical education sector.

2025 Outlook: Low

What may go wrong: lower student enrollment, regulatory issues, new emerging careers in industry, accreditation and learning models, international players and competition
What’s going right: AI-generated content creation, immersive content, stable valuations

Med Tech Innovation and Life Sciences Discovery and Clinical Development

Trump Administration and the US BioSecure Act will be a positive. India has to enter the big league of biologics with global partnerships as Chinese firms will face headwinds. Cross domain innovation with AI is the key to leapfrog in the global race. Also India needs to reinforce its success in Covid vaccine development to reignite confidence in India. Expect a major IPO.

2025 Outlook: Moderate

What may go wrong: over dependence on Chinese players, slower reverse brain drain transition of drug hunters from US, low qualified life sciences professionals pool, lower grant funding, no further sops in the 2025 finance budget
What may go right: emerging social innovation models, market appropriate solution development, native AI models

Pharma and Therapeutic Solutions

Volume growth in the domestic markets, US generics price erosion, with the softening of input costs, ongoing decoupling of supply chain with China and currency depreciation to continue in 2025, will improve the margins very marginally. The companies with strong cash positions will increase capex and also buyouts and M&A activity. Not any major name IPOs expected.

2025 Outlook: Moderate

What may go wrong: Slower China decoupling of supply chain, continuing US generics markets prices decline, potential increase in tariffs by the US under Trump regime, increased APIs prices, continuing domestic market volume degrowth, no further sops in the 2025 finance budget
What may go right: US BioSecure Act to favour India, increased R&D spend, new products pipeline, newer capex cycles, multi-year high in US active drug shortages

Healthcare Providers

Capacity creation will now be around 2500 beds in tier 2 and 3 cities. Funding cycles improve as internal accurals improve for fresh capex and capacity expansions and inorganic expansions. Expect a few IPOs, buyouts and exits via secondary sale.

2025 Outlook: Hot

What may go wrong: margin pressures, supply and demand mismatch in micromarkets, lower medical tourists arrivals, rising valuations, stable margins
What may go right: asset-lite models, launching into new medical tourism markets

Healthcare Insurance

Payors are seeing insurance penetration grow since the Covid pandemic. Newer markets in the GenZ and Millennials cohorts and geographically tier-2 and 3 cities are the essential for growth. Bundled products and services for health and wellbeing is the key. AI modelling will assist in accurate underwriting of risks. Agentic AI entry to change the solicitation and selling customised bundled products.

2025 Outlook: Hot

What may go wrong: bundled product for consumer needs, product approvals, risk mitigation for new products, consumers need for longevity, agentic AI to connect consumers, payors and providers for seamless services
What may go right: Consumer demand, reduced loss ratios, AI fraud detecting agents

Health Retail

Anti-digital trend is catching up with consumers expecting analogic human to human touch for consuming healthcare products and services in cross-domain settings which is now perceived aspirational and desirable. Many digital business models need to tweak their phydigital presence mix. Its back to innovative traditional health retail settings.

2025 Outlook: Hot

What may go wrong: failing to provide the human to human touch points, talent for new age health retail settings, anti-digital pivoting, wrong business model assumptions
What may go right: exits in failed business models, profitability focus, phydigital presence

Wellness

The past wellness definition is no longer relevant. New age ‘Gen-Z’ed wellness business models and innovation is emerging which brings in the cross-domain experiential products and services. Redefinition of wellness is the key and will show case the future winners. These innovations will fuel India’s new age wellness tourism too.

2024 Outlook: Hot

What may go wrong: regulation, talent and skills in cross domain products and services, micro market segmentation, faster beta testing, new mass market business models, spurious social media channels, fake outcome/claims
What may go right: Gen Z micro segmentation, wearables, biosensors, newer phydigital formats

Alternative Therapies

Redefined by cross-domain influences, emerging tech, wearables, biosensors, cutting-edge innovation in life sciences with other domains fueled by GenZ experimentation with new biohacking and health fascism expressions. It is going to be the next destination of value care in healthcare emerging from real need and experience of consumers for Do It For Me (DIFM) healthcare.

2025 Outlook: Hot

What’s going wrong: regulations, consumer education and confidence, clinical research, new product development, new mass market business models, repeat sales, spurious social media channels, fake outcome/claims, wrong Gen Z role models, developing phydigital formats
What may go right: discretionary consumer spending, newer cross-vertical innovative business models, mainstream complementary treatment, wearables, biosensors

Moving Forward

2025 will be a pivoting year for mankind, healthcare and investing as AI for All is not All.

Happy investing and stay strong!

Media Coverage

M&A, Buyouts in Healthcare to Remain Coverage in VC Circle

2025 India Healthcare and LifeSciences Investment Outlook Coverage in Express Pharma Feb 2025

Rebooting Age: Long-Living India

Rebooting Age : Long-living India

Podcast

QuoteUnQuote with KK and Dr. Deepak Kumar Saini, Convener, Longevity India and Professor, Dept. of Developmental Biology & Genetics Indian Institute of Science (IISC), discuss Bet #3 on anti-ageing tech and products that is going to be a major trend in the next 5 years. Why is it so?

As 50s is the new 30s now. Present Genx and seniors would like to reverse age or age slowly. By 2047, over 300 million Indian would be Senior Citizens and our dependency ratio will be around 40%. Indian would like to extend their lifespan 20% to 50%. But the trick here is to ensure that the end of life after prolonged life is a quick process rather than a prolonged decline.

New Healthcare Bills in Parliament in Monsoon Session 2023

Background

The Covid Pandemic exposed some of the short comings and lacunae some of the Acts and Bills that have been enacted in India to regulate the healthcare and lifesciences industry. You may be surprised that some of these regulations pre-date the pre-independence British Era Regulations in this country. While healthcare and lifesciences products, services and professionals have progressed significantly over the last 75 years since Independence their regulations from the British Era hampered the progress. Six bills are being introduced are expected to be passed in this ongoing session of Parliament which commenced on July 20, 2023 and will be in session till August 11, 2023. These include:

Drugs, Medical Devices and Cosmetics Bill, 2023;
National Dental Commission Bill, 2023;
National Nursing and Midwifery Commission Bill, 2023;
Biological Diversity (Amendment) Bill, 2022;
Forest (Conservation) Amendment Bill, 2023; and
DNA Technology Bill (Use and Application) Bill, 2023

Let’s understand some of the Bills are being introduced directly by the Ministry of Health and Family Welfare while others are being introduced by other Ministries but have an impact on healthcare and lifesciences industry indirectly. Let’s quickly understand what these Bills are going to be enacted for.

The Drugs, Medical Devices and Cosmetics Bill 2023

This Bill seeks to regulate the import, manufacture, distribution and sale of drugs, medical devices and cosmetics. The focus of this bill is to ensure the medicine and medical devices quality, safety, efficacy, performance and clinical trials of new drugs and medical device. Beside, the Bill seeks clinical performance evaluation of new in-vitro diagnostic medical devices including Ayush medicine, medical devices and cosmetics with the objective of the highest possible regulatory standards, ensure a transparent regulatory regime and to repeal the archaic Drugs and Cosmetics Act, 1940. We do remember what was going on during the pandemic to fast track the approval of Pfizer and other companies vaccines in India without any clinical trials and data on Indians. Hopefully, this Bill will plug some of those loopholes that were being exploited by some of the multinational pharma companies to push their products into India during the Covid pandemic.

The National Dental Bill 2023

This Bill repeals the Dentists Act 1948. The proposes to set up a National Dental Commission (NMC) to regulate dental education and the profession in the country. It also seeks to make dental education affordable and raise its standards, and make quality oral healthcare accessible.

The National Nursing and Midwifery Commission Bill 2023

This Bill seeks to set up a National Nursing and Midwifery Commission (NNMC) and to repeal the Indian Nursing Council Act 1947. The Indian Nursing Council Act, 1947 is an act of the Indian parliament that regulates the nursing profession in India and was introduced by the Ministry of Health and Family Welfare in India.

The Drugs, Medical Devices and Cosmetics Bill 2023, The National Nursing and Midwifery Commission Bill 2023 and The National Dental Bill 2023 was introduced by the current minister of Health and Family Welfare, Mansukh Mandaviya.

The National Research Foundation Bill 2023

This Bill seeks to establish a National Research Foundation and repeal the SERB which is the Science and Engineering Research Board Act, 2008. The Science and Engineering Research Board Act, 2008 is an act of the Indian parliament that provides for the constitution of a Science and Engineering Research Board to support basic research in science and engineering.

The Science and Engineering Research Board Act, 2008 falls under the Ministry of Science and Technology in India.

The Biological Diversity (Amendment) Bill 2022

This was reported by the Joint Committee was introduced on December 16, 2021. The amendment report of the joint committee was presented to both the houses of Parliament which has proposed for consideration and passing. This Bill proposes to protect some of the plant species that would enable protection and development for Ayurveda.

The Forest (Conservation) Amendment Bill 2023

The controversial bill amends the Biological Diversity Act, 2002 to simplify compliance requirements for domestic companies. It also removes research and bio-survey activities from the purview of benefit sharing requirements. The bill also decriminalises all offences under the Act. Among several criticisms of the Bill was that it promotes ‘ease of doing business’ and would exempt users of codified traditional knowledge and Ayurveda, Yoga and Naturopathy, Unani, Siddha, and Homoeopathy (AYUSH) practitioners from sharing benefits with local communities.

Environment Minister Bhupendra Yadav will be introducing the Bill.

The DNA Technology Bill (Use and Application) Regulation

In the case this Bill which was introduced in the Parliament on July 8, 2019 is seen to have an issue. This is despite the report of the standing committee on Science and Technology, Environment, Forests and Climate Change was laid on the table of Lok Sabha on February 2021 the motion proposed was for withdrawal.

The DNA Technology Bill (Use and Application) regulation is a bill that seeks to regulate the use and application of DNA technology for establishing the identity of missing persons, victims, offenders and unknown deceased persons.

The above three bills is being tabled in the Parliament by the current Minister of Science and Technology, Dr. Jitendra Singh

A Tale of Two Medical Systems: Revolution Ahead?

Background

The current spat between the Indian Medical Association (IMA) and Baba Ramdev of Patanjali is like a modern version of Charles Dickens’ famous novel A Tale of Two Cities, that led to the French Revolution. The Federation of Resident Doctors’ Association (FORDA) has decided to execute a Black Day on the 1st of June against the controversial statements made by Baba Ramdev against Allopathy and the video shared by him on Twitter. These activities by the allopaths are only goes on to strengthen the value proposition of Alternative Therapies and Indian Traditional Medicine in the minds of the consumer and view IMA and the Allopaths with suspect. The louder the decibel in media the faster would be the Medical Revolution against Allopathy.

Having led the world’s first Integrative Medicine Partnership at the Institute of Ayurveda and Integrative Medicine (IAIM) and served their Advisory Board, I would like to request both sides to set aside their differences and work towards delivering innovative integrative solutions between the two systems for the consumers before it is too late that the consumers bring about a Medical Systems Revolution. Here are some of the points and issues that I would like to lay down for the jury of the consumers to judge and adjudicate.

Investor Perspective: Larger Flow of Investments in Indian Alternative Therapies

Investors and companies invest in opportunities where they see money and value proposition for the consumer’s needs. Let’s understand from the consumers point of view the world over which is becoming more and more skeptic of the allopathic system and their preference towards Indian Traditional Medicine or Alternative Therapies and Medicine for treatment and wellness. Our annual Healthcare and Sciences Heatmap 2021 Investment Heat Map | Kapil Khandelwal (KK) every year is measuring the investment in different sectors including Alternative Therapies. Our conclusion is that Indian Alternative Therapies and Medicine have been gaining wider consumer acceptance and affirmation leading to increased investment activities. Apart from the shift from Allopathy towards Some of the key drivers for investment in this sector are:

Economic growth and rising incomes
Rising per capita expenditures on healthcare products
Low cost of production
Improvements in the distribution network
Increase in accessibility in both urban and rural regions
Awareness programs and subsidies
Rise in non-communicable and chronic diseases

It’s not Baba alone who is the key enemy of the allopaths As per our analysis over 60 corporate groups, pharma and consumer companies, including Multinational Companies (MNCs) have diversified into Indian Alternative Therapies and Medicines with an overall investment of over INR 80000 crores. Moreover, as a boost to this sector, the government recently introduced an economic stimulus package under the Atmanirbhar Bharat and has allotted INR 4,000 crore to the sector for promotion of herbal cultivation. The move aims to cover 10 lakh hectares (24.7 lakh acres) under herbal cultivation over a period of two years

Defamations Cannot Muffle Consumer’s Choice

Nearly 75 per cent of Indian households already use some form of Ayurveda to treat a variety of problems. The writing is on the wall for Allopathy during the current Covid Pandemic, when those who were the forbearers of medical treatment had no answers to treat Covid and the consumers themselves had to search for home made solutions to build immunity and treat mild forms of the infections themselves. Rather than take the prescribed Allopath Doctor’s prescription of artificial vitamins, zinc and tablets, etc. consumers preferred gilroy, kali mirchi, methi, nimbu pani, turmeric, kada, etc. Where was IMA hiding in 2020 with a mass campaign to debunk all these stuff that the consumers were ingesting based on Indian Alternative Therapies and Medicines. I am sure with the current spat between the Baba and IMA allopaths, pharmaceutical companies, doctors and others seem to fear that their dominance is at stake is very apparent.

Indian Alternative Therapies and Medicine are Learning from The Chinese Traditional Medicine

Indian Traditional Medicine and Chinese Traditional Medicine are equally older than Allopathy. However, Chinese export over 5 times more in value their traditional medicines to the world than the Indians. The Chinese were able to lead this sector globally by publishing and sponsoring enough research on quality, effectiveness and safety of their traditional medicine. Moreover they were able to invest aggressively in research in combining their traditional medicine with western medicines into integrative medicine. Why is there no spat between Chinese and the large pharma companies of the West?

India is learning from the Chinese catching up by investing heavily on:

Product innovation is the core to the healthcare solutions that consumers are seeking against allopathic medicine
Study Ayurveda and Alternative Therapies by using the methods and means of western medicine. (As a side note: I know for sure that the same Baba recruited one of my ex-colleagues who was from allopathic drug discovery having worked in US and India to set this up at his Patanjali Research. I am sure he has some aces up his sleeve when he is challenging IMA in the courts rather than just tendering an apology.)
Innovate the basic theory of Indian Alternative Therapies. Different from the western medicine which starts from the molecular biology, Ayurveda is researched and developed based on systematic biology of Kafa, Wada, Pitta. Clinical trials and research is strengthening this potential
Big Data solutions into health informatics to empirically proving where Allopathy stops and Ayurveda starts. At IAIM, there is a large initiative to collect data to prove what limits Allopathy and where Ayurveda benefits the consumer.
Integrating genetics with the systematic biology of Ayurveda leveraging the big data. Apart from the phenotype, genotype and other information is strengthening innovation in the products.

So, my concluding comment on this is spat between Ayurveda and Allopathy is that it’s a lose-lose for both not just in India but internationally giving the Chinese Traditional Medicine a chance to grow its pie internationally. The win-win solution for both the sides is not to prove who is right or wrong on their claims and counter claims and defame both the systems of Medicine in India but to work out an integrative medicine solution between the two. Else we are heading down to the wire on a medical revolution like the Tale of Two Cities dictated by the consumers choice and preferences.