2025 Healthcare and Life Sciences Investment Outlook

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
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:

2025 India Healthcare and LifeSciences Investment Heat Map
2025 India Healthcare and LifeSciences Investment Heat Map

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

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

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

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. 

Where Are We Going Wrong with Unified Health Interface (UHI) – the UPI for Healthcare?

Where Are We Going Wrong with Universal Health Initiative (UHI)?

Introduction

In 2020, I wrote a blog titled From Telegraph Road to US$50 Billion Digital Health Silk Road Digital Health Silk Road Archives | Kapil Khandelwal KK celebrating the announcement of the National Digital Health Mission (NDHM) under the National Health Authority (NHA). We had worked out the direct and indirect impaction to the Indian economy that such an initiative will result. Over the next few years, the turn of events have led the country to not move forward on such a huge initiative for the healthcare of people of India. Let’s look at the turn of events leading up to the recent development and the way forward from here.

Key Developments in the Journey of Developing our Universal Health Initiative (UHI)

‘National Health Stack – Strategy and Approach’

In 2018, NITI Aayog released a document setting out the building blocks of the National Health Stack as ‘common public goods’ which are essential for an implementation of digital health initiatives in India. The key components described in the National Health Stack were national health electronic registries, claims platform, federated personal health records framework, national health analytics platform, and other horizontal components.

National Digital Health Blueprint (NDHB).

In 2019, Ministry of Health and Family Welfare (MoHFW) released the National Digital Health Blueprint (NDHB). The need for creating a framework for the evolution of a ‘National Digital Health Ecosystem’ (NDHE) – an ecosystem and not a system, was recognized in the NDHB. The NDHB lists out principles, building blocks, applications and digital services, standards, institutional frameworks etc, to create such an ecosystem.

National Telemedicine Guidelines

During Covid, the Medical Council of India (MCI) quickly released the National Telemedicine Guildlines to enable tele consultations so that limited capacity of the physicians is utilised for remote consultations during the pandemic and lockdowns.

Consultation Paper on Unified Health Interface (UHI)

In March 2021, MoHFW released a consultation paper on Unified Health Interface (UHI) to replicate its digital-payment success in healthcare. Taking cues from the Unified Payments Interface (UPI), it set out to establish a similar system for healthcare inclusion and universal health for the people on a ‘Bharat Stack’ for Healthcare. I am sure many of the tech industry bodies such as Nasscom, iSpirit and CII and FICCI would also have been consulted in framing the Consultation Paper.

Current Status

iSpirit, Indian tech industry body was appointed by National Health Authority (NHA) to lead the development of UHI. There have been delays in operationalizing the UHI and recent media reports state that key disagreement between the NHA and iSpirt on the nature of the UHI network-and iSpirit walking away from the project.

Why Did UHI not take Off?

iSpirit and Media View Points

There is a long format article from Ken that has been doing rounds and my talks with some of the Healthtech and other VC investors interested in this initiative have been summarized here:

  • Limited use of iSpirit partners for building components
  • Rationale of iSpirit partners that were short-listed for pilot and those left out for the wider roll out in the next stage
  • Conflict of interest between the iSpirit partners shortlisted that would push their product/components into the UHI pilot making it not a fully open system
  • Lack of openness between the iSpirit and NHA on the development and roadmap for wider participation of healthcare industry players
  • Slippage of deadlines for the teleconsultation solution multiple times drawing the ire of NHA
  • Self-doubts within iSpirit on the future success of the pilot and the eventual scale of UHI
  • iSpirits experience with other non-healthcare solutions roll-outs on the way forward in the roll out of UHI to the nation which is not true for healthcare as compared to fintech, social commerce and other digital solutions

My Views on Current UHI’s State

Let me tackle the lack of understanding of the reality of the Indian healthcare system and how it is evolving in the future for the UHI to succeed. These are some of the points that I have made in the past in various industry forum presentations, my articles and blogs. Then I will address the way forward from here for UHI to succeed

India’s Scale in UHI will be an Aggregation of its Diversity of People – The Markers for Healthcare Delivery

Based on my experience of rolling out the 104 and 108 helplines in late 2000s, for any solution to be successful, especially the teleconsultation that iSpirit and NHA were developing, it has to build for the different languages and dialects prevalent not only in a region of a state, but across states due to floating population. As recently as covid pandemic, when we were rolling out CovidBots for triage on the 104 for a few states, we have realized that nothing has changed in the last 20 years in India. The figure below provides the language diversity for which we will need to implement not a one product fits all under UHI.

India Diversity in Numbers – Genetio-Lingustic Segmentation
India Diversity in Numbers – Genetio-Lingustic Segmentation

With the best of the cloud services, India has a limitation of 23 languages being provided with voice translation capabilities.

What Scale are we talking of?

Based on our population genetic, epidemiological, chronic disease burden, I had released this state-wise risk map of India in 2010. This show that we have around 50 million households which have high-risk burden. This is twice as big as the population of USA. This is expected to touch over USD 150 bn of spend not just on curative but preventive care.

What is the scale?
What is the scale?

So what is the scale we are talking of? Is this not sizeable according to iSpirit? How does this compare with the subscribers are using UPI? As of July 2021, there were around 130 million monthly active subscribers on UPI after 5 years of its launch. As per industry estimates if I recall, the digital health services teleconsultations peaked during Covid lockdown and were around 100 million monthly active subscribers/teleconsultations consultations. This is even before the launch of teleconsultations module of UHI. Can you imagine the multiplier effect once it goes mainstream?

Why Not Partner with Nasscom’s Tech Services Companies?

On the issue of openness between iSpirit and NHA on the development and roadmap for wider participation of healthcare industry players, my take is that iSpirit’s objective is to promote product players from India. But, I must remind that large IT services players like Wipro, Infosys, Cognizant, TCS, IBM, Tech Mahindra, etc who have been building point-solutions for some of the leading healthcare players and governments globally for over twenty years. Not inviting and leveraging these partners from Nasscom is also one of the reasons for failure of UHI

Learning from Past Mega Global Healthtech Product Failures

I have written in the past on why global players with deep pockets like Google, Microsoft, IBM, etc have failed on their healthcare initiatives. National Digital Health Archives | Kapil Khandelwal KK Haven’t we any learnings from such mega failures?

Why Did Google Health Fail
Why Did Google Health Fail

Digital Health Penetration Across States is Not Uniform Nor is State-wise Regulations

In our 2021, State Healthcare Heat Map 2021 States Heat Map | Kapil Khandelwal KK, the first of its kind report for which are the hottest states to invest in healthcare, we have covered factors like Penetration of Digital Health. It is very clear that UHI to be successful, it is not going piecemeal staggered solutions go-live, but a big-bang all UHI solutions go-live in the states with highest digital health penetration. Moreover, have we not learnt lessons on how each of the states managed the delivery of Covid Care Sustainability Of Digital Health | Kapil Khandelwal KK as healthcare is a state subject. Have we not forgotten that West Bengal is not there for running the Ayushman Bharat. Nor does it run the National Health Emergency Ambulance number 108. Assuming, even if UHI would have gone live, there would be another layer of customisation that UHI would have to roll out for each of the states where the healthcare is delivered. Different states are at different maturity of implementation of various medical criminal code and consumer protection. Such state regulations and code cannot be circumvented by one EULA of the UHI and the modules. We are not transferring money like UPI, we are managing health of the people where there are risks of lives.

2021 States Investment Heat Map
2021 States Investment Heat Map

Start with the Building Blocks

Post Covid, a lot has changed. Since UHI wanted to start with teleconsultations, can we even get the ICD-11 codes live in India so that we are up to international standards? Since outpatient consultations/teleconsultations are predominantly out of pocket spend, there is least incentive for the care giver on the street to fill up the forms and ICD codes. With ICD coding in the UHI, AI tools at the back end would be able to assist not only the care givers but also the consumers, the other ancillary benefits of coding would follow.

In Conclusion

Setting aside the differences, it is clear that UHI’s scale and opportunity is even bigger than UPI’s and its impact on the people of India once it is fully implemented and evangalised by each of the states of India. Comparing success of UPI to UHI will be a totally wrong starting point. UHI is like the GST (GST has its own set of issues) with each state having its say in the GST Counsil. Let us reenergize the UHI with bringing in the States and Nasscom players into the solution to make it more viable and successful.    

Budget 2022: When is Healthcare’s Amrit Kaal Coming?

Budget 2022

Preamble

On 1 February 2022, our Hon. Finance Minister presented her fourth budget in the Parliament and introduced the “Amrit Kaal” in Point 4 of her speech, “we are marking Azadi ka Amrit Mahotsav, and have entered into Amrit Kaal, the 25-year-long leadup to India@100. Hon’ble Prime Minister in his Independence Day address had set-out the vision for India@100.”

Point 5 of the Budget Speech outlined the vision for Amrit Kaal, “By achieving certain goals during the Amrit Kaal, the government aims to attain the vision. They are:

  • Complementing the macro-economic level growth focus with a micro-economic level all-inclusive welfare focus,
  • Promoting digital economy & fintech, technology enabled development, energy transition, and climate action, and
  • Relying on virtuous cycle starting from private investment with public capital investment helping to crowd-in private investment.

The Finance Minister has envisioned to develop ‘sunrise opportunities’ such as artificial intelligence, genomics, and pharmaceuticals to assist sustainable development and modernise the country. However, this is more on the supply side industrial development. But the core issue of healthcare infrastructure is not addressed. Envisioning the Indian population which we would like to be a healthy one by 2047 when we enter India@100. I believe that Budget 2022 missed out a huge opportunity in envisioning Healthcare 2047! Here are my reasons.

Current Undergoing Transformation in Healthcare

The country has undergone a tough time during the pandemic. The Government has played its enabling role in ensuring the supply chain disruptions with China does not lead into a health crisis of sorts. On the other hand, the funding of Covid-Vaccine and immunization has ensured that the country emerges quickly into an endemic phase of Covid pandemic. While this was going on, there was strengthening and upgrade of the digital health infrastructure. The pandemic has also taught lessons to the private healthcare delivery ecosystem to restructure their business models and ensure that there is a push toward lower costs healthcare delivery models. These transformations have demonstrated India’s resilience in its healthcare systems to face emergency situations like the current pandemic.  

India’s Amrit Kaal’s Population Demographics

As the chart below demonstrates that India’s population by 2047 will be shifting towards middle age bulge. Over 300 million (~19% of the total population) will be senior citizens by 2047. Our dependency ratio will be around 40%. These 40% will be in the tax paying bracket which will provide the then Finance Minister in 2047 the revenues to spend for different welfare programs including healthcare.

India's Population Pyramid Shifts to 2047
India’s Population Pyramid Shifts to 2047

Lessons from Elsewhere in the World

In early 2000, I was involved in restructuring the healthcare systems of Saudi Aramco. Being the largest oil producer in the world, the company had been underfunding the pension and healthcare benefits of their employees who were going to be retiring in the future. The financing of these healthcare benefits created a financial crisis of sorts which have to be funded.

USA has also being facing such challenges when its baby boomers have now become unproductive senior citizens and their total healthcare bill is currently 18% of their GDP.

Vision for India’s Amrit Kaal Healthcare Delivery to Avoid Maha Kaal

As per current estimates, our country requires USD 400 billion of investments in healthcare infrastructure on our current demography to meet the global norms. There are no allocation in the current National Infrastructure Pipeline (NIP) funding for healthcare. Therefore much of the investment will be private sector driven in the future for healthcare infrastructure.

Such experiences elsewhere in the world remind me that our Amrit Kaal in 2047 does not end up as Maha Kaal of our Amrit Kaal where we would have to look up to Indian Gods who were invoked to end the situation. There have been several demands in the last few budget to accord infrastructure status to the healthcare industry. The current budgetary allocations to healthcare all though increasing has not been sufficient to build capital formation for healthcare infrastructure in the country. From the current 2.5% of GDP, there needs to broaden the spend on healthcare. We need the real picture of the input and outputs in healthcare. With the current GST regime of zero tax on healthcare services, we are not able to gather the real value of healthcare in the country and healthcare should be under minimum GST slab so that there is pass through benefits of the inputs that are set off. This will lead to a lot of transparency and provide real hard estimates of healthcare spend of the country.

Assuming by 2047 our dependency ratio will be lower than today. Which means that the total taxpaying population in 2047 may be same as today or even lower. There needs to be a plan to ensure that current taxes from the current population who will become senior citizens by 2047 will be underfunded like in the examples that I have mentioned below, leading into a budgetary crisis.

In all earnest, given the current constraints the current budget 2022 could do so much for healthcare. But now that the Amrit Kaal is out of the bag, there needs adequate focus to healthcare to avoid healthcare Maha Kaal in 2047 when we enter India@100.

The Oracle Returns

oracle-and-cerner

Background

On December 20, 2021, Oracle Corporation and Cerner Corporation jointly announced an agreement for Oracle to acquire Cerner through an all-cash tender offer for $95.00 per share, or approximately $28.3 billion in equity value. Cerner is a leading provider of digital information systems used within hospitals and health systems to enable medical professionals to deliver better healthcare to individual patients and communities.

My Tryst with Cerner and Oracle Along with My Journey

Cerner has been a leader in the health information systems since it was founded as PGI & Associates (after its three founders Patterson, Gorup and Illig) who quit their jobs from Accenture (then Arthur Andersen) in 1980s.  I had the chance to work closely with Neil Patterson when Cerner expanded outside of US in Gulf region with the implementation at Saudi Aramco (now Saudi Aramco-John Hopkins) in early 2000s.

During the same time, I had worked with Oracle leadership in the Gulf region on several roll outs in the Government sector.

In early 2000s, Saudi Aramco, world’s largest producer of crude oil was migrating from mainframe environment and had embarked on world’s largest big bang implementation of SAP and corporate performance improvement program in the world. To migrate and manage its in-house healthcare delivery to its employees, contractors and their dependents in Kingdom of Saudi Arabia (KSA) and overseas, the choice was between SAP Healthcare and Cerner. Neil Patterson, the co-founder of Cerner made multiple visits to Dharan, the headquarters of Saudi Aramco to pitch and win the first major implementation overseas. That’s was the beginning of my personal friendship with Neil. As Neil would visit Dharan on quarterly steering body meetings, we would share a quiet dinner and discuss his vision about Cerner and his international growth initiatives before he boarded his private jet to Kansas City. Over the years, Cerner witnessed major growth outside of the US, including some inorganic growth acquisitions like Siemens HMIS and starting their offshore development centers in Bangalore, the largest base after Kansas City. Unfortunately, Neil succumbed to cancer in 2017. I lost a fantastic friend and mentor forever who had guided me in my career at different points in time.

While at KPMG Consulting in the Gulf, I made several bids with Oracle to the various governments in the Gulf. Oracle was great with their database and their product architecture; their major issue was that they lack clinical prowess to manage healthcare either in hospitals or with state healthcare. It was around this time that I was associated with Sam Rao who was Head of Business Development and Large Deals at Oracle. Although, he understood healthcare, but the product deficiencies of Oracle was just not a great fit for running eHealthcare initiatives for the population of GCC countries. Later Sam and I collaborated to start out XY Clinics (an innovative nutri-genomics and diagnostics venture) in GCC and India and had a great run and exit

Flash forward: Many of Cerner and Oracle leadership in the US and Rest of the world either worked with me or had been a partner with me on some of the healthcare initiatives. One of them being Dr John Glassier who I also invited on my podcast QuoteUnQuote With KK.  

https://open.spotify.com/episode/5np4XQN473NTia8xeHcvyF?si=WpSetp-xT-6OQ6abID-LZg

How Cerner Acquisition Helps Oracle and Vice-versa

Oracle has always had a weak presence in the clinical healthcare information management system. Although it has a great rooster of clients not only in the us but around the world. A mega-29 billion dollar deal will signal that Larry Ellison, Oracle’s founder is serious about getting a big leap into the healthcare sector once again. Its earlier acquisitions in healthcare were small and somewhere did not change Oracle in its ways of doing business with healthcare clients. Therefore Oracle Returns. In the post-pandemic era, as healthcare providers and Government healthcare systems, step up to spend more on their digital and clinical transformation, Oracle-Cerner would definitely be a very strong option. I am informed from my ex-colleagues and industry insiders that Cerner will be kept as a dedicated business unit within Oracle. This would be a very positive development both for Cerner and Oracle as independence of Cerner in the larger Oracle would be a critical success factor for this acquisition. As for Cerner, Neil vision and dream of taking Cerner globally as a leading healthcare information systems player will come true posthumously.

Wishing Oracle and Cerner All the Very Best in their combined journey!

That’s Lazer Sharp Vision, Literally!

That’s Lazer Sharp Vision, Literally!

Background

Perfect human sight is the greatest gift that a man can get. Years ago, I remember on one of my Rotary Eye Camps in a village near Bangalore, an old lady came to the Eye Camp with the help of her assistant holding her and guiding her to take the steps due to poor vision. The doctors checked her eyes and gave her a pair of spectacles. On wearing the spectacles the lady was overjoyed and filled with tears. She could see perfectly which she had not for years. Her dependency on others and quality of life improved immediately. This incident bought emotional tears to all the people around her. Like the old lady, there are millions of Indians who have poor quality of life due to lack of proper sight as they cannot afford proper spectacles to correct their sight. I seem to be amongst the more fortunate ones who can afford the luxury of sight correction.

My Issues with Hypermetropia, Myopia and Presbyopia

As far as I am concerned, I have always tried to maintain my eyes inspite of long-distance sight (hypermetropia) correction from my teenage years. As I aged (presbyopia), the complexity of near-distance (myopia) reading and long-distance sight have emerged. My lenses that Essilor fitted to combine both of these into one lens in a spectacle resulted in near catastrophe while driving on the highway. As a result I preferred to maintain two sets of spectacle for hypermetropia and myopia. With presbyopia, I have to fit new lenses as the vision for hypermetropia and myopia keep changing. This means a new set of spectacles every year or so to maintain proper vision.

My Experience This Time Getting Vision Correction on Digital

Every year, I visit the optometrist around the festive season to get my vision tested and procure new set of spectacles and lenses as per the advise of the optometrist. Given the lock down situation, I thought of procuring the spectacles through the digital online platforms like Myntra, LensKart, Titan Eye and Amazon, etc rather than shopping for at the physical optician stores. I wanted to try out Lenskart as my daughter had bought two pairs of spectacle recently and was a very loyal customer of them. While all the catalogues of Myntra, Titan Eye and Amazon offered just the spectacles, Lenskart offer the spectacles and a zero-powered bluecut and anti-glare computer lenses fitted along with it. Similar spectacle designs on platforms other than Lenskart turned out to be cheaper as Lenskart was loading the price to the lenses additional. I needed powered lenses to be fitted at an additional cost and throw away the lenses already fitted with Lenskart spectacles.  

My WhatsApp Interaction and Talk with Amit Chaudhary of Lenskart

Pissed off with the experience, I WhatsApp Amit Chaudhary, Founder of Lenskart. That’s when I realized the business model of Lenskart versus other digital and brick and mortar opticians out there. Here are some of the excerpts of my telephonic conversation with him

  • Lenskart is the largest AR eyewear venture in the world
  • Over USD 150 mil of eyewear is sold by them through their platform and lenses are manufactured and fitted through their fully-automated robotic facility
  • AR technology and fully-integrated robotic manufacturing facility makes them the cheapest provider of eye wear in the world due to the scale
  • They are targeting a total addressable market of around 1.5 billion eyes in India
  • They are therefore integrated to provide the full solution of spectacles and lenses as operationally there are challenges of product warranty when customers buy spectacles from them and fit the lenses outside at a local opticians.

There is a stand out quotes that while talking with Amit that summarized their business model

“We are the Maruti of the eye wear business. Customers like you form the top 10% who are the Ferrari’s who would like spectacles not only for functional, but for esteem value”

I like the lazer sharp vision of Amit. As entrepreneurs like him who raise lot of VC and PE capital at some time want to dominate and move away from their core business model and value proposition in the pressure for growth, profitability and valuations.

Although Amit offered to service me as an exception, but that is not core to their way of working. Consumers sometimes miss out on this and crib and bad mouth the start ups on social media, missing out how these start ups are making the world better by offering sight to millions by being cheaper, better and faster. Remined me of the old lady in tears who could see properly and so did I on Amit’s perspective.

Kudos to such start ups which are bringing in technology and production techniques to reach scale!

Yeh Hai Bombay Meri Jaan, Saab Hain Covid Se Paresaan!

Mumbai Covid Second Wave

Preamble

Earlier in the last decade I was part of the Healthcare Committee of Bombay First which was assisting the Maharashtra Government in the Mumbai Masterplan 2045. One of the key concerns and recommendations made by the Committee was building the healthcare infrastructure for the city, Mumbai lags behind in beds per 1000 population with several key peer Indian cities such as Gurgaon, Delhi, Chennai, Hyderabad and Bangalore. Alongside the shortfalls in hospital beds, there is also a shortage of healthcare professionals, equipment and infrastructure needed at various levels in the healthcare delivery supply chain. The second wave of Covid in the city has once again proved that the healthcare delivery to the Mumbai residents is again in short supply, be it beds, healthcare workers or vaccines. With the crisis looming large, the city is on the brink of a long second lockdown. Without delving into the politics and finger pointing, I want to point out the gaps.    

The Gaps in Healthcare Delivery and Covid Response in the City

Hospital Beds Shortage in Skewed Distribution Geographically

In Early 2000s, Mumbai has around as per the Bombay First report, 24,984 beds. As per the recent Mumbai Municipality report, there are 24,039 beds in 2021 in Mumbai. In other words, hospital beds have actually reduced over the last 20 years in Mumbai. It is obvious that many nursing homes have shut down as the doctor/owner have found it lucrative to monetise their nursing homes to commercial real estate. As a result, Mumbai is amongst the worst cities in India with a bed to population ratio of 1.17 beds per 1000 (as against the WHO norm of 3 beds 1000). It was 1.63 beds per 1000 in 2000. Moreover, these beds have been unevenly distributed in Mumbai. South Mumbai has around three-fourths of the total beds in the city which was the case in 2000. This means as the city expands to the suburbs, no additional bed capacity has been augmented in the last 20 years in Mumbai.

Slide1
Map highlighting the Geographical Coverage of Prominent Hospitals in Mumbai

Second Covid Wave in Mumbai and Skew in Spread

As per the recent Mumbai Municipality Report on Covid, the highest increase of positive Covid Cases in the Western and Central Suburbs of the City in the last 7 days. (See the chart below). While the alarming rate of growth of covid positive cases in these wards would take less than 28 days to double the cases. As compared to 35 days as an average for Mumbai city. While the response to Covid is in the Western and Central Suburbs, the concentration of healthcare facilities is predominantly in South Mumbai. While this is leading to a lot to movement of people seeking admissions to hospitals for Covid treatment.

Slide2
Spread of Covid Positive Cases in Second Wave till 8 April 2021

Action Plan for the Future

The cost of real estate in Mumbai very prohibitive for private healthcare operators to set up greenfield hospitals unless there are regulations to incentivise them. Various recommendations provided by our Committee is not been implemented on the ground. The Covid Pandemic is a wake up call for the City administrators to buckle up and bit the bullet to accelerate healthcare infrastructure in the city by our planners for the future.         

Sustainability Heat Map of State-level Digital Health Initiatives in the New Normal in India

Preamble

The Covid Crisis has opened up many digital health initiatives by many State Governments as a crisis management initiative. Over 300 such initiatives were launched by various State Governments across India for management of Covid as part of their charter for health management. As we shift to the new normal, many of these efforts by the State Governments would either shut down or pivot into general health management initiatives. We caried out an exercise to create a sustainability index on whether they would continue or not.

Approach and Methodology

We carried out a nationwide survey on the Covid-based digital health initiatives. The information was collected through State Health Missions, State Health Department, their websites, doctors connect and various reports. Out of the 300 and more initiatives, we narrowed down to around 75 key initiatives across the States. An analysis of the functionality of these digital health initiatives by the State Governments can be categorized into eight broad categories. These are:

  1. Home Quarantine Tracking         
  2. Travel/Tracking
  3. Covid Chatbot  
  4. Covid Testing   
  5. Telemedicine   
  6. Drones/Robots/Surveillance/Tracking         
  7. Health Worker Management        
  8. Information/Fake News

These initiatives were accessed for their sustainability heat map on the following parameters:

  1. Digital applications
  2. Master data and architecture
  3. Pivotability
  4. New normal use cases
  5. Costs and capital for sustainability
  6. Management in the new normal
  7. Private sector partners
  8. Techno-commercial viability
  9. State regulatory issues
  10. Best practices for Covid management
  11. Others

State Covid Initiatives Sustainability Heat Map

Based on the analysis, we have drawn down a heat map as shown below:

image
Source: EquNev Capital Analysis

Our Conclusions

Based on our heat map, we see only 15% of the current applications that can sustain in the new normal. While we understand that these digital health initiatives were hastily drawn up in early-April 2020, the state health budgets and other issues to get these applications off the ground to create quick citizen impact, over the longer-term such digital health initiatives need to be thought through for a longer time frame as was discussed in my podcast The Promise of Digital Health: For Everyone, Everywhere. QuoteUnQuote with KK – Kapil Khandelwal (KK)

However, this time frame was a solid testing ground for how successful can digital health be in various states of India as healthcare is a state subject. Based on the information, Digital Health in India, holds promise.

From Telegraph Road to US$50 Billion Digital Health Silk Road

Digital Silk Road

Preamble

There have been very positive developments for Indian healthcare on the digital front. First, the Indian Telemedicine Guidelines and then the National Digital Health Mission (NDHM). From various think tanks and industry bodies there have been various numbers been project on the incremental value that these will create for the Indian economy. While it is wishful to conjecture the US$ 250 billion dollar impact, what hums in my mind is the Dire Straits famous 14-minutes “Telegraph Road” song. At that time, Mark Knopfler was reading the novel The Growth Of the Soil by the Nobel Prize winning Norwegian author Knut Hamsun and he was inspired to put the two together and write a song about the beginning of the development along Telegraph Road and the changes over the ensuing decades. Using the same analogy, the development of India’s Digital Health Silk Road is feasible on the back of the physical and human healthcare infrastructure. So let’s tune in to my song!

Song Intro – India’s State of Wild-Wild West Healthcare Underdevelopment

India is a country of paradoxes for healthcare infrastructure. India has 18% of world’s population. However, it has around 18% of world’s diseases burden which is increasing. To service this diseases burden, this increasing disease burden, India has only 2.4% of world’s land mass and needs approx 0.01% of world’s land usage for health and well-being purposes. On the clinical manpower supply, India has 1% of world’s lab techs, 9% of world’s health workers, 8% of world’s nurses and doctors. To level up India to the global average, the total investment is approx $460 billion now (165 countries in the world had a GDP of less than $460 billion in 2018). (see Tedx talks My Presentations – Kapil Khandelwal (KK) To address the country’s healthcare needs within the constraints of capital, land and clinical manpower, homegrown solutions are required. At per capita healthcare spend of INR 4116 (USD 55), India’s per capital spend is growing @ 22% pa. However, India is amongst the lowest 4 countries (ranked 129) in the world on healthcare spend as per Oxfam’s latest Commitment to Reducing Inequality Index 2020 at 4% of GDP (against the globally recommended 15% of GDP).

Song Pre-Chorus – Healthcare Gold Rush to the Wild West due to Covid

Let’s set the context under which there has been an accelerated push for healthcare digitization in India. The Great Covid Lockdown. Elective healthcare were down by 70% across the board due to lockdown and priority to Covid affected. The healthcare industry started rumbling and requesting Government to come out with a bail-out package of over INR 50000 crs. Doctors needed to restart their practice through work from home or anywhere. The decade-long deadlock on the telemedicine act between Medical Council of India (MCI) and the Ministry suddenly cleared. There was a mutual agreement to develop the telemedicine road and to regulate the gold rush road to telemedicine in India.

Song Verse – New Digital Health Regulations

The actual verse of the telemedicine regulations in India was announced by the Niti Aayog and the MCI. The Prime Minister in his verse of Independence Day speech also announced the National Digital Health Mission (NDHM). The draft verse of the digital health regulation was available for the general public to review and critique. This was the back drop to the crescendo of the industry chorus on the digital health in India and the opportunity it offered.

Song Chorus – Industry Estimates and Reports

With the regulatory verse out in the public, the industry voice chorus on the real impact to the Indian economy initiated. One industry report estimated the pace of digital healthcare can unlock USD 200 to 250 billion in next 10 years in terms of primary and secondary impact to the nation’s economic value. These value-creation in the march to the wild west will be on three key roads:

  • Road 1: From episodic care to wellness-oriented care
  • Road 2: From volume-based to value-based healthcare
  • Road 3: From siloed systems to streamlined processes

While such stratospheric estimates at a Concorde-neck supersonic speed of the digital health silk road to the Wild West is great for headlines for the chorus, let’s not fool ourselves with the history of what the retail (brick and mortar) and ecommerce underwent in the past decade which went super sonic with investments and valuations on digital retail commerce in India. I have been writing about various issues and roadblocks to digital health path in my various columns which are available at My Library – Kapil Khandelwal (KK)

Song Bridge/Solo – My Estimates on the Investments and On Ground Reality and Impact

For any song chorus there is also a bridge/solo that makes the real sense. Here is my view of the chorus. The last decade received around USD 500 million in different ventures of digital health which were cut-past healthcare business models of the West. The current technology spend on these is around USD 500 million per annum. For the USD 250 billion impact on the ground to be realized a straight forward deep healthtech investments of around 5% (around USD 12.5 billion) is to be right away with a gestational lag of around 3 years on a conservative 2x on valuations return and not on revenue growth. In other words, all the sum total of early stage VC money raised in 2019 globally will have to be directed to India and that too in healthtech. A tough ask and a pipe dream.

Let’s also focus on the available data sets which is the oil to run the digital health motorway in India that we currently have. Currently, India’s data sets on healthcare is of the Telegraph road era. These include information on radiology, EMR, labs, meds, monitoring, doctor exam, nurse observations, claims data, billing and transactions. This data set is available for the Bharat Stack 1 (the elite-12% of India’s population). The real driver for the growth is the Bharat Stack 2 (the next billion of India’s population) and 30-odd points of healthcare data (not under the current NDHM regulations) which will make the digital health silk road truly a reality. An incremental investments of USD 18 billion in deep tech ventures in next generation digital health ventures to create a true high-speed digital health motorway of the future.

Therefore to land the stratospheric Concorde of the chorus that were singing, we require a total of USD 30 billion of tech investments on the word go. Where is that sort of money? We still don’t know where this money raised will be invested and that is not the point we are belabouring. Taking that cue, we have been tracking around 150 healthtech ventures in our annual healthcare and life sciences investment heatmap on digital. We will need to create 10000s of ventures that can create the depth and width of healthcare apps for the next billion today!

Song Outro – The Rhythmic Orchestration of Capacity Creation in Physical and Digital Healthcare

While most songs orchestra fade and end abruptly, this India digital health silk road would need a different Outro to its song. On a conservative basis, we estimated that the overall India digital health silk road opportunity is valued conservatively at USD 50 billion as it currently stands with the different constraints in our physical and technology healthcare delivery system. This is on the back of three key multiplier effect on the Indian healthcare economy:

  1. Increasing per capita spend on health and well being of the next 1 billion population as disposable incomes goes up moving from the informal sector to formal sector in next 10 years
  2. Incremental 1/6th disease burden our population carries as compared to world due to the genomic make up and ageing population in next 10 years through alternative healthcare delivery models
  3. Emerging alternative digital healthcare delivery models that would play on the shortages in the physical delivery system as penetration and acceptance of mobile first delivery of healthcare services become mainstream and productivity of the clinical manpower is augmented by healthtech

Money for Nothing – Covid Vaccines for Free

Another Mark Knopfler hit which talks about the excesses of a rock star and the easy life it brings compared with real work. Between the Independence Day announcement and the Bihar elections manifesto announcement, there seems to be shift in the focus and the priorities it seems from our Rock Star Prime Minister. The Government would not have the funds to spend on the Digital Health Silk Road if it spends its budget on providing free Covid Vaccines to the masses.

Only time will tell how the orchestra and the song of the great India digital health gold rush will play out!

Excerpts of this blog published as an article in VC Circle: