Healthcare | 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.

Indexation and Canons of Taxation: Have We Learnt Anything from Angel Tax?

Preamble

In my Macroeconomics Course in College, I was introduced to the Canons of Taxation are principles that guide the design of a fair and efficient tax system. Adam Smith, in his book *The Wealth of Nations*, introduced four fundamental canons of taxation:

Equity: Taxes should be proportional to the taxpayer’s ability to pay. This means that individuals with higher incomes should pay more taxes than those with lower incomes.
Certainty: The tax amount, payment time, and method should be clear and certain to the taxpayer. This helps in planning and reduces the chances of arbitrary taxation.
Convenience: The tax system should be convenient for taxpayers to comply with. This includes the timing and method of tax payments.
Economy: The cost of collecting taxes should be minimal. The tax system should not be overly expensive to administer.

Modern economists have expanded these canons to include additional principles such as productivity, elasticity, simplicity, and diversity.

However many Governments around the world, including India do not follow these Canons of Taxation and make the taxation more complex rather than simplistic. From an investor point of view, the latest Budget for FY 2024-25 is one such instance where the Ministry of Finance has demonstrated one case of positive and one case of negative principles of canons of taxation. From an investor point of view, on the positive side, the Budget has abolished the Angel Tax and on the negative side, the Budget has abolished the indexation applied on Long-Term Capital Gains (LTCG) for computation of LTCG by reducing the LTCG rate from 20% with indexation to flat 12.5%. Let’s discuss this in detail.

Angel Tax Abolition – Positive Canon of Taxation

When late Finance Minister and President of India Pranob Mukherjee, introduced the Angel tax in 2012, the justification given was that it was to prevent money laundering through inflated valuations. However, most start ups are valued higher than fair market value. Most angel investor would value these angel investments looking at the future growth potential and at the time of investments, these start ups had no or low revenues and profits. It is but obvious that the valuation methodologies would be higher than the market value. The angel tax had several significant impacts on startups in India:

Valuation Challenges: Startups often faced difficulties in justifying their valuations to tax authorities, leading to disputes and potential tax liabilities.
Investor Hesitation: The tax created uncertainty and risk for angel investors, making them more cautious about investing in early-stage startups.
Cash Flow Issues: Startups had to allocate funds to cover potential tax liabilities, which could otherwise have been used for growth and development.
Administrative Burden: The process of proving fair market value and dealing with tax assessments added to the administrative burden on startups.
Stifling Innovation: The overall environment of uncertainty and additional financial strain could stifle innovation and discourage entrepreneurship.

With the abolition of the angel tax in 2024, the startup ecosystem is expected to benefit from increased investor confidence and a more supportive regulatory environment.

Conclusion

The Angel tax did not pass the Canons of Taxation test and met its stated objectives. After lobbying for many years it is now abolished.

Removal of Indexation on LTCG for Sale of Real Estate

In the current budget, the Finance Ministry has removed the indexation benefit for calculating long-term capital gain (LTCG) on non-financial assets (including property). It has also lowered the LTCG tax rate to 12.5% (from 20% previously). The government has clarified that the removal of indexation benefits will not be applicable to old properties held before 2001, which would continue to get indexation benefits. This move is unlikely to impact the end-users who sell their existing house and reinvest in a new house (LTCG is not applicable). However, it will impact investors who would sell their house (investment) and reinvest in other asset classes.

Now the statement coming from the Finance Secretary in the media is that the new LTCG tax regime is in favour of the taxpayer as it lowers the LTCG burden. However,

this is not the case. Let is analyse this in detail.

Indexation on LTCG

There is an adjustment to the cost of acquisition of real estate of offset the inflation. Since 2001 onwards is the time frame when the new LTCG tax regime will impact the taxation, the following chart shows the indexation with 2001-02 as 100.

Indexation for LTCG Since 2001-02 Till Date

Assuming that an investor bought the property in 2001-02 at INR 100, the indexation benefit will be that if sold in 2024-25 it will be valued at INR 363, that is a multiple of 3.63x and this will be the cost that will be deducted from the sale consideration for computation of LTCG on the profit on the sale of the property. Now this benefit has been removed and a flat rate of 12.5% of sale consideration. This change has its own pros and cons and debunks what the Finance Secretary talked to the media about the new LTCG tax regime. Let’s see the different scenarios and time frame and the tax burden under the two LTCG tax regime.

INR 100 Asset @ 5% pa Appreciation Illustration

Clearly, the investor pays more LTCG when the indexation benefit is removed with lower tax rate of 12.5%.

INR 100 Asset @ 10% pa Appreciation Illustration

The investor only gains to pay less tax if the property is held for 10 years and more and appreciates in value @10% pa. Therefore we can conclude that the impact on relatively shorter-term investments (<5 years) where market price growth is <10% p.a. is negative. Conversely, the impact of this new regime would be neutral/marginally beneficial for investments with longer holding period (>10 years) and where property price appreciation is at >10% p.a.

It’s a Bummer

As a healthcare real estate fund, the social infrastructure like hospitals do not appreciate > 10% pa. Also the investment and exit timeframe would be <5 years. This means that there is additional tax burden for the investors. However, we are not the only institutional investors who are impacted with this change in LTCG tax computation. The recent change in LTCG tax computation bring about many questions around the cannons of taxation and many more. These include:

Healthcare real estate in India is one of the most costliest in the world and hence its relative attractiveness reduces for international investors towards India due to the additional tax burden.
There should have been exceptions allowed for funds and institutional investors for their existing investments in property sector to allow for the projected returns. Any new investments could have been based on the new LTCG tax proposal. This will allow for certainty of gains and returns to the investors in their current investments.
There are doubts in the minds of the investors about the stability of the LTCG tax regime if they are tweaked in the name of lower tax burden which is totally not true.
The secondary sale of the property by investors may alter the exit process by the investors in terms of time and valuation to match the increased LTCG tax burden suddenly imposed under the new regime.
The real valuation of the property may be tweaked with cash in the transaction to lower the LTCG tax.
Other creative accounting practices may be introduced to capitalise on the property inflate their costs to offset the loss due to increased LTCG tax burden.

To conclude, the new LTCG tax regime on property is not a positive one and does meet the canons of taxation and is not going to meet its objectives like the abolished Angel Tax.

Bharatvarsh – Pilgrim Nation: The Land of Spiritual Wellness Travel

Bharatvarsh: The Destinations for Spiritual Wellness Journeys

Podcast

QuoteUnquote with KK and Dr Devdutt Patnaik, India’s top mythologist and author discusses on our bet #our Bet #22 on mythological/pilgrimage wellness/health that is going to be a major trend in the next 5 years from our 2024 India healthcare and lifesciences investment manifesto. Devdutt, clears the issues on Bharatvarsh, sprituality, spiritualism, the Great Indian Pilgrimage, destinations across Hindu, Jain, Buddhist followers, ancient practices and modern beliefs. He also discusses various emerging counter trends around non-traditional spirituality, conspirituality amongst the extreme rightists and wokes, fake narrative emerging out of AI and ChatGPT and how belief systems are being altered around practice of spirituality and religion.

Excerpts

What is Spirituality?

How is Religion Different from Spirituality?

How is Bharatvarsh defined by Politicians, Pilgrims and Vedas?

Are there Counter Trends to Spiritualism?

How do we address the Saviour Mindset?

Also Listen

The Mantra for Happiness

Veda, Weed and Yoga: Is it ‘Xeno’ to XYZ Gen?

GWI-Wellness Real Estate-2024

Global Wellness Trends - Trends in Spiritual and Numinous Moments in Architecture

Will Ayodhya Be The Mecca Of Medical Tourism? | Kapil Khandelwal KK

Mooring Around the Future of Chips in AI-dominated India

Podcast

QuoteUnquote with KK and Nitin Dahad, Tech Evangelist, Editor embedded.com, Writer

Also Watch

Raghu Panicker, CEO of Kaynes Semicon, gives us some background to the origins of the current semiconductor industry in India from the 1980s by two key figures: M.J Zarabi and Wally Rhines.

Hitesh Garg, India country manager for NXP Semiconductors, talks about key markets for NXP globally and in India, particularly automotive and industrial.

Satya Gupta, a veteran of the Indian electronics industry in India. He has several influential roles in the industry and in policymaking

Bhanupriya Krishna, founder and managing director of Perceptives Solutions, talks about the lack of talent for addressing the semiconductor manufacturing industry in India

Pradeep Vajram challenges the current thinking in India to develop chips and IP for India only, highlighting that scale is key for investors in Indian semiconductor startups

Also Read

India to Build Chip Manufacturing Ecosystem, Talent Pool - Nitin Dahad, EE Times

Emerging Resilience in the Semi Conductor Supply Chain

Emerging Resilience In The Semiconductor Supply Chain

2024 – India Healthcare and Life Sciences Investment Manifesto

2024 - India Healthcare and Life Sciences Investment Manifesto

TV Interview in ET NOW

Coverage in the Press

Express Pharma Q&A : These 40 bests would deliver $30 – $50 bn additional growth to healthcare sector by 2029

Express Healthcare Q&A

Business Standard : Anti-Ageing Tech Likely to Shape Heathcare Demand in Coming Years

Business Standard - Anti Ageing Tech Likely to Shape Heathcare Demand in Coming Years

2024 India Healthcare and Lifesciences Investment Heatmap

In 2024, the world will be as uncertain, if not more, as it was and anticipating what will happen next is an ever more challenging task for our Algorithms and our teams. Since 2013, our algorithms have been accurately predicting the investment heatmap in the healthcare and life sciences in India which were predicting with 95% accuracy on the sectoral investment cycle in India till the end of 2019. Since the Covid Pandemic in 2020 we lowered levels of prediction accuracy like we started back in 2013. The fake narratives and echo chambers that were peddled during the pandemic years of 2020-22, that vitiated our predictions during the pandemic years continues in for some other factors. 2023 was even more unpredictable in many ways. Our algos do not penetrate the terrorists, government intelligence and security networks and hence unable to consider events that playouts in the Middle East and impacting geopolitics, investments in Indian Healthcare and Life Sciences to some part of the investment flows from offshore. 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 2024 Heat Map.

2024: A Year of Geopolitics than Geo Economics

The biggest political event in India in 2024 will be the Lok Sabha General Elections. Hence H1 2024 will not see any major policy or budgetary directions to the sector till the new Government takes over in New Delhi by June 2024 and then presents its budget. For the first time, in the post pandemic era, almost all global funds, analysts and bankers have a unanimous consensus on India’s positive outlook for 2024, some even covering India as a separate chapter in their reports which was dedicated to China in their Asia Outlook till 2022. However, healthcare and life sciences sub sectors in India have its divergence to the overall India outlook for 2024. We have endeavored to bring out the deeper analysis and specifics out of the broad ‘India Positive’ Outlook for 2024 for the Healthcare and Life Sciences Sector in India.

The wave of optimism for 2024 in Indian healthcare and life sciences stems from the following:

The pace of digitization is now veering toward mainstream adoption of Generative Artificial Intelligence (AI) tools and solutions across that are being piloted.
New business models/incubation for investments are emerging (see out Future Bets in Healthcare) that will be cross-domain
The bills and laws introduced in the Parliament in the Session New Healthcare Bills 2023 Archives | Kapil Khandelwal KK are yet to shape bounce in investments.
Muted returns in the private markets will continue in 2024 as the winter of private investments continues in 2024. Let us understand that the best investments tend to occur during times when investment outlooks appear riskier, so the lower prices in many kinds of equity investments might well yield attractive returns over time.
Companies listed on the bourses have always underperformed the broader index in the last 2 general elections of 2014 and 2019 by -4.5 to -6.5%. We are expecting the elections results to be neutral this time on the Indian bourses. A few big names to IPO in 2024.
With one-third of India’s population now constituting Gen Alpha and Gen Z, the health and wellness aspirations of this cohort is the growing aspirational class that wants to live life post Covid-19 differently and different products and services will serve as the next growth opportunity.
The valuations have come back to realistic levels to the pre-covid levels for primary and secondary investments.
Debt and equity requirements have stabilised as the cash-crunch situation during the pandemic have ‘normalised’ and so are the return expectations. Both are negatively correlated with yields globally. In other words, investments in equity and its returns will tend to outperform the market, as yields decline.
As new Generative AI capabilities emerge, the investments in human capital for newer skills are emerging. Also, newer models of ‘sweat’ equity/debt are emerging.
Investments in newer health and wellness solutions to weather climate change are getting exciting. (see out Future Bets in Healthcare).
M&A and buyouts are expected to continue, but lower from the peak of 2022.
How India plays its geopolitics will also determine the quality and quantum of foreign investments in India in the various sub sectors.

The 2024 India Healthcare and Life Sciences Investment Heat Map is as under:

Healthcare Financing

Newer products for financing healthy lifestyle for the Gen Alpha and Gen Z are emerging. Financing ‘idleness’ and healthy entertainment lifestyle through innovative business models are the key. There is a consumer shift for spending on healthy lifestyle which is a personal investment in longevity of healthy life.

2024 Outlook: Moderate
What’s going wrong: slower market/product innovation, right bite for the consumers, reach and penetration to New Gen consumers, financing costs
What’s going right: India stack digitisation, uberisation, AI solutions

Medical Education

Valuations are correcting and consolidation activity is accelerating. New regulatory regime will come into force and will require investments in managing the delivery and quality of content. New skills for the new AI tools and newer consumer’s requirements needs is accelerating but not in the curriculum.

Outlook: Moderate
What’s going wrong: Alignment to new consumers and care, increasing debt burden, new age skills certification, CME with AI-tools
What’s going right: Skill-mix churn, upgradation of skills, AI for frontline workers

Med Tech Innovation and Life Sciences Discovery and Clinical Development

Capacity creation and new product development continues as India is now into the China+1 club. Expect a few IPOs this year in this sector. Government grant funding will temper down. Geo polities is a key risk to create supply chain disruptions.

2024 Outlook: Hot
What’s going wrong: IP regulation, regulatory bottlenecks on clinical development, newer skill sets for research and acceleration, PLI policy for sub sector, geo politics, supply chain disruptions
What’s going right: Human capital, emerging social innovation models, right products selection, market appropriate solution development, peptide based products, chronic diseases product innovation for co morbidities

Pharma and Therapeutic Solutions

Geo politics may affect supply chain and missed topline and profitability estimates. Cost competitiveness like Chinese players to compete globally is the key for growth. Expect a few IPOs, buyouts and exits via secondary sale.

2024 Outlook: Moderate
What’s going wrong: price controls, wrong product portfolio, capacity scale up, global or China-level cost competitiveness, exit of PLI incentives, shortage of skilled workforce
What’s going right: distribution infrastructure, digital business models, government incentive programs

Healthcare Providers

High levels of leverage is still a concern. Private equity investments slowing down due to valuation expectations. Expect a few IPOs, buyouts and exits via secondary sale. Capacity creation is slowed down due to fund crunch.

2024 Outlook: Moderate
What’s going wrong: margin pressures, price controls, execution of programs on the ground, supply and demand mismatch in micromarkets, debt financing costs, gun powder churn, operating cash runway, liquidity and working capital crunch, not exploring newer formats
What’s going right: asset-lite models, medical tourism

Healthcare Insurance

Loss ratios and profitability is slowing improving as pricing and products are rationalized. Expect two IPOs of two major players. New products innovation for newer consumer’s requirements is lagging.

2024 Outlook: Hot
What’s going wrong: product fit to consumer needs, product approvals, IPOs pricing and valuation
What’s going right: Consumer demand, reduced loss ratios

Health Retail

The Pharmacy Bill 2023 brings its own set of challenges. AI pilots once mainstream will reduce costs and margin pressure albeit very slowly. The valuation is still a challenge for raising fund and buy-outs, secondary exits. Expect an IPO.

2024 Outlook: Hot
What’s going wrong: regulation, operating margins, spurious social media channels affecting consumer confidence, health UPI, time to scale
What’s going right: consolidation, newer cross-vertical innovative business models, profitability focus, AI adoption and models

Wellness

2021 was the highest growth year in the last 10 years on the back of discretionary consumer spending on wellness. Digital business model innovation is still lagging. Medical wellness tourism will be recover in Q3 of 2022. M&A activity and consolidation to continue in 2022 but at a slower pace. Corporate Wellness spends to continue to fuel growth in 2022

2024 Outlook: Very Hot
What’s going wrong: regulation, maturity to scale, new mass market business models, repeat sales, spurious social media channels, fake outcome/claims
What’s going right: newer cross-vertical innovative business models, corporate wellness spending

Alternative Therapies

New Gen consumers are seeking unique experiences and combing with mental health and rejuvenation as their discretionary spends are increasing.

2024 Outlook: Very Hot
What’s going wrong: maturity to scale, consumer education and confidence, clinical research, new product development, inflated valuation, new mass market business models, repeat sales, spurious social media channels, fake outcome/claims
What’s going right: discretionary consumer spending, newer cross-vertical innovative business models, mainstream complementary treatment

Moving Forward

As one iconic smart investor said that one should be investing in healthcare and life sciences because you believe smart investing will yield results that are beneficial for society, not just to enrich oneself.

Happy investing and stay strong!

Also Published in Express Pharma February 2024

2024: Healthcare and Life Sciences Investment Outlook

Covid Pandemic is Bust : The Population Pandemic Awaits

Introduction

Recently, the World Health Organisation (WHO) played Beating the Retreat on Covid-19 and proclaimed that the global emergency on Covid is Over. The end tally of the Covid War Losses:

765,222,932 confirmed cases;
6,921,614 deaths;
Glaring short comings of healthcare infrastructure;
Economic and social disruption:
- Nearly half of the world’s 3.3 billion global workforce are at risk of losing their livelihoods, pushing nearly 0.82 billion into extreme poverty
25% increase in prevalence of anxiety and depression worldwide, affecting the mental health and well-being of people of all ages.
Entire food system is affected due to weather changes and disruptions in the supply chains, reducing access to healthy, safe and diverse diets.

While the post Covid war reparations are underway, there was another bugle on the population front. Last year we added the 8^th billion human on earth. This is going to be another pandemic in the waiting. The healthcare needs for 8 billion people is a horror war movie in the making. Closer home, India is going to be the most populated country in the world next year.

The Demographics of Population Pandemic

Global Population Pandemic

As a thumb rule, global population growth will stabilize when the birth rate and the death rate are equal. We will continue to grow till the fertility rate ie. the number of children born per woman falls below 2.1. As per various scenarios, the world population, currently around 8 billion, is expected to reach 9.8 billion in 2050 and 11.2 billion in 2100, and then decline gradually.

How we reached 8 Billion People on Earth?

India’s Population Pandemic

India’s population is expected to peak at 1.65 billion by 2060 and then decline gradually. According to reports woman fertility rate falls below 2.1 by 2030. India’s demographic transition from a high-fertility and high-mortality society to a low-fertility and low-mortality society. (From 2.33 children per woman in 2015 to 2.03 children per woman in 2021, while the life expectancy at birth has increased from 67.7 years in 2015 to 69.4 years in 2021. The population pyramid also shows that the number of children under 15 years old peaked in 2011 and has been declining since then, while the number of elderly above 65 years old has been increasing steadily. Also read: According to a report by The Times of India, India’s population will stabilize only in 2050 (2047 is our Amrit Kaal Amrit Kaal : Budget 2022 | Kapil Khandelwal KK) when the death and birth rate will be balanced. Also we have a higher than usual healthcare acuity due to our genetic make up Tedx Archives | Kapil Khandelwal KK

Managing India Population Pandemic, Its About Quality of Life and Health

For the Covid pandemic, India quickly ramped up the production of Covid Vaccine and also played the vaccine diplomacy. Over billion doses of Covid vaccine was supplied globally to different countries apart from immunising billion Indians. India has built global scale capacity for facing the pandemics. India is also looking to champion the agenda of healthcare for the Global South in its Chairmanship for the G-20 this year. But the issue around the demographics of the population pandemic goes beyond providing for healthcare.

As we plan ahead for the Amrit Kaal 2047 when India’s population growth stabilises, I have been writing and speaking on what is required. Let’s use the Roti, Kapda, Makaan, Dava-Daru (the last one is already addressed in my Tedx Talk Read Healthcare For All | Kapil Khandelwal KK)

Food security: We have to feed 1.6 billion mouths by 2047 two square mealsx365 days a year. We don’t have enough land mass to be able to produce food at that large quantum. Intensive, industrial scale agriculture would have to be introduced with Green Revolution 2.0. (see PM Task Force Report on Food and Agri Reform Food And Agri Reforms | Kapil Khandelwal KK)
Water Scarcity: For sustaining life, we had addressed linking of north rivers to south rivers and regenerating the water table
Sustainable Smart Cities: by 2047 over 60% of the population will be urbanized and would need sustainable and healthy living environment on a very concentrated urban land mass with lower levels of pollution.
Healthcare for All: We urgently need to invest USD 360 billion to come up to global standards on healthcare metrics. In addition, another USD 675 billion in the healthcare and life sciences value chain to sustain our current and future population and the health acuity today.

Let’s live and let live in a world that can sustain this population pandemic!

Assisted by ChatGPT 😉

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2023 India Healthcare and Lifesciences Investment Outlook

Since 2013 our algos have been accurately predicting the investment heatmap in the healthcare and life sciences in India which were predicting with 95% accuracy on the sectoral investment cycle in India till the end of 2019. Since the Covid Pandemic in 2020 we lowered levels of prediction accuracy like we started back in 2013. Covid-19 pandemic killed over 23 million people globally. 2022 has brought new headwinds, some we haven’t seen in over 40 years. Healthcare spending will fall in 2023 in real terms, given high inflation and slow economic growth, forcing difficult decisions on how to provide care. Digitalisation of the healthcare system will continue, but the use of health data will come under stricter regulation. A New world order under the current geo politics fragmentation and multilateral world is bringing India to the forefront. It’s vaccine diplomacy, effective and cost-effective therapeutic solutions is a game changer for India.

2023: A Year of Newer Normal

Since the Great Chinese famine of 1959, for the first-time life expectancy as per UN, Covid-19 had been cut by 1.7 years off global life expectancy, reducing it to 71.1 years. While a recovery probably began in 2022, the UN calculates that 2023 will be the year when life expectancy first exceeds 2019 levels. The investment thesis with most of the investment managers in the current scenario is more of a long view on healthcare infra which are less tied to economic cycles and an imminent slow down globally. Some of the investment risks the healthcare and lifesciences sector faces include rising real interest rates, increasing price inflation for healthcare products and services in the face of weakening in consumer spending, reshoring the supply chains and the wars, both trade and terriotorial. Digital businesses are equally going to be impacted. ESG and impact funding is waiting for deployment.

Let’s relook at the board trends for 2023 in terms investment activity and trends.

Healthcare Financing

2021 was an all time-high for healthcare financing sector due to emergency and non-discretionary spend on healthcare. Health Tourism related funding is only going to take off in Q3 after the current wave tides down. Consolidation activity to slow down.

2023 Outlook: Moderate

What’s going wrong: right bite for the consumers, reach and penetration, higher debt financing costs, slower non-discretionary and elective healthcare spend, delaying of healthcare spend and health tourism, new wave restrictions, shortage of digital workforce
What’s going right: India stack digitisation, agetech, consumer borrowing to spend on electives

Medical Education

Skilled manpower shortages is the key driver for growth. All the students who have returned back from Ukraine need to be accommodate in our current system Regulatory reforms are urgently required to push digitization and newer business models for upskilling existing workforce. Churn in ownership of assets due to consolidation activity will continues at a faster pace.

2023 Outlook: Moderate

What’s going wrong: regulation, corruption, no vision, skill shortages, alignment to new age care, increasing debt burden
What’s going right: skill demand, digitisation, manpower-led business models creating their own content or tying up with larger established players, cross-border students coming to India, export of clinical manpower to the West

Med Tech Innovation and Life Sciences Discovery and Clinical Development

India has proven to be the vaccine supplier to the world in 2022 with over forty percent of the world’s pre-qualified vaccine products are made in India. Capacity creation and new product development need to be accelerated particularly in infectious diseases and some niche segments. Reshoring and government policies for that need to be accelerated. Global investment and partnerships is on the rise in 2023. Patent expiry of some of the blockbusters in the US are a huge opportunity.

2023 Outlook: Moderate

What’s going wrong: Innovation pipeline, IP regulation, regulatory bottlenecks on clinical development, newer skill sets for research and acceleration, global collaboration and partnerships
What’s going right: Human capital, cost advantage, reshoring the supply chain, Make in India

Pharma and Therapeutic Solutions

Several players are going to go for the IPOs in 2023. Reshoring the supply chain is moving slowly. The Government production linked incentive is not moving as intended in the medtech, intermediates, APIs. The capital expenditure in creating world-class green infra is still to take off.

2023 Outlook: Hot

What’s going wrong: price controls, policy log jam, innovation and scale up, cost competitiveness, exit of PLI incentives, scale of capex, Margins pressure, IPO valuation
What’s going right: cost advantage, distribution infrastructure, Government incentive programs, blockbuster going off patent in the US, ESG funding entry

Healthcare Providers

2022 was a negative year for almost all the listed stocks. With higher interest rates, funding costs for have increased. Inputs such as steel, cement, etc, have also shot up increasing the capex per bed. Newer sources of funding green healthcare infra as a long-term bet which are less tied to economic cycles is emerging. Digitalisation will slow down even further as consumers go back to the old ways. Costs and profitability pressure will increase to maintain the investor interest. PE valuations will continue to get right adjusted to market valuation.

2023 Outlook: Moderate

What’s going wrong: margin pressures, price controls, execution of programs on the ground, PPP in healthcare, supply and demand mismatch in micromarkets, debt financing costs, gun powder churn, operating cash runway, liquidity and working capital crunch
What’s going right: Asset-lite models, demographics

Healthcare Insurance

The IPOs in 2021 in the sector have created uncertainty in valuation and investor sentiment. The sector will continue to grow as it did in 2022. New products and customer segmentation is going to be the growth drivers

2023 Outlook: Hot

What’s going wrong: product fit to consumer needs, product approvals, loss ratios, operating cash runway, human capital reduction, consumer offtake and demand, IPOs pricing and valuation
What’s going right: Consumer demand, digitisation, new products

Health Retail

Spends on healthcare are slowing down and so is the discretionary spend. Falling service levels and consumer trusts is at an all-time high. Costs and margin pressures is going to be more acute. Only one major IPO expected in 2023. Many of the late stage start-up are going to scale down or not raise the capital at the expected valuations.

2023 Outlook: Moderate

What’s going wrong: regulation, consolidation, slower consumer spending, funding drying up, operating cash runway,
What’s going right: Consolidation, newer cross-vertical innovative business models, profitability focus and valuation being right adjusted

Wellness

Growth which tapered down in 2022 is still going to be sluggish in 2023 as consumers cut back their spends. Digital business model innovation is still lagging behind. Medical wellness tourism will be recover in Q3 of 2023. Corporate Wellness spends which also scale down even further. PE funding is going to slow down even further as valuations squeeze even downwards with margin pressure. Expect one major IPO here.

2023 Outlook: Hot

What’s going wrong: regulation, maturity to scale, down round valuations, slowing of wellness spends, manpower and cost pressures
What’s going right: newer cross-vertical innovative business models,

Alternative Therapies

Growth and new customer acquisition is the new mantra in 2023 as consumer spending decelerates further. New products and therapies that have accessed funding in 2021are going to find it difficult to raise at the expected valuation. Large MNCs are also entering in this space to fight for the consumer’s mindshare. Funding crunch is going affect growth. Expect an IPO. Some of the players may scale down or shut down due to funding. Consolidation activity will increase.

2023 Outlook: Hot

What’s going wrong: maturity to scale, consumer education and confidence, clinical research, new product development, growth, funding crunch,
What’s going right: discretionary consumer spending, newer cross-vertical innovative business models, mainstream complementary treatment.

Let’s wish that we focus on building trust in healthcare for the consumers in 2023 and there is peace across for the world to come out of recessionary trend that would boost the investor confidence across.

Happy investing and stay safe!

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Why I picked up playing Squash Now?

The lockdown is over!

Over the lockdown, I was only doing my regular walks and diet control. This helped me reduce my weight and kept me fit physically and mentally. The result was that I reduced over 15 kilos in weight. However, I needed a full body workout and had to pick up a sport. I am not a gym person and needed to add some workouts for my upper body and endurance. Hence some racket sport would be a great addition. In the past, I had played table tennis in school and college at competitive level. Later, in college I played tennis till I gave up in 2011.

After 10 years, I wanted to take up a racket sport that is easy on my age and is all weather. The choice zeroed down to squash.

Research from Sports and Medicine Favouring Squash

According to Forbes Magazine, squash was rated as the healthiest sports in the World. Forbes consulted with personal trainers, coaches and exercise physiologists, 10 sports were listed as being the ‘healthiest’ in terms of cardiorespiratory endurance, muscular strength, muscular endurance, flexibility, calories burned in 30 minutes, injury risk. Squash took first place!

According to Forbes, 30 minutes spent on the squash court gives you ‘an impressive cardio respiratory workout.’ Constant running and rallies build endurance and muscular strength in your lower body, and squash can even improve flexibility in your core and back, thanks to the twists, lunges and turns necessary to keep the ball on the go.

If you’re wondering what makes squash so healthy, here are the results from the Forbes survey:

Here is more, Recently the British Journal of Sports Medicine underwent a study which examined information on more than 80,000 adults across England and Scotland who took part in national health surveys between 1994 and 2008. The study found that risk of death from any cause was 47% lower among those who played racket sports. The study suggested that regularly playing squash could help stave off death the longest.

Scientists have narrowed down the sports and types of exercise that are linked to significantly lower odds of dying before those who do not do those activities. The research concluded that racket sports, swimming, aerobics and cycling seem to be the best for prolonging life, in that order.

Meanwhile, those who partake in racket sports such as squash, also have a lower risk of dying from cardiovascular diseases such as strokes. After taking into account influential factors, the authors of the paper identified which sport or exercise seemed to be the most beneficial.

Compared with the participants who said they had not done a given sport, they found that risk of death from any cause was 47% lower among those who played racket sports; 28% lower among swimmers; 27% lower among those who took part in aerobics classes; and 15% lower among cyclists. No such associations were seen for runners or joggers and those who played football or rugby. When the researchers looked at the risk of death from heart disease and stroke, they found that playing racket sports was associated with a 56% lower risk, swimmers had a 41% lower risk and aerobics participants had a 36% lower risk compared with those who did not participate in these sports.

The researchers did find a 43% reduced risk of death from all causes and a 45% reduced risk of cardiovascular disease among runners and joggers when compared with those who did not run or jog, but this advantage was not deemed significant when influential factors were taken into account. They cautioned that the impact of running and jogging might have been underestimated.

The study suggests that squash is ultimately the best sport to play to ensure a long life.

About Squash

Squash is played in a four-walled court with a small, hollow rubber ball. It is played between two i.e, singles and four i.e, doubles players. The game was first played in 1930 at Harrow School in London, England. The game is an excellent cardiovascular exercise and mostly played in the gyms. It’s not an Olympic sport yet but it features in Commonwealth games and Asian games since 1998.

Gregory Gaultier, Mohamed El Shorbagy, Ali Farag, Nour El Sherbini, Raneem El Weleily are leading the point table at the moment. Joshna Chinappa, Dipika Pallikal Karthik, Saurav Ghoshal and Ritwik Bhattacharya have made India proud in the sport.

Getting Started

Getting started on squash costs as low as ₹5,000. Please use the basic gear available on Decathlon, India website or visit their store. Search | Squash (decathlon.in)

What's in my squash bag? — What’s in my squash bag?

#	Gear	Make	Remarks
1	Squash Racket	Prince Thunder Sub Zero 200 – 175 grams	Poor packing, bent while shipment and play, do not buy
2	Squash Racket	Perfly SR 135	Latest product. Pro range. Loved it.
3	Squash Ball	Prince Rebel	High quality Pro
4	Shoes	Plaeto Unisex Squash Sneakers	Loved it. Made in India and endorsed by Rahul Dravid
5	Short and T-Shirt	Sweat Free from Reliance Trends and Decathlon	Good fit
6	Bag	Aurion Squash Zipper Kit Bag	Great price and value

My Squash Starter Kit

I made the mistake of ordering Prince rackets on Amazon. The product is bad as the grip needs to be replaced. Also the Amazon packing and handling is poor. The rackets arrived damaged.

Other Benefits of taking up Squash:

Even at this age

Squash as a game is age-friendly. At 50+, I was able to pick up the game in the first session. The rest is YouTube videos to brush up the 101 and techniques.

Easy to pick up

As I played tennis, squash was really easy to pick up and lean. I can play solo and brush up on my strokes and on court movement alone with a coach to guide me.

Improved cardiovascular fitness

As per my watch, my peak cardiovascular activity at the end of 45 minutes of constant play was 175 bpm. This was 30-35 bpm higher than my usual walk after 45 minutes.

Improved hand-eye coordination

One of the concerns that I had was, Will I be able to see the squash ball which is coming to me at high speed? Need less to say, I was able to affirm that I had not lost my hand-eye co-ordination even after taking up a racket sport after 12 years. I was able to hit the ball from the first shot.

I can play solo

I am able to play the game solo and do not need a team to be accumulated to play the game unlike in racket sport, you need a duo. Just start hitting the ball against the wall!

Increase strength

After a couple of days of playing squash, I see my upper body strength improving

Improved posture

Sitting in front of your laptop, leads to a couching posture. After a few days of playing squash, I could feel my shoulders and back straightening up to a better posture

Learn to run and move backwards

If you can run backwards, your brain is still sharp and focussed. Squash gets you moving forward and backward on court to hit the ball hard enough. So its like a brain tonic for me!

Can play it even during rains of Mumbai

Most of the outdoor sports become seasonal in nature and cannot be played all round the year. Not in the case of squash. All you need is a wall to hit the ball against!

Health benefits

While here are some of the other health benefits of playing squash. Stress reduction, strengthening muscles and joints, with proper elbow and knee guards it is not injury prone, improves mental strength, determination and routine

And lastly, I am having fun!