2024 India Healthcare and Lifesciences Investment Heatmap

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

https://www.expresspharma.in/express-pharma-february-2024/

Covid Pandemic is Bust : The Population Pandemic Awaits

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 8th 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?
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

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.

2023 India Healthcare and Lifesciences Investment Outlook
2023 India Healthcare and Lifesciences Investment Outlook

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?

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:

forbes
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!

What’s Next? Operation Himalaya?

Operations Himalaya

Preamble

Operation Ganga was an evacuation operation by the Government of India to evacuate the Indian citizens amidst the 2022 Russian invasion of Ukraine, who had crossed over to neighboring countries. This involved transport assistance from the neighboring countries of Romania, Hungary, Poland, Moldova, Slovakia to reach India. Over 20,000 medical students were evacuated in Operation Ganga. I have been writing and talking about it over the last 10 years. Let me outline the magnitude of the situation at hand. India constitutes ~18% of world’s population. From here things become a bit trickier. We have world’s 21% disease burden. ie. One-sixth higher proportion of people falling sick. On the clinical manpower shortages, we just have around 8% of the total global labour force of doctors, nurses and healthcare workers to address the 20% of the global disease burden we carry with our people. We are short by 5 lakh doctors, 20 lakh nurses and 30 lakh short of other health workers. Fortunately, we are a net exporter of nurses to the world so we have to also back fill the gaps of nurses leaving out of India for those remaining in India. Coming to the capital to address these gaps, we require close to Rs 30 lakh crores or $430 billion to come to the global average of hospital beds. Another Rs 2 lakh crores or $29 billion is required to build capacity for healthcare manpower. Therefore the total investment is approx $460 billion. To give you the magnitude, 165 countries in the world had a GDP of less than $460 billion in 2018. Given the shortage of merit quota seats in Indian medical colleges, students have to migrate abroad for pursuing their medical education. We need an upstream Operations Himalaya in earnest.  

Vision for Operations Himalaya

There is a saying “9 men cannot make a baby in 1 month”. Similarly, students enrolled into medicine today will add incrementally to the workforce in next 4 years.  The silver lining is that this capacity building spend would lead to $1.45 trillion of additional incremental to the GDP after 5 years as 1 incremental bed capacity creates 28 jobs over its lifetime. In other words healthcare economy in India as a standalone would itself be #16 nation in terms of GDP. The table outlines the future of Medical Education.

What is the Future of Medical Education?
As per the Milbanks Report on the Future of Academic Medicine 2025, there are 3 key trends that are impacting medical education

Digitalization of Healthcare
new science and technology, particularly genetics and IT
speed of internet and digitalization
unimportance of distances
24/7 society
lack of agreement on where healthcare begins and ends

Personalization of Healthcare
rich and poor gap 
seeking “wellness” and rise of self-care & sophistication
increasing anxiety about security and ethical issues
emergent diseases

Globalization of Healthcare
gap between what can be done and what can be afforded
increasing accountability of all institutions
loss of respect for experts (more so after the pandemic)
economic and political rise of India and China      
Future of Medical Education

There needs to be a top-down vision for expanding the supply of clinical manpower in India which needs to be tied to the healthcare outcomes our healthcare system needs to achieve. The following framework which I presented earlier outlines the process for setting up the vision.

Our Health Markers – Linking Medical Education and
Our Health Markers – Linking Medical Education and Health

In the past I have defined these as the 3 A’s.

  • Affordability: The Cost and Benefits of Developing Careers in Healthcare in India
  • Accessibility: Providing trained staff in different parts of India
  • Assurance: Training to medical professionals meets global standards to perform in any healthcare system

Key Issues: Healthcare Manpower Economics:

It costs approximately Rs 2 crores per seat to set up a medical college for 100 seats in India. While this may be economical, investments in medical colleges and doctor training is a lengthy process; therefore, changes implemented to alter supply do not have immediate effects on the supply of trained healthcare professionals. A recent estimate reveals that as many as 40% of rural posting by trained medical graduates and post graduates in different states in India are not fulfilled. There is a huge shortage of gynaecologists, cardiologists and child specialists in rural hospitals in the government sectors. Hence the government announcement to increase the supply of medical graduates may still not address the accessibility issue. We may end up importing clinical manpower from lower cost destinations if we are not able to produce these cost effectively in India.

Medical education is supposed to be overseen by the different Councils of India, which is responsible for ensuring the quality of both the infrastructure and the professors at India’s medical institutes and also provide assurance that they meet the global standards. Since demand is high, it is difficult for schools to retain faculty over the long term, which creates a lack of continuity in both the school’s practices and its policy. The plethora of new and underequipped medical schools will create more doctors and healthcare professionals on paper, but will lower the quality of the doctors produced, further exacerbating the preexisting shortage. So, while attempting to alleviate a shortage of doctors, India has managed to create a completely new crisis on top of the preexisting one – the shortage of teaching professionals in these medical collages. Various estimates put this somewhere between 75,000 to 100,000 trained teachers and professions currently.

Finally,

Mere policy announcement for opening up more medical colleges in India is not the panacea for solving the shortages in the supply of healthcare professionals and the people to train healthcare professionals. It is time we look at the issues holistically and plan for the future by going upstream towards the Himalaya from the current emergency evacuation of Operation Ganga!

https://open.spotify.com/episode/5SwlhKl1MYBEMM95usMh2U?si=e51b6fa5d2974e6d
Also Listen Podcast on Russia-Ukraine Conflict

Also Read Article published in my Column – A Dose of IT published in Deccan Chronicle and Asian Age – 14 February 2011

Rs 1 Crore crores Human Capital Impact – A Generation Lost

My presentation at the 21st World Quality Congress a fortnight ago just highlighted the human capital impact due to healthcare and education in India. A whopping Rs 92,28,230 crores to the Indian economy at net present value! This is like creating over 1500 TCS or Infosys or Wipro in today’s size overnight in our economy.

Let us understand, although India has 18% of world’s student population that is the largest in the world, its policy and direction on higher education, including medical and health sciences sector is not clearly articulated towards inclusive development. Regulation, size of funding to this sector, both public and private is one of the key determinants of India’s ability to generate wealth (GDP). Moreover sectorial priorities and directions in sectors such as health sciences, infrastructure if not clearly addressed could create future crisis in the economy and further impede economic growth. 

On the demand side, we already know that India contributes to 18% of world’s population, however its share of world’s disease burden is 20%. Hence to treat the increased disease burden, India requires incremental human capital of doctors, nurses and other health workers. But the issues get very grave for India. We have around 8% of world’s doctors, nurses and health workers. Hence we may have to create more human capital in healthcare to treat India’s disease burden. What’s more, of the Rs 490,000 crores we currently require for skills repair to make the current human capital coming out of our colleges and universities, approximately 25% of this is to the medical and nursing schools make the graduate doctors, nurses and health workers job ready.

On the supply side, there are competing careers options and sectors that await the aspirants that are entering the colleges and universities to take up courses. Using the Lev and Schwartz model for human capital valuation, we evaluated the value of different careers in health sciences versus other sectors. What is interesting is that a nurse who decides to work in India human capital value would be Rs 19 lakhs while a surgeons with a master’s degree is around Rs 1 crore. Other non medical sectors are equally attractive in terms of their human capital value. Hence the issue for India is how do we make this attractive for aspirants to take up medicine as a career. While shortage in supply of doctors, nurses and health workers in the economy will obviously push up their human capital value, knowing the disease burden of India. However, we will lose a whole generation of boomers!

But all is not lost for India. Our enrolment ratio in higher education is 12% and is half of China’s at 24% of all students passing out of secondary schools. Hence even to match China’s enrollment, we would create a total human capital of Rs 1 Crore crores using the same valuation model at higher education level. To meet this potential, we need to be opening over 25 colleges everyday for the next 3 years in the brick and mortar world!

We will again fail to create such huge capacity in the real brick and mortar world as we have under supplied the infrastructure sector due to the boom in other sector in the last decade. Hence the only option left behind for the present generation to graduate through higher education is through ICT (online) world. Over the last 5 years there have been many ventures that have come forward looking at the wider opportunity in the ICT space for medical education. However the key barriers have been the regulatory and accreditation agencies that have slowed down the mass adoption.

It is time that we wake up to the huge human capital potential awaiting India. If we fail to deliver, we not only diminish this human capital over Rs 1 Crore crores, but the increased disease burden that I wrote about in my earlier column would cost us over Rs 25,00,000 crores of diminished human capital potential!

It’s all about the quality of human capital we produce and how we produce it that will matter for this generation that is passing us in India. This is the biggest scam that none of our future generations in India will forgive us as Indians.

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.

2022: Healthcare and Life Sciences Investment Outlook

2022: Healthcare and Life Sciences 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. While we worked on the Heat Map for 2022, we realized that every new wave of Covid is like a black swan event and raises the uncertainty and reduces the accuracy of the predictions with a reset. For 2021, we released two sets of heat maps, one for the healthcare and life sciences sub sectors and another for the States. Since the Central Government took the mantle of immunization, the need for updating state-wise heat map for 2022 is not relevant and not much data is being updated except for the electioneering noise and promises by political parties and immunization achieved.

2022: A Year of Consolidation and Tempering Expectations

2021 was the record year since 2013 when we started tracking the healthcare and lifesciences investments. The investments across the board was the highest, with the maximum number of IPOs and M&A activity, with over USD 2.2 Bn in funding across all the sectors in 2021. Some of the investment activity we predicted for 2022 preponed to 2021 due to positive investor and market sentiments and uncertainty of the future waves of Covid. Therefore, 2022 is a year of consolidation and tempering the tempo of investments.  

2022 Outlook
2022 India Healthcare and Life Sciences Investment Heat Map

 Let’s relook at the board trends for 2022 in terms investment activity and trends.

Healthcare Financing

2021 was an all time-high for healthcare financing sector. However, recent clamp down of Chinese funded consumer financing fintechs is going to temper down the healthcare financing sector. Health Tourism related funding is only going to take off in Q3. Consolidation activity to slow down.

  • 2022 Outlook: Hot
  • What’s going wrong: regulation clamp down, 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, consumer borrowing to spend on non-electives, immediate gratification, reduced household savings supplemented by borrowings

Medical Education

Key shortages of healthcare frontline workers was very apparent during 2021 Covid Crisis. The need for regulatory regime to upskills is still being reworked. Healthcare could be the key job creator. 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 continue albeit at a slower pace.

  • 2022 Outlook: Hot
  • What’s going wrong: regulation, corruption, no vision, skill shortages, alignment to new age care, increasing debt burden, new age skills certification, funding dry up
  • What’s going right: skill demand, digitisation   

Med Tech Innovation and Life Sciences Discovery and Clinical Development

India has proven to be the vaccine supplier to the world in 2022. Capacity creation and new product development will continue. Dependence on Chinese supply chain will reduce further as alternatives are developed indigenously. Expect a few IPOs this year in this sector. Government grant funding will temper down.

  • 2022 Outlook: Hot
  • What’s going wrong: innovation pipeline, IP regulation, regulatory bottlenecks on clinical development, newer skill sets for research and acceleration, Government grants and funding slow down
  • What’s going right: Human capital, cost advantage, emerging social innovation models, lower dependence on Chinese supply chain

Pharma and Therapeutic Solutions

M&A and consolidation activity was at a record high since 2016. Shortage of digital workers will slow down the digital transformation activity. As China substitution and supply chain threats mitigate, the Government will temper down their PLI support as well

  • 2022 Outlook: Hot
  • What’s going wrong: price controls, policy log jam, wrong product portfolio, innovation and scale up, global or China-level cost competitiveness, exit of PLI incentives, shortage of skilled digital workforce
  • What’s going right: cost advantage, distribution infrastructure, digital business models, Government incentive programs

Healthcare Providers

Funding costs will zoom up and will make access to long-term capital dearer. Huge churn in asset ownership and consolidation activity will continue. Digital transformation activity will slow down due to skill shortages

  • 2022 Outlook: Moderate
  • What’s going wrong: margin pressures, price controls, GST slabs rationalization on inputs, 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: Digital business models augmentation, asset-lite models

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 2021. Digital push and intermediation will be the key to growth.

  • 2022 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 

Health Retail

The major consolidation of the health retail after hectic M&A activity of 2021 will slow down the decibel levels of consumer discounts and offers to focus on generating healthy bottom lines. Only one major IPO expected in 2022.

  • 2022 Outlook: Moderate
  • What’s going wrong: regulation, consolidation, slower consumer spending, excess funding for GMV and operating cash runway
  • What’s going right: Consolidation, newer cross-vertical innovative business models, profitability focus

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 behind. 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

  • 2022 Outlook: Very hot
  • What’s going wrong: regulation, maturity to scale, new mass market business models
  • What’s going right: newer cross-vertical innovative business models, corporate wellness spending

Alternative Therapies

Newer products and therapies that have accessed funding in 2021 will continue to fuel growth and investments. Adoption of alternative therapies into mainstream allopathic as complementary treatment is going to accelerate. Newer product development and business models is the key to sustained growth and success in 2022

  • 2022 Outlook: Hot
  • What’s going wrong: maturity to scale, consumer education and confidence, clinical research, new product development, inflated valuation,  over capitalization and cash burn to gain market share
  • What’s going right: discretionary consumer spending, newer cross-vertical innovative business models, mainstream complementary treatment.

Let’s wish that there are no further variants and waves in 2022 for any black swarm events for affecting investor sentiments.

Happy investing and stay safe!

Kapil Khandelwal is Managing Partner of Toro Finserve LLP, India’s First Healthcare Infrastructure Fund and Director EquNev Capital Pvt Ltd.

Who is Twitter to Adjudicate Life Sciences Opinion?

Who is Twitter to Adjudicate Life Sciences Opinion?

Preamble

I had written in my blog Ban Twitter | Kapil Khandelwal (KK) last year as Twitter refused to follow Indian regulations and also muzzle certain sections of religious and political voices and opinion from India by banning or suspending their twitter handle. Under the leadership of the New CEO, Twitter seems to be adjudicating opinion on Life Sciences and that too experts. The latest controversial account suspension is of Dr. Robert Malone.  

Who Is Dr Robert Malone? Robert W Malone MD (rwmalonemd.com)

Malone is the father of mRNA vaccines. mRNA is the same technology used in COVID vaccines by Pfizer, J&J, etc in the US. He has served as an adjunct associate professor of biotechnology at Kennesaw State University, and he co-founded Atheric Pharmaceutical, a company that was contracted by the U.S. Army Medical Research Institute of Infectious Diseases in 2016. Malone has long been an outspoken critic of the global COVID vaccine rollout, warning of the risks of a rushed release and saying normal procedures have not been followed throughout the process. He has been crusading to stop vaccines from being mandated for children, and to stop corruption in the government and the medical-industrial complex and pharmaceutical industries.

He had over half a million followers on his Twitter account. On 27 December 2021, his account was permanently suspended for not adhering to Twitter’s Covid 19 misinformation policy.

He can still be followed via his substack page.

Muzzling Divergent Scientific Opinion on Social Media

As this pandemic is playing out, the so called official expert spokesperson of the US Government have been proven time and again how wrong they have been in guiding the public. In fact on of the experts and advisor to the US President, had gone on to rubbish the work of our scientist at IIT Delhi who published that they discovered four insertions in the spike glycoprotein of the Covid-19 virus which they say are not present in other coronaviruses. These experts have been using social media to guide or misguide the masses. As a result, the public opinion on the official experts is now suspect and individuals now want to assess both sides of the scientific views before excessing their personal judgement.

Twitter does not possess scientific material peer reviewers to state whether a certain scientific opinion is valid or not. It can at most highlight as not peer reviewed by a wider scientific community. This sort of baning scientific expert opinion is a dangerous trend. In future, the big-pharma can short change the scientific community’s opinion by muzzling their voices and views on social media. For the individuals who are interested in knowing the scientific voices will have to now put pressure for a much open, unbiased  social media to allow for alternative scientific views to emerge.

QuoteUnquote with KK (Kapil Khandelwal) Season 2 premiers as the first podcast on Dailyhunt

India’s leading business podcast QuoteUnquote With KK (https://kapilkhandelwal.com/podcasts/) produced by healthcare and investment industry veteran, Kapil Khandelwal of Toro Finserve LLP was launched on Dailyhunt, India’s #1 local language content platform, this month.  This podcast organises a virtual fireside chat with thought leaders around the world on various current issues and topics across business, economics, investments and socio-politics. The show successfully completed its first season comprising ten episodes with global thought leaders Mark Mobius, Parag Khanna, Rajeev Peshwaria and Mark Kahn, to name a few.

Kapil Khandelwal, as quoted in his podcast, shared “we have been listening to our listeners and in next year’s season, we’re going to run QuoteUnquote with KK on 2 tracks – Healthy and Wealthy. Healthy because of what we have gone through last year, and Wealthy because without a healthy world we cannot become a wealthy world. So, these are two very intermingled issues. We have lined up star speakers from different areas in healthcare and investments and current events and developments. On popular demand, we are going to run this podcast on a fortnightly basis. Our team is very excited to give more to the audience demands and feedback. QuoteUnquote with KK is available on global platforms like Spotify, iheart radio, Amazon. The strategic idea of our partnership with Dailyhunt is to provide access to Indian audiences looking for premium, short-format content. Additionally, Dailyhunt users will also be able to access all my blogs published on various subjects.”

Umang Bedi, Co-founder, Dailyhunt says, “Our 285+ million users challenge and inspire us to introduce formats that improve their experience on the platform. Communities socialized over content last year like never before, and Indian audiences are absolutely entitled to premium and intelligent content, regardless of their location or their network. I had the privilege of hosting a talk show with business leaders on Dailyhunt last year, and taking from its success, I’m quite confident that KK will enjoy an engaging and stimulating relationship with our users.”

On the launch occasion, Kapil Khandelwal, Father of offshore Quant Fund Investing in India and Managing Partner, Toro Finserve LLP, said, “I am glad to announce that India’s largest discovery platform, Dailyhunt is now hosting QuoteUnquote with KK. This will take the virtual fireside chat to over 285+ million monthly users on the Dailyhunt platform. I welcome the audience of Dailyhunt and am looking forward to interacting with them, on the platform”  

Season one of QuoteUnquote with KK, with all ten episodes, is now available on Dailyhunt.

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Dailyhunt Announcement

Why India is not selling its Healthcare Assets Under National Monetisation Pipeline (NMP) 2021?

National Monetisation Plan 2021

Preamble

On 23 August 2021 the government announced a National Monetisation Pipeline of INR 6 tn, (~2.6% of GDP), aimed at monetising its brownfield infrastructure to fund greenfield ones. Most of these projects will be concentrated in the roads, railways, and power sectors and no monetisation of India’s healthcare assets. NMP provides the guide to funding the National Infrastructure Pipeline (NIP) announced by the Finance Minister on 31 December 2019. I had written an article on the NIP giving my observations and feedback on the NIP with respect to healthcare (see below).

National Monetisation Plan 2021 Sector Wise
National Monetisation Plan Sector-Wise

Why is Healthcare Assets Monetisation not Under NMP?

It has been clearly apparent from the Covid 19 pandemic the clear shortages in the bed supply whenever there was a spike in the Covid cases. The private sector just did not have the capacity to manage the situation, burdening the Government and its healthcare resources to step up. I had warned about the gross under supply of beds in my critique to the NIP, “As per one of our investment thesis on healthcare infra in India, to meet the global norms of 3 beds per 1000 population India needs an investment of $200 billion by 2025. This is approximately the total NIP projected across all the infra sectors. The current NIP shows a committed pipeline of $2.5 billion which is only through Center and State Governments. A gap of 99% of what needs to be invested for India to meet global norms for healthcare infra supply! Unlike roads which is hogging over 80% of NIP’s committed investments, healthcare infra is gestational. Therefore, there is a weak and lagging healthcare infra investment in India leading to demand gaps.” These concerns that I had voiced have come out to be true during the Covid pandemic. The issue here is not about how much to invest in healthcare infrastructure but the issue of would the Government want a political turmoil now to sell off its healthcare assets out. More importantly, for the monetization of healthcare assets, there are other regulatory and tax issues for the Government to iron out to be ready for this sector’s assets to be monetized.

I believe that it has been a prudent move by the Government to exclude healthcare out from the NMP.

 

National Infra Pipeline (NIP) – Where is the Healthcare Infra Connectivity like Roads for the Masses? (Published in Jan 2020 in VC Circle)

Background

Over the last few months of 2019, the Government through various Ministries and industry bodies and Political Forum have tried to reach out to investors in healthcare infra to compile the pipeline of investments that are at various stages of implementation. This report was announced by the Finance Minster on 31 Dec 2019. We congratulate the Ministry of Finance in coming forward with the efforts in reaching out various stakeholders and sets the focus and discussions back on the economy.

While the report recognizes the fact that various mechanisms need to be put into place to debottleneck and fast track the investment process into infrastructure to meet our goals of a $5 trillion Indian economy by 2025 and be the second biggest economy in the world by 2050. It also recognizes the issues relating to land reforms, which the Government dropped out in earlier regime due to political opposition, financing, regulations amongst others. As India’s dedicated healthcare infra fund, we point out some of our observations and feedback on the report with respect to developing and funding healthcare infra in India.

Indian Healthcare Infra Economics

As per one of our investment thesis on healthcare infra in India, to meet the global norms of 3 beds per 1000 population India needs an investment of $200 billion by 2025. This is approximately the total NIP projected across all the infra sectors. The current NIP shows a committed pipeline of $2.5 billion which is only through Center and State Governments. A gap of 99% of what needs to be invested for India to meet global norms for healthcare infra supply! Unlike roads which is hogging over 80% of NIP’s committed investments, healthcare infra is gestational. Therefore, there is a weak and lagging healthcare infra investment in India leading to demand gaps.

While there is a further ripple effect of this investment on the wider economy in terms of job creation, healthy and productive population amongst others which we believe will be the second order issues that can be addressed as investment flows in. The key issue here is what measures the Government and Private Sector needs to take to accelerate the pace of investments and delivery of healthcare infra to the masses like road connectivity.

Key Policies and Measures to Attract and Boost Healthcare Infra Investments from Private Sector

GST Bottlenecks on Input Side with No Pass Thrus on Output Side

Any healthcare infra investments structure whether PPP or private with asset-lite models is taxed under GST. While there is no scope for pass thrus of these costs on the output side. Several representations to the Government on correcting this anomaly have been presented at the highest levels. Unless this is corrected, private sector participation investment is only a minor aggregate to the investments.

Interest Rates YoYo Regime

RBI in its efforts to contain the inflation has not directionally provided a proper guidance of interest rates over the last few years. These changes in interest rates are difficult to model and predict for our investors both Indian and foreign. Healthcare infra investments require a stable interest rates regime.

Bank Leverage for Healthcare Infra

Over the last few years of liquidity crisis with the banking sector, healthcare infra financing like other infra financing has been deprioritized by the banking system as a whole as very high risk. Our discussions with senior leadership with various top banks does not give any confidence that the worst is over for the healthcare infra sector bank financing with many still negative with the burden of NPAs of the past. A policy to establish healthcare infra as a priority sector for bank would be in positive direction.  

Pivoting Infra Models for Delivery of Ayushman Bharat

Ayushman Bharat is a positive step in Nation’s healthcare financing and delivery. However, the last report of Niti Aayug states that around 90% of all players in India owning healthcare infra employ less than 10 employees! Seriously, are these really hospitals delivering quality care? Given the current reimbursement rates, private sector participation in the whole scheme can only be marginal or absent in their current healthcare infra operating cost base. A more innovative low-cost infra investment model needs to be developed which some players are working towards to pivot towards the requirements of Ayushman Bharat.

Monetising Existing Gun Powder of Healthcare Infra

There is an approximately $45 billion of healthcare infra assets which are sitting on the books of Central and State Governments and Private and Social Sectors. Many of these require funding for upgrading and expanding their infra. Various archaic regulations and other operations bottlenecks are preventing investments flows into these existing healthcare infra from Indian and foreign investors.

Nine Men Cannot Produce a Baby in a Month (even in a test tube)

While healthcare infra is a highly gestational business, it is dependent on supply of adequate clinical and operational manpower from the investments in the education sector. The NIP duplicates the investments in AIIMs under health and education. A similar push is required in the education sector for private sector participation.

Social Stock Exchange – A Black Swan for Healthcare Social Infra

While working on the regulations for the Social Stock Exchange (SSE) with SEBI. There are several regulations that govern the social sector in terms of ownership of land and infra that need to be streamlined for a healthy investments in social health infra. We estimate that the addressable social ventures that would qualify to be listed on the SSE would potentially deliver an annual turnover to be around $5 bn on a conservative basis from various impact investors. If the regulations are streamlined, our expectations is that this would be increased by a multiple of 3X.

In Conclusion – Our Forward Looking and Safe Harbour Statements

While the NIP is a great exercise for setting the vision and strategy for the way forward. We believe that investor confidence is still muted and the dialogue between the Government and Healthcare Infra Investors and Operators need to be urgently set up for strategizing how the current estimates in NIP for healthcare infra can be boosted 100X to meet the current deficit to Healthcare Infra Connectivity like Roads for the Masses to meet the global norms.