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2025 Healthcare and Life Sciences Investment Outlook

2025 Healthcare and Life Sciences Investment Outlook

Mankind versus ChatGPT: Our Caveat for 2025

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

Confusion Matrix for AI ChatGPT and Human Predictions
Confusion Matrix for AI ChatGPT and Human Predictions

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

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

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

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

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

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

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

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

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

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

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

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

Healthcare Financing

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

2025 Outlook: Moderate

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

Medical Education

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

2025 Outlook: Low

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

Med Tech Innovation and Life Sciences Discovery and Clinical Development

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

2025 Outlook: Moderate

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

Pharma and Therapeutic Solutions

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

2025 Outlook: Moderate

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

Healthcare Providers

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

2025 Outlook: Hot

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

Healthcare Insurance

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

2025 Outlook: Hot

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

Health Retail

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

2025 Outlook: Hot

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

Wellness

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

2024 Outlook: Hot

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

Alternative Therapies

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

2025 Outlook: Hot

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

Moving Forward

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

Happy investing and stay strong!

Media Coverage

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

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

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

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

Rebooting Age: Long-Living India

Rebooting Age : Long-living India

Podcast

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

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

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

Fake, Fakier, Fakiest? Who is going to Eventually Win the Race?

Fake, Fakier, Fakiest? Who is going to Eventually Win the Race?

Podcast

QuoteUnquote with KK and Prof Salvatore Babones, American Author, Sociologist , China Expert, Associate Professor @ University of Sydney and Founder Indian Century Roundtable (ICR) Think Tank https://www.indiancentury.org/

In this podcast we discuss the fake narrative on economic, population, societal transformation, supply chain decoupling, labour and unemployment, control over private enterprises, technology, environmental issues, dedolarisation, digital currency, political narrative, negative propaganda, global dominance and iron fist between China under Authoritarian Xi Xinping and Democratic India under Fascist Modi using the PESTC framework and who will win the global race?  

What is Fake, Fakier, Fakiest?

Fake News | Kapil Khandelwal KK

With PM Modi in Sydney

 

Prof Salvatore Babones Meeting With PM Modi in Sydney
Prof Salvatore Babones Meeting With PM Modi in Sydney

Also Read:


 

Also Listen:

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.