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Competition to buy in Indian hospitals
Transactions in India's healthcare sector have skyrocketed in recent years, with the TOI reporting in December as hospitals are currently leading the largest share of foreign direct investment (FDI) within the sector. In 2014, hospitals accounted for 50% of FDI in total healthcare, converting it to $1.5 billion. This is because Healthcare FDI hospital shares have more than doubled from 24% in 221 and more than doubled from 43% in 2020, highlighting their increasing excellence. It's been a huge increase. This trend also reflects the strengthening of investors' preferences for hospitals, along with the traditionally preferred pharmaceutical sector.
Strong private equity interest in Indian healthcare services companies is the European investment bank Rothschild & Co. According to the top executives of the sector, it is a highly reliable indicator of the multimonth growth potential. Hedley Goldberg of Rothschild & Co told ET in an interview in January.
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In addition to many private equity transactions, the hospital sector is also attracting large Indian companies. Several companies, such as Tata, Birla, and Hinduja, exist in healthcare, but none of them have a big presence in India and India. However, ET reported last year that the Bajaj group is preparing to enter the healthcare sector by establishing a series of hospitals in metros across the country. According to Bloomberg, it allocates Rs 10,000 as an initial investment. A few months ago, billionaire Mukesh Ambani's reliance industry acquired technology-driven healthcare platform Karkinos for Rs 375. Reliance purchased it under the Bankruptcy and Bankruptcy Code (IBC). The healthcare sector, particularly hospitals, have witnessed a major expansion during the Covid-19 pandemic. However, once the situation eased, it became difficult for many standalone hospitals to maintain their business. Such hospitals are attracting attention from two sets of bidders. Those who are already in the industry and are trying to expand, and those who want to turn those entities around before selling to someone else. Promoter-led strategic investment companies and hospital operators often acquire better assets by offering high-priced valuations, resulting in the stress that can be acquired through the bankruptcy and bankruptcy process. I'm looking for a medical asset. Indian companies and hospitals are increasingly focused on acquiring buildings and real estate to expand their operations and strengthen the market presence. This trend is driven by an increase in population, driven by an increased demand for quality health services in urban and semi-urban areas, with increased health awareness and increased insurance coverage. Major hospital chains such as Manipal Hospital, Apollo Hospital and Fortis Healthcare have invested heavily in strategic locations, acquiring both existing hospitals and new properties in Greenfield Project. These acquisitions will not only help healthcare providers scale quickly, but will also help them take advantage of high-demand regions where healthcare infrastructure is limited. Manipal Health Enterprises 'Manipal Hospitals, supported by Temasek Holdings, acquired a five-storey hospital facility last year in the Andeli suburbs of Mumbai's western suburbs.
Why is the Indian hospital sector so hot?
Historically, the drug sector, which includes APIs (active drug ingredients), has been a favorite of investors and has attracted billions of dollars in transactions. However, since Covid, hospitals and diagnostic sectors have been in the spotlight, drawing a wave of investors. The market capitalization of the Indian hospital sector has skyrocketed nine times from Rs 3.5,000 on FY20, Brokerage Firm JM Financial said last year in July. When the sector was tackling inefficiency, high leverage and low loin, Covid provided much needed driving force. This stemmed from improved pricing, increased insurance coverage, and a dedicated shift to complex surgeries such as transplantation. India's top-listed hospital chains have worked well in the stock market up to this year. Shares in Apollo Hospitals rose 28% in 2024, while Max Healthcare Institute Ltd. rose 64%.
“Hospitals have been at the heart of PE's interest over the past few months: the size of the Indian market, relatively underserved markets outside of urban areas, high incidence of disease burden and insurance growth (public and Both private) will continue. Given the growth of fuel, there is still a long way to go for growth. Furthermore, hospitals are marked by a list of several hospital chains, due to major market activities , attracting the attention of investors.
Bajaj Group has been attracted to the hospital sector due to Metro's growth potential and the growing number of healthcare companies, according to the ET report. According to a research report from Last Last Last released by JM Financial, 10-23% in Delhi, Hyderabad, Bengaluru, Kolkata, Chennai and Mumbai compared to 21-52% in public hospitals and 10-62% in standalone facilities. The beds are occupied by the hospital chain. year.
The Indian hospital industry is poised to record healthy combined annual growth rate (CAGR) at around 12% over the next three fiscal years, credit rating agency Careedge Ratings said last year. The surge in growth has led to an increase in capital expenditures by healthcare companies.
Increased incidence of lifestyle diseases and ease of demand for affordable healthcare delivery drives the Indian healthcare market. According to a report released last year by HSBC Global Research on Indian Hospitals, seven listed hospitals said they would add 14,000 beds over the next three to five years. A total of 22,000 new beds are expected, including those from other private hospital chains. With these additions, India does not have an excessive supply of beds. The report states that the addition of beds is triple the number of beds added in 4,000 between the 2019-24 fiscal year. Most hospitals are currently in the consolidation stage and plan to expand and add after earning profits during the 2019-24 fiscal year due to low CAPEX.
A World Health Organization report said last year there were only 16 beds per 10,000 people in India.
According to a report by HSBC, India will need 100,000 additional beds over the next five to seven years to meet medical demand against the backdrop of rising non-communicable diseases such as diabetes, heart disorders and cancer. Seven top-listed hospital chains have announced CAPEX for their project, which will add over 22,000 beds over the next three to five years.
The government's push to transform India into a global healthcare hub by promoting medical tourism is another strong growth driver for the hospital sector. Citing government data, the HSBC report states that India's medical tourism has increased from 0.18 million in 2014 to 0.73 million in 2024. In most countries such as the US, Singapore, Korea, Thailand and more.
The union budget 2025-26, released in February, was welcomed by medical and industry experts as it focuses on creating a patient-centered ecosystem and promoting new advances in health tourism. Finance Minister Nirmala Sitharaman said medical tourism and “healing in India” will be promoted in collaboration with the private sector. It will be backed up by the building of capabilities and simpler visa norms, she said.
(Use input from TOI)
