While other businesses see ups and downs in investment due to external reasons, the healthcare sector remains intact at any point in time. So, like other industrial sectors such as FMCG, investment in healthcare also allows the investors to get a good return.
During the lockdown period due to COVID-19, the healthcare sector performed well, although some losses were seen in this sector as well. Experts say that the healthcare sector provides a good opportunity for private equity funds in India.
According to industry experts, the first step in investing in any business is to understand the business. The healthcare sector in India is not as complicated to understand as it seems. There are multiple business models within healthcare and the subtlety of each business is different. Hence, you have to pay attention to details before investing.
Export Branded Generics Market
Most companies in India sell branded generics in India and other developing markets. These products are made by companies that own the brand and promote the product to the customer as well. This is a high return on equity business with very slow growth as the perception of allopathic medicines in India is still growing.
Exports Unbranded Generic Market
Many companies in India manufacture and sell unbranded generics to distributors in different developed countries such as the US, UK, etc. The products are not branded and hence there is no similarity between two manufacturers of the same product. This is a low RoE and highly capital-intensive business that sees bouts of volatility in pricing and volumes.
API Manufacturing
Some companies manufacture API and sell it to formulation manufacturers. API is a key raw material to manufacture formulations. This is a B2B business with varying levels of profitability depending on the product segments a company is functioning in.
Hospitals
Hospitals are generally either multi-specialty or super specialty. Super-specialty businesses can be very profitable if the brand is reputed and its reach is broad. Multi-specialty hospitals are less profitable compared to the former but get higher volumes and easier to scale up.
Quadria Capital 