New government policies such as health insurance scheme Ayushman Bharat, regulatory changes, and thinning margins may trigger greater consolidation among hospitals and firms running preventive healthcare businesses, said panellists at News Corp VCCircle's Healthcare Investment Summit 2018 on Tuesday.
At a session called 'Fireside Chat: Consolidation in Hospitals', Asia Healthcare Holdings' executive chairman Vishal Bali interviewed Trivitron Healthcare's chairman and managing director GSK Velu.
The industry veterans observed that India’s healthcare sector is facing many challenges but always comes back stronger. They also deliberated on ways and methods through which Indian healthcare can create more value.
"Consolidation is the way to go. But in the pathology or preventive healthcare space, it is not as easy as it happens in the US or Europe," Velu said. “Businesses need to be well-regulated, and if businesses are well-regulated, consolidation becomes easier.”
Velu, a serial entrepreneur, said that India's pathology industry is worth $5 billion and only the top 10% of it has witnessed consolidation.
Consolidation in India's healthcare industry hogged the limelight following the big-ticket acquisition of Fortis Healthcare Ltd by Malaysian healthcare and multi-specialty hospital chain IHH Healthcare Berhad earlier this year. It was a protracted takeover battle in which at least five parties made bids.
In a separate deal, Radiant Life Care Pvt. Ltd, a hospital chain backed by private equity firm KKR & Co., recently decided to buy the entire 49.7% stake of South Africa-headquartered Life Healthcare Group Holdings Ltd in India's Max Healthcare Institute Ltd for 4.3 billion rand ($293 million).
India's healthcare industry has been a hotbed for private equity deals in recent years, and this is expected to get a push following the government's decision to roll out a national healthcare insurance scheme - Ayushman Bharat - that seeks to provide annual insurance coverage of Rs 5 lakh each to 10 crore families.