Most investors are bullish on the healthcare sector despite regulatory challenges, trust deficit between the customers and doctors and lack of transparency, according to panellists at News Corp VCCircle Healthcare Investment Summit 2017.
However, they stressed on the need for a course correction and delivering results for all stakeholders to attract more investments.
"If this sector does not think about course correction, we have to face a lot of challenges. Gone are the days when we could open hospitals and everyone would make a visit. Things have changed and hospitals are facing occupancy challenges," said Vishal Bali, senior advisor (healthcare), TPG Growth, who was one of the panellists at the summit which was held at Vivanta by Taj President in Mumbai. The summit was attended by around 250 participants.
However, Bali, who is also founder and chairman of home healthcare services provider Medwell Ventures, said the sector has the wherewithal to overcome regulatory challenges.
The government early this year decided to cap pricing on stents raising concerns for the industry.
"You don't want to be in a situation where the telecom industry was (that was hurt by regulatory hurdles). Chances are that we could miss having Indian champions in the consumable devices space if we do not have the right regulation," said Avnish Mehra, managing director, Everstone Capital.
Healthcare demand, pricing, trust deficit challenges
The demand for healthcare in India remains high with its huge population and rising incidences of diseases, among others.
However, Avnish Bajaj, founder and managing director, Matrix Partners, noted that while demand may look impressive but it is not as deep as it is deemed to be since the market is extremely price sensitive.
Hence, the panellists underlined the need to increase insurance penetration as one of the ways to address this problem.
"One-time cost hurts patients and the only way it could be bridged is insurance penetration," said Satish Chander, managing director, True North.
Dharminder Nagar, managing director, Paras Healthcare, pointed out that while pricing may be a challenge, customers across tier I, tier II and tier III are seeking quality healthcare and are willing to pay.
"If you want to go to tier II and III, don't think that you will get away by giving an inferior product," said Nagar, adding that a viable business model can be built beyond metros as Paras Healthcare has done with a hospital in Darbhanga, Bihar.
According to the panelists, there is a trust deficit between patients and doctors because of lack of efficient communication.
Sandeep Singhal, co-founder, Nexus Venture Partners, pointed out that while technology is a great way to expand healthcare accessibility, the so-called telemedicine has not scaled in India.
"It is because both patients and doctors want to see each other (personally). Technology is less of an impediment and behavioural change is more necessary," he said.
The industry thus needs better regulation, complete transparency and free competition for best pricing, said Everstone Capital's Avnish Mehra.