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Tuesday, October 14, 2008

PE investments in healthcare dip 65%


The pharma and healthcare sector in India is feeling the pinch as far as private equity (PE) investments are concerned. For the quarter ended September 2008, PE investments in the Indian pharma and healthcare sector has witnessed a 65% decline, with total deal size dropping to $87 million from $252 million for the corresponding quarter last year, according to a study by Venture Intelligence. However, the number of deals has increased to 11 from 8.

According to Nitin Deshmukh, CEO, private equity, Kotak Investment Advisors, this is a temporary phenomenon. “Not only healthcare, all other sectors are facing crisis. The uncertainty in valuation pushes investors and companies into a wait-and-watch mode.” Undoubtedly, there is tremendous potential for investments in healthcare as possibilities for healthcare needs in tier-II and-III cities are yet to be explored completely, he added.

Though there is a temporary slowdown in investments in Indian healthcare industry, past investment figures as well as future studies reveal tremendous potential for healthcare in future. According to emerging markets private equity association (EMPEA), PE investments in India’s healthcare sector has tripled from $126 million in the first half of 2007, to $459 million between January and June 2008. Technopak, a consultancy firm, estimates a $5 billion investment in the sector between 2008 and 2011, with 70% expected to go into regional hospitals in small towns.

The major deals, for the quarter, in the healthcare sector include; the Rs 90-crore investment in Themis Labs from NYLIM Jacob Ballas India Fund III LLC, $15 million by International Finance Corporation in Hikal, $4.6 million by IFCI venture capital in Marck Biosciences, investments in Nectar Lifesciences by Citi Venture Capital and investment in Rubicon Research by Kotak PE.

For the quarter, PE firms invested about $3 billion in 116 Indian companies, against 115 deals with a total of $4.2 billion during the same period last year.

Source: ft.com Contributed by: DMSMedwire Research JSG

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