Mumbai: India’s market for single-speciality hospitals is set to more than double to $31 billion in three-four years from the current $15 billion, amid their private equity-led expansion into small towns and hinterlands where demand for quality healthcare services is growing rapidly, according to a report.
The market share of single-speciality hospitals, catering to segments like eyecare, dental care, orthopaedics, oncology, fertility treatments and mother & child care, is expected to rise to 40% of the total healthcare market by 2028 from the current 30%, said the report from investment bank Avendus.
Of this, the total organised single-specialty healthcare – which includes scaled chains – accounts for $4 billion, which is seen rising to $9 billion, said the report.
“The share of single speciality will become larger in the next four years and the organised players will more than double,” said Anshul Gupta, managing director and head of healthcare investment banking at Avendus Capital.
The single-speciality format, where a hospital typically would have 40-50 beds, presents the opportunity for greater geographical depth compared to multispeciality hospitals where the average size is 250-300 beds. These formats offer an ideal blend of low capital intensity, high specificity of care, and replicable business models that are increasingly appealing to institutional investors and founders.
Strong returns
A combination of factors is driving faster consolidation in the sector, including their demand for capital expenditure and better return on investments.
“Some of the scaled players are very aggressively rolling up. Be it the large eyecare chains like Dr Agarwal’s Eye Hospital, Maxivision and others, each of them has private equity backers and they have been doing M&As of anywhere between eight and 10 acquisitions every year,” said Gupta.
Doctors running small chains are mostly interested in clinical work and for them admin work is a hassle, he said. “By being part of a larger (investment) platform allows them the flexibility to focus on clinical work.”
Besides, such chains find it harder to invest in capex in tech and infrastructure development on their own, but when they are part of a larger platform the cost gets spread, said Gupta.
India’s total private and trust healthcare market is $50 billion and expected to grow to $79 billion by 2028, according to Avendus estimate.
Total private equity investments in the single-specialty sector crossed $3.7 billion, accounting for over 35% of total hospital investments in the last 10 years.
About 70% of these investments have gone to established specialties such as IVF, eyecare, mother & childcare, dialysis and oncology.
In the last two-three years, leading players in specialties such as dental care, urology / nephrology, skin and hair care have started to attract investor interest due to significant whitespaces in the demand-supply in these specialties, according to the report.
“A trifecta of factors is helping accelerate investor interest in the single-specialty healthcare chains … significant growth opportunity in tier 2/3 cities, clearly visible unit economics and viability with best in class ROIs,” Vishal Bali, executive chairman of Asia Healthcare Holdings, an healthcare investment platform that focus on single specialities like oncology, women and child care, fertility, urology and nephrology, told ET in a recent interaction.
Top PE transactions in single-specialty healthcare in the last two years include Indira IVF-BPEA EQT, NephroPlus-Quadria Capital and TPG Growth and Temasek in Dr Agarwal Healthcare.
