Introduction

By 2020, the Indian healthcare market is expected reach $280 billion in spending, up from $38 billion in 2007–08. As noted in previous chapters, the bulk of financing has come from the private sector rather than from central and state governments. The historical reliance on private sources and (especially) out-of-pocket spending has fostered both shortages in manpower and inadequacies in India's healthcare infrastructure and services. At the same time, the country seems to be at a crossroads as it attempts to balance its own “iron triangle” goals (see Figure 1.1): increase access, reduce cost, and increase quality.

This situation provides an opportunity for private equity and venture capital (PEVC) funds to fill some of the void. On the one hand, there is a large supply of these funds. Based on fieldwork and interviews with executives in the industry, more than 150 PEVC funds, both domestic and foreign, are found to be present in the Indian healthcare market. Of these, five have been identified as key players: ICICI Ventures, Baring Private Equity Partners, Religare, Kotak Private Equity Group, and CX Partners. On the other hand, these funds have not been particularly active in healthcare: as a percentage of total PEVC investments, surprisingly healthcare occupies only a meager proportion (roughly 3 percent) of investments.