Panacea Biotec, the Rs 700-crore drug and vaccine major, is now focusing on hospitals. The company is likely to tap private equity funding for expansion. Last year, Panacea had bought 76 per cent stake in Umkal Hospital, Gurgaon, and is developing a 225-bed multi-super specialty hospital here. This facility, set to begin operations by March 2013, is being developed at a cost of Rs 145 crore. Once the hospital, Panacea New Rise Hospital, starts operations, the healthcare major would explore expansion into Tier-II and Tier-III cities in North India.
Rajesh Jain, joint managing director, Panacea Biotec, said, We have plans for a chain, starting with north India, depending on our experience in the first venture. Once our first hospital is launched early next year, we will explore opportunities for private equity investment for further expansion. However, he refused to specify the funds the company planned to raise. According to a recent study by the Associated Chambers of Commerce and Industry of India, by 2014, the private hospital market in India would grow from $26 billion to $54 billion, at a compounded annual growth rate of 20 per cent.
In the last couple of years, hospital chains in India have witnessed major private equity/venture capital deals. In January, Olympus Capital Asia Investments had invested $100 million in DM Healthcare. In March, US-based Advent International invested $110 million (Rs 560 crore) in Hyderabad-based hospital chain Care Hospitals. There are a lot of international hospital majors looking to tap Indias growing healthcare demands. We are open to tie-ups with knowledge partners or investors for our future projects, Jain said.
Compared to hospital sectors in developed countries like the US, the Indian hospital sector is growing at a fast pace and exhibits a much better operational and financial performance. India has the key advantage of significantly lower costs, which is attracting a large number of international patients to India, he added. According to a recent KPMG study, India would need two million additional hospital beds by 2028 to achieve a target of five beds per 1,000 patients. Currently, India has one bed per 1,000 people, against the global average of three beds per 1,000 people.