Healthcare booms despite slow funding

Healthcare booms despite slow funding
In the past few decades, we have watched as the Indian economy has made a slow shift from an agro-based economy to a service oriented one. IT and technology in India have put us on a global platform, giving us the opportunity to expand by leaps and bounds.

The healthcare sector, in particular, has been on the rise — the Indian healthcare market poses a veritable mountain of opportunities for investment and growth and is one of the biggest FDI earners. Given the need for quality and timely medical care, and the spread of smartphones and the internet, it is no surprise that the healthcare industry is on the rise.              

IT cities like Bengaluru, Gurgaon and Hyderabad are becoming the centres of healthcare startups; based in the technological portals, these new companies are helping build the idea of telemedicine within the Indian borders. Telemedicine, until now, has been a rather new concept, but with the spread of the internet, even the most remote village in the mountains has access to healthcare through online consultations.

However, healthcare startups such as these are facing a big challenge — arranging for funding. In the past 18 months or so, venture funding has been on the slowdown; as it is, startups find it difficult to raise money for themselves, with tightened liquidity and few investors, and that’s in a consumer-good based industry. In a newly minted field like telemedicine, which is still taking its first steps within the country, few people are willing to put in a large amount of cash or invest in a startup at that.

One reason could be that most of the prospective investors are not convinced about the concept of telemedicine in itself, which focuses more on preventive rather than curative healthcare. It’s geared towards increasing patient awareness, not bringing patients to doctors only when they need to be treated for a particular disease, thus restricting healthcare to certain boundaries.

Another major problem with venture capitalists is the issue of timely returns — most venture capitalists in India prefer to put their cash in a start up or a business that will give them returns within the next 5-7 years. Healthcare, on the other hand, is a slower industry. It looks at the bigger picture, which means that the investors have to think of the long run — it will take roughly 10-15 years for good returns to be visible on the balance sheet, especially when it comes to a healthcare industry that is focusing on medical research and development. Telemedicine, perhaps, will take a shorter time, but it still requires more patience and energy than most venture capitalists are willing to extend.

This means that struggling start ups that have little in the way of investment need to work twice as hard; not only do they have to convince the investors about the worth of a not-so-understood product, they also need to convince them to be patient and to wait to reap the rewards. Only companies that have strong, differentiated, quantifiable strategies with a powerful business plan will be able to succeed in this kind of a scenario. And even for such strong startups, funding cannot be arranged for overnight; it will take time, perhaps a number of years, before they are able to build up to the liquidity and funding that they require to build their business.

It certainly looks like a bleak case, doesn’t it? But surprise — the number of healthcare startups in the past three years have significantly gone up, despite this slowdown on funding! You’d think that the lack of investors would put a damper on things — on the contrary, it’s pushed these startups to build stronger, more rigid business plans that have helped them set up industries that cater to the needs of even the most remote areas of India.

In the current market scenario, the fact of the matter is that healthcare, as an industry, requires more players. Government healthcare centers, particularly in the rural areas, do little to compensate the requirements of the common folk; people need medicine and access to timely healthcare. On the other hand, where government hospitals don’t have even the most basic facilities, every village certainly has an internet café and the villagers definitely have smart phones. They can access the world through the internet and are exposed to a wide amount of information that allows them to be part of the global economy. 

As a whole, the technological aspects of the healthcare industry are lagging behind in comparison to its peers. Couple this with the information boom that is happening all across the country and energetic businessmen are seeing opportunities in the needs that might look insurmountable obstacles to normal people. Without a doubt, there is a powerful demand for quality and timely service of medical practices, even if it is just a simple consultation with a doctor online about some symptoms that have cropped up suddenly.

This kind of a demand is a definite disruption to the traditional discharge of healthcare services as it is happening today — in the hospital, waiting for a consult with the doctor for hours on end. Telemedicine is quicker, faster, and has a wider access; where traditional medicine advocates a visit to the one doctor in the one hospital; online portals offer the patients a global forum where they can interact with a number of doctors and specialists, ensuring that they receive the best care at the right time.

The advantages of telemedicine and an IT-based healthcare sector are many; while the funding maybe on a slowdown, more and more people are coming to realise that preventive and awareness based healthcare is a far better option than just curative medicine that traditional hospitals offer. Undoubtedly, within the next few years, the healthcare industry is going to be the driving force behind the Indian economy and the smarter, newer entrepreneurs are jumping on this bandwagon while they still can, even if it means longer hours, harder work and tougher investors.

(The author is co-founder of Healthenablr, a telemedicine healthcare services company)

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