SynopsisDespite being people-centric, the workings of the Indian healthcare industry are not largely known to the public. The Indian healthcare ecosystem is fragmented, unorganised and hardly integrated. Now with several of the unique businesses in the ecosystem getting listed, more about them should be known.
ET Intelligence Group: Despite being people-centric, the workings of the Indian healthcare industry are not largely known to the public. The Indian healthcare ecosystem is fragmented, unorganised and hardly integrated. Now with several of the unique businesses in the ecosystem getting listed, more about them should be known.
The Covid-19 pandemic made healthcare one of the Street’s favourites with several hitherto unlisted businesses going public. These included India’s largest standalone health insurance company (Star Health), a standalone pharmacy retail chain company (MedPlus Health), a labware company supplying to pharma and diagnostic businesses (Tarsons Products), and a diagnostic company operating on a public-private partnership model (Krsnaa Diagnostics).
There are some more businesses waiting to hit the primary market. A leading full-service contract research organisation (Veeda Clinical Research), a company engaged in manufacturing medical consumables (Healthium Medtech) and a stents maker (Sahajanand Medical Technologies) have filed offer papers. An integrated digital healthcare company (API Holdings) owning businesses across the value chain – pharmacies, diagnostics, retail distribution, hospital supplies procurement, teleconsultation and EMR (electronic medical records) solutions for doctors – has also filed its offer documents with the market regulator.
At a time when the healthcare ecosystem is facing disruptions with existing players foraying into adjacent businesses and digital players entering some of the existing segments, it is important to have several unique industry constituents with no listed peers to get listed on the bourses. Thanks to the pandemic, healthcare businesses, often backed by private equity, have a better chance of drawing investors at attractive valuations.
Consequently, several aspects of these businesses within the healthcare value chain are becoming publicly known, benefiting a host of stakeholders such as investors, government agencies, policymakers, doctors, patients and patient groups as well as civil society.
The pandemic has been a wake-up call for the regulatory authorities. The government has proposed to overhaul the laws related to drugs, cosmetics, and medical devices. The Insurance Regulatory and Development Authority of India (IRDAI) is seeking to have a separate regulator for the healthcare market.
With more numbers and types of industry constituents becoming publicly traded entities, the corporate governance standards will warrant higher disclosure related to the firm and industry practices, the unit economics of the business and challenges faced.
The disclosures will come in the form of quarterly financials, annual reports, investor presentations and management commentary in the earning calls – providing cues to the stakeholders. The impact of any health crisis, policy change or tax break or levy will also be promptly known through the valuations of the listed companies on the bourses.
There are nevertheless a few more kinds of businesses in the healthcare space that are yet to become public – companies exclusively engaged in the manufacture of trade generics (low-cost unbranded generic drugs), wholesale distributors of pharmaceuticals, third party administrators in health insurance business and health tech companies delivering healthcare. As the healthcare market matures and consolidates in the country, more unique businesses will access the public markets.
(Originally published on Dec 29, 2021, 06:25 AM IST)
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