India Healthcare / life sciences

How Healthtech is Shaping The Industry

COVID-19 has created an urgency to digitize healthcare products and related
services. The ongoing pandemic has brought to centre-stage the attention for healthcare and life-
sciences sector as a central investing theme for the present decade. Increasing patient awareness
combined with growing internet adoption (over 700 Mn Internet users in India in 2020; penetration
reaching ~50%) has resulted in a vibrant digital healthcare ecosystem today. The Indian Healthtech market
today is less than 2% of overall healthcare market (~USD2.6 Bn market in 2020, growing at 39% CAGR)
leaving a large headroom for growth. More importantly, COVID-19 has pushed Healthtech adoption by
multiple times compared to normal period. Given the wide adoption by most stakeholders viz. Government,
patients, insurance companies, specialists etc. it is fair to assume that the digital adoption trends will
continue to stick for a long time. India presently houses about 4800+ start-ups in the Healthtech space and
52 Healthtech start-ups have received funding in 2020 alone of over USD500 Mn. In the last three years
the Healthtech sector has received over USD3 Bn private capital funding. Clearly, Healthtech has the
potential to transform the way healthcare has been traditionally delivered in India as well as improve
healthcare access by increasing the reach and affordability of the existing infrastructure.
India Healthtech Investment Trend Healthtech Segmental Composition
1200
USD80 Mn - Fitness And Wellness
1020
1000 USD20 Mn - Personal Health Management

USD10 Mn - Wearables
800
USD Million

658
USD90 Mn - Home Healthcare
600
USD200 Mn - Healthcare IT/Data Sciences
406 422 414
400 USD500 Mn - B2B Hospital Supplies
225 217
200 USD20 Mn - Telemedicine

USD1500 Mn - ePharmacies & ediagnostics

0
2014 2015 2016 2017 2018 2019 2020 Total USD2.6 Bn
Source: Venture Intelligence Source: Industry reports, TCHF Industry Discussion Analysis

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Healthtech Business Model Spectrum
The Healthtech business spectrum can be divided into smaller ecosystem of businesses addressing a wide
array of needs like distribution, supply chain, diagnosis, data management, care, rehabilitation, personal
health and several others. The following are some of the Healthtech strategies at play currently in the Indian
market place.

a) ePharmacy and eDiagnostics USD1.5 Bn GMV Market; 40% CAGR FY18-21

A clear beneficiary of COVID
eHealth services are digital platforms aimed at providing pharmacy, diagnostic and consult services.
Compared to the traditional out-patient model, ehealth is a simple consumer facing model that solves
various pain-points for the patients like travel, waiting time, limited availability of medicines/specialists,
limited discounts, hassle with procedures and several others. The eHealth market was sized at USD1.5
Bn GMV in FY20, 90% of which was ePharmacy-led. The ehealth sector is projected to reach a market
GMV of USD11-$17 Bn by FY 25. More importantly, the eHealth market experienced significant
adoption during COVID with support from consumers, doctors, hospitals, regulators and investors.
Overall, the sector is a clear beneficiary of COVID lockdown. Most pharma manufacturers have started
to partner with eHealth platforms as they bring benefits through their organized tracking and wider
reach. Investors too have an optimistic sentiment towards eHealth with the sector having attracted
nearly USD500 Bn private capital in the last 24 months.

ePharmacy and eDiagnostics Business Models

eHealth eHealth

100% Focus on Health

Vertical

Focus on multiple
categories such as Health
FMCG, Grocery, plus
Fashion, Others - NA
Electronics, Horizontal
eHealth etc.
OTC
First
Integrated

Standalone Integrated
focus either multiple
epharma, services on one
eConsultation single platform.
or eDiagnostics

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b) Telemedicine; USD200 Mn market; 50% CAGR FY18-21
Ability to tab a deep specialist pool; encouraging regulations
Telemedicine includes online doctor consultation via video, chat or audio and online appointment
booking for physical consultations. Driven primarily by the safety factor and ability to tap a deep and
wide pool of specialist doctors, econsultation has seen a rapid rise in popularity among patients during
the COVID period. For doctors too, the partnering services offered by the Telemedicine platforms and
the rising patient base has ensured an efficient use of their time. Given the fairly large base of
frequently transacting chronic patients, It is estimated that almost all econsultation doctors are likely to
continue with Telemedicine platforms post COVID. Regulatory guidelines too have recently encouraged
the use of econsultation to prescribe medicines and there is a clear classification of permissible
medicines that can be prescribed in this manner.
Telemedicine Business Models

Online healthcare platform for appointment Has both a Teleconsultation interface Bangalore based hospital - ready
booking, telemedicine and practice and ecommerce platform selling platform for hospitals to start
management; also makes software products health and wellness products as well teleconsult | Also has direct customer
for the delivery industry | Fund raise USD193 as online lab testing service | Over interface for health records, long term
Mn from InnoVen Capital, Trifecta Capital, one lakh registered doctors | Total care, alerts | also offers local services –
Sequoia, Matrix, Sofina, and others raise USD 15 Mn | Nexus Venture, physicians, labs, medicines | 6.350 +
Tiger Global, RNT, hospitals, 6 cities, 2000 + consultation
per day | Total raise – USD 60 Mn |
Beenext, Japans’ SBI venture, Prime
venture, Stellaris

c) B2B Hospital Supplies; USD500 Mn market; 40% CAGR FY18-21

Helping reduce the complexity in hospital procurement
The hospital procurement market is a highly fragmented and complex supply chain involving 5,000+
Manufacturers and catering to over 10L Healthcare providers. To add to the complexity there are over
hundred thousand hospital supply distributors who supply over 500K SKUs. The B2B Hospital supplies
companies are relatively newer businesses that operate as market place models. These companies
work to help hospitals improve their supply chain management with better reordering and forecasting.
They also help in reducing interaction time with multiple vendors and product identification thereby
increasing the operational and capex efficiency. More importantly such institutionalized SCM works
towards elimination of pilferage and intermediaries.
B2B Hospital Supplies Business Models

Parameter

Nursing homes and Corporate chains and Small clinics and

Focus customers sub-distributors
doctor clinics large hospitals doctor-led practices

GMV per month (Dec 20) 90 Cr 39 Cr 3-4 Cr 3-4 Cr

Healthquad, Rebright Carpediem Capital,

Investors LGT Orios Venture Partners
Partners others SIDBI

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d) Healthcare IT / Data Sciences USD20 Mn market; 30% CAGR FY21-26
Growing need For healthcare data management
These are new age businesses that provide data handling tools and data management services to
various companies. These tools help in managing costs, improve information transparency and
thereby improve revenues. Typical examples could be R&D services like compliance and governance
of clinical trials, care management, referral services, patient engagement, digitally managing a clinic
etc. While this model has the advantage of low customer acquisition cost, some of the critical success
factors would be quality of algorithm with proven accuracy of findings and established commercial
models on which large pool of samples are tested. This segment has been fairly active in terms of
attracting investor interest.
Healthcare IT/ Data Sciences Business Models

FOCUS: BIG DATA FOCUS: Provides FOCUS: Offers FOCUS: Provides FOCUS: Builds FOCUS: Full-stack
ANALYSTICS: healthcare R&D and EMR software to software for model
Cloud solutions, providers with management medical hospitals, clinics, encompasses a
big data and AI date on services to practitioners, and labs around patient portal,
driven analytics in population, healthcare and clinical decision the country. scheduling
life sciences health, referral pharma support , capabilities,
management, companies for generating e- business analytics,
patient compliance and prescriptions and billing information,
engagement. governance of digitally managing charting, patient
clinical trials the operations of engagement tools,
their clinics among others.

e) Home Healthcare USD90 Mn GMV; 20% CAGR FY18-21

Addressing pain points of traditional hospital services
The Home Healthcare model seeks to address the pain points of hospital services in India like risk of
other infections, high hospitalization expenses and lack of personal care. As of today, Home
healthcare is a USD90 Mn market; however the potential addressable market is several fold. It is
estimated that on a like to like basis, Home Healthcare can be about 40% cheaper as compared to
hospitals. More importantly, with the love and care of friends and family along with a comfortable
environment, patients have a faster recovery cycle. Over the last few years there has been rising
doctor’s acceptance of Home Healthcare which has also been aided by insurer’s willingness to cover
Home Healthcare expenses. This market is estimated to grow at 15-19% CAGR over the next five
years.
Home Healthcare Business Models

Critical Care
(In-House Services)

Generic Care
(On Demand Service
Marketplace

PAN India Focus Regional Focus

Horizontal Players/
Vertical Players Hospital Chains
KEY FOCUS: Drive 80% of the organized HHC Market

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f) Healthtech Wearables USD10 Mn GMV; 40% CAGR FY18-21
Growing personalization of care
There is increased awareness about some of the prominent benefits of wearables across the care
continuum viz. early identification of health risks, positive lifestyle and behavioral changes and
personalization of care. The consumer wearables market today is predominantly made up of wrist band
and watches and the different offerings focus on the health tracking features like ECG Sensor, Heart rate
and activity, sleep patters etc. The overall wearables market in India albeit small at aboutUSD10 Mn is
estimated to grow at over 60% CAGR over the next five years. The demand for wearables is set to
increase with consumer awareness on preventive health along with smartphone and internet
penetration. Over the long term issues wrto data privacy and affordability will need to be addressed.
Healthtech Wearable Business Models

Apple watch has an ECG Fitbit Versa measures sleep GoQii’s Vital 2.0 has a BP and Xiaomi’s Mi bands and
sensor and also measures and breathing along with an ECG sensor Titan’s fast track reflex track
heart rhythm. It also has a heart rate and activity activity and measure heart
heart fall detection system rate

Wearable patch for real time Smart shoe insoles integrated with a Wearable for stress management,
monitoring of cardiac signals and body smartphone app to monitor user's mental health and epilepsy alerts.
vitals running pattern. Provides real time
foot and knee stress monitoring.

g) Fitness and Wellness USD80 Mn Market; 50% CAGR FY18-21

Standardizing the fitness model
This segment focuses on providing a standardized model for fitness and wellness which is still an
unmet need in the country. Customers are offered digital and offline experiences across fitness,
nutrition, and mental well-being. This business model could operate as either asset light and asset
heavy models offering therapy sessions on mental wellbeing, Ayurveda etc along with products. Some
of the factors for this business model to succeed are a high paying and sticky base of customers,
ability to source and retain supply of trainers, have adequate equipment and capital for initial set up
and low cost of customer acquisition.
Fitness and Wellness Business Models

Health and fitness company offering digital and offline experiences across fitness,
nutrition, and mental well-being | Offers meals, mental wellbeing, therapy, Ayurveda,
Own Brands/Co-branded products | USD285Mn fund raise from Unilever Ventures,
InnoVen Capital, Accel USA, Chiratae Ventures, Kalaari Capital, Others

Pune based community fitness model | Funding from Sequoia

Chennai based fitness studious; 200 employee and 40 studios | USD10Mn fund raise
from Fireside Ventures

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 This thematic has been conceptualized and written by the investment team at Tata Capital Healthcare Fund
(TCHF), a growth oriented private equity fund primarily focused on the healthcare and life Sciences sector in
India. The investment team of TCHF can be contacted at [email protected].

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