Quadria Capital, an Asian healthcare-focussed private-equity company, has lined up a $9.8-million fund for India with an eye on making investments in hospitals, pharmaceutical and medical devices companies.

Talking to BusinessLine , Amit Varma, Quadria Capital’s co-founder and Managing Partner, said as the sector is getting organised and starting to adopt global best-practices, it is opening up a lot of opportunities. “Companies in the sector are moving up, there are incentives for local manufacturing, all of which are positives,” he added.

Quadria Capital has invested in 15 companies across six countries in the region, through three private-equity vehicles, and manages $1.5 billion of funds. This includes an undisclosed investment in HCG, which runs 19 cancer hospitals all over the country and recently got listed in the stock markets.

Specialised pharma

Another investment rationale the PE company sees has to do with the changing trend in the pharmaceutical sector, which made a name globally for producing effective generics drugs. “Indian pharma players are beginning to transition into specialised manufacturing as they move up the value chain.”

Sensing this trend, in July, Quadria invested in Concord Biotech, a manufacturer of fermentation-based biopharmaceutical APIs, focussed on niche segments such as immunosuppressants, oncology, anti-fungal and anti-bacterial areas.

Industry watchers point out that many global corporations have set their eyes on Asia, given the lure of a large under-served, along with increasingly affluent populations. In July, Tokyo-based trading firm Mitsui & Company invested $101 million in Columbia Asia Global chain of hospitals.

According to Mahesh Singhi, MD of Singhi Advisors, more private equity will start flowing in, and large corporates will invest in single-speciality hospitals.

Another trend driving investments in this sector is the gap in demand and supply. According to WHO, hospitals beds per thousand people should be four; in India’s case, it is less than 1.

Growing middle class

Further, OECD has predicted that by 2020, the spending power of the global middle class will reach $35 trillion a year — up from $21 trillion in 2009 — out of which, about 80 per cent of the growth is expected to come from Asia Pacific.

In India, diagnostics, pharmacy, medical insurance and healthcare-related IT are growing 25-35 per cent, according to studies.

Hospitals account for the largest chunk in terms of healthcare-related spending in India, which is expected to reach $154 billion by 2020.