Healthtech’s latest buzzword is a relentless killer

Cancer is among the most prevalent diseases in India, with the number of patients expected to increase to 1.57 million by 2025 from 1.4 million in 2020, according to a report last month by Apollo Hospitals, among India’s largest multispeciality hospital chains that also provides oncology treatment.

“Yesteryear’s cardiology is today’s oncology,” said Ajai Kumar, founder and executive chairman of Healthcare Global Enterprises Ltd, a hospital chain specialising in cancercare. “With the number of cancer cases rising tremendously, healthcare providers are jumping to grab the business opportunity.”

Investors, as well as conglomerates such as the Reliance Group and Tata Group, were quick to jump on the opportunity, as oncology-focused facilities providing comprehensive care under one roof are emerging alongside multispecialty hospitals offering cancer care.

Globally, investors have backpedalled amid an unrelenting funding crunch. Investments into the global oncology sector dropped to $9.2 billion in 2023 from $12.1 billion in the year prior and $23.5 in 2021, according to Tracxn data.

In India, however, healthcare has been among the most-funded segments. 

According to the Bain India Private Equity Report 2024, healthcare investments in the country hit a record high of $5.5 billion in 2023. “Ongoing consolidation in multispecialty and the emergence of scale assets with attractive business profiles in single-specialty were key factors,” the report said.

Bain added that 20% of the capital raised for healthcare in 2023 went to single-specialty hospitals due to the emergence of scaleable assets across eyecare, IVF, and oncology. 

The three segments saw 14 assets with over $20 million in revenue in financial year 2022-23 because of “attractive business profiles with superior operating economics, low capex, less dependency on star doctors”, it added.

Bridging disparities

According to Sunil Thakur, partner and head-South Asia, at healthcare-focused investment firm Quadria Capital, investors remain interested in the space primarily because of the size and growth potential of the oncology market.

According to market research firm Technavio, the oncology market in India is expected to expand to nearly $950 million between 2022 and 2027, at a compounded annual growth rate of over 13%.

“India is reeling under a considerable cancer burden with growing incidence and mortality rates, which are compounded by geographical disparities in burden distribution and insufficient clinical resources,” Thakur said.

Healthcare Global, which was backed by Quadria Capital, got listed on the bourses in 2016. Over the past 12 months, HCG’s share price has increased by nearly 37%, and ended Wednesday’s trading at ₹369.85 each on NSE. CVC Capital is also selling its nearly 70% stake in Healthcare Global Enterprises to investors, Mint reported.

Hyderabad-based oncology-focused Omega Hospitals is in talks with investors to raise capital, news website Deal Street Asia reported in November. Mint couldn’t confirm this. In July last year, Morgan Stanley Private Equity invested in oncology and radiation therapy centre ClearMedi Healthcare.

Last month, the government launched India’s first homegrown anti-cancer CAR T-cell therapy in collaboration with the Indian Institute of Technology-Bombay, Tata Memorial Hospital, and research body ImmunoACT to make the treatment affordable.

Also read: NexCAR 19 cancer therapy: Conceived at IIT Bombay, delivered in Tata Memorial

Among significant earlier deals in this space, Reliance Industries Ltd invested an undisclosed sum in Karkinos Healthcare in 2021, while the Tata Group pumped in ₹110 crore in the Bengaluru-based oncology startup.

Also in 2021, pharmaceutical giant Natco Pharma invested $2 million in Cellogen Therapeutics, a Delhi-based startup developing solutions involving cell and gene therapy for various oncological problems.

Scaling and accessibility

Healthcare Global, an early mover in the oncology segment, is so far the only single-specialty healthcare firm in India to go public. It raised ₹650 crore from the primary markets in 2016.

Such single-specialty hospital chains are able to build an ecosystem around oncology, with their business models—typically involving full-stack treatment and extensive use of technology—geared to support expansion across multiple locations, said an investor in the healthcare sector.

“Hospitals, especially multi-specialty, can be tricky to scale given the high costs. Single-specialty hospital chains for a disease like cancer are likely to be lucrative because it will be relevant in almost every part of the country,” said this person, declining to be identified.

Quadria Capital’s Thakur concurred. Oncology-focussed hospitals enjoy the advantage of bringing a full-stack offering, the right medical staff, tools and processes to cater to large numbers of cancer patients, creating a virtuous cycle of growth, he said.

This approach differentiates them from multispecialty hospitals that may not necessarily offer a full-stack service to justify relatively lower patient footfall for a particular disease as compared with an oncology specialty hospital, Thakur added.

Also read: Mint Explainer: The trigger for DCGI alert on Abbott’s Digene, Takeda cancer jab

Healthcare Global has a capacity of over 2,000 beds across 21 hospitals in India, including in small cities such as Vijayawada, Ranchi and Cuttack.

“We have taken up the responsibility of ensuring quality medical practices in places beyond the metros. Cancer can be unforgiving regardless of social status and hence the effort should be driven by outcome,” said Healthcare Global’s Kumar.

Suresh Ramu, co-founder and chief executive of Cytecare Hospitals, which has 140 beds at its Yelahanka branch in Bengaluru, said more surgical and medical oncologists are now willing to work in Tier 2 centres, and that daycare centres for cancer treatment are also on the rise.

Cytecare has so far raised about $79.1 million from investors, according to Tracxn.

Tech-driven therapies

Cancer treatment is evolving rapidly, said Healthcare Global’s Kumar, adding that hospitals are quick to master new approaches to targeted therapy, genomics, and digital pathology, among others, with the help of technology. 

“There are various advanced tools and methods available for diagnosis and therapy, enabling early detection and prevention,” he said.

Robotic surgeries—which involve specially trained surgeons to use technology—is a major focus area for Healthcare Global, according to Kumar, who added that the hospital chain currently has six robots and is looking to expand soon.

Also read: Cervical cancer can be eliminated. Alabama is leading the way. 

Oncology as a speciality has seen significant improvement in terms of awareness, access, talent and use of technology, said Quadria Capital’s Thakur.

“The entire care pathway is relatively smoother and the time to diagnose and access the right therapy has become very short,” he said. “Moreover, the increasing clinical talent pool and convergence of global best practices with India, both in terms of use of technology and latest therapies like CAR T-cell, has fuelled the growth of this sector.”