If you think HealthXCapital’s $25 million fund is a mere drop compared to larger vehicles targeting the Asian healthcare space – it is. Healthcare is awash with capital.
Sample this: Healthcare-focused private equity firm, Quadria Capital is raising $700 million for its second fund for emerging Asia. Singapore-based Altair Capital is targeting a $150 million maiden ASEAN fund covering healthcare, among other investments. China VCs like Quan Capital and Long Hill Capital are raising up to $300 million for their healthcare funds. Biotech and pharmas rule the exits with players like Wuxi AppTech and Tencent’s WeDoctor on track to launch HK IPOs worth over $1 billion.
But HealthXCapital is differentiating itself by occupying a space that no else is now. The Singapore-based healthcare fund is side-stepping the cash burners like genomics and biopharma to focus on devices, diagnostics and digital health. Why? Because disruption in emerging Asia doesn’t need to come in a big bang with fireworks.
HealthXCapital partner Seemant Jauhari said: “Someone asked me recently – are you interested in process efficiencies in hospitals? Of course we are. But have we taken care of the basic needs of people standing in queues? Or having people dispense pharmacy medicines in time? Improvisation will come later. The mature markets are trying to improvise and perfect processes, but we are still struggling with basic healthcare delivery and quality.”
That’s where the opportunity is for HealthXCapital. Jauhari stresses that he is looking for companies that target two key areas – accessibility and affordability. They are the same issues plaguing most of emerging Asia today.
According to World Bank statistics, healthcare expenditure in Southeast Asia and India stands at 4.7 per cent of GDP, compared to 9.9 per cent in Europe and 17.9 per cent in the US. The region also faces challenges in underdeveloped infrastructure, lack of affordable treatment, proactive healthcare and opaque data management.
Although Jauhari declined to share when he expects this fund to be fully deployed, he said, there is “definitely scope” for another fund. He added that deal flows are healthy and currently “in the hundreds”.