Health insurance, nutrition are areas of high interest for us: Quadria Capital

Health insurance, nutrition are areas of high interest for us: Quadria Capital

Healthcare-focused private equity firm Quadria Capital announced an investment of Rs 850 crore in India’s largest dialysis player NephroPlus on May 6, 2024.

Quadria, which is currently raising an $800-million fund to invest in healthcare opportunities across India and Asia, has assets under management (AUM) of $1.4 billion in India, with investments in companies such as Maxivision Eye Hospitals, Medibuddy, Encube Ethicals, Akums Drugs and Pharmaceuticals and Strand Life Sciences.

In an interaction with Moneycontrol, Sunil Thakur, Partner, Head, South Asia at Quadria Capital, spoke about the new areas of interest for the healthcare-focused investors, such as health insurance, health and nutrition.

Edited excerpts:

What is the rationale for investing in NephroPlus and what is your company's growth plan?

The rationale comes from both the market potential and NephroPlus’ leadership position in multiple countries, most importantly in India. The dialysis market is sizeable and growing across India and other emerging markets in Asia. Renal failure is an important public health problem. However, it remains a mostly undocumented cause of premature death in developing countries like India. We are investing in a company that has differentiated capability to offer optimum price-quality value proposition tailored to address the needs of various price-conscious market segments in emerging economies. Moreover, as a track record, it has been able to demonstrate its execution prowess at scale, using a successful playbook.

Looking at the current healthcare services landscape in India, is your investment strategy focused on single speciality hospital chains? Will you invest in multi-speciality chains, going ahead?

We have generally been over-weight on single speciality because of the advantages the model offer, like the virtuous cycle of full-stack offering, best clinical talent, and tools and processes to cater to a large number of those singular therapy patients. That said, multi-speciality chains have their own attraction and will find interest from investors, including ours.

What are the new areas where you are exploring investments? Is health insurance an attractive opportunity for you? Will you be looking at areas such as health/nutrition supplements etc?

As a specialist healthcare fund, we continue to test trendlines across the healthcare segment and evolve our focus segments for investments. As part of that, we come up with new segments that we believe will have outlier growth and a profit pool shift. Today, we are focusing on models and businesses that tie into the themes of localisation, consolidation and institutionalisation, outsourcing, consumer healthcare and scaled digital healthcare. As part of that, segments like health insurance, health/ nutrition, as pointed out by you, are areas of high interest for us.

On the pharma side, post-COVID, we have seen a rush of investments in API, CDMO businesses. What is the outlook there? Has the China+1 theme played out well for Indian pharma companies?

The outlook remains positive on account of the potential in the domestic and international markets. The China+1 strategy hasn’t played out the way one had thought of initially, but we believe that in the medium to long term, many global players will de-risk their manufacturing presence, and its benefits will come to India.

What is your view on the production-liked incentive (PLI)  schemes for the pharma sector?

The PLI scheme has been a great success not only for the pharma sector, but also for medical devices. It has attracted significant investments -- both greenfield and brownfield -- by Indian pharma and med devices companies.

How do you assess the regulatory landscape and potential regulatory changes affecting the healthcare sector in India?

Overall, the regulatory landscape has started to become more progressive and predictable. That said, there are areas within healthcare, which we believe, can adopt more market-driven pricing and policies in order to attract more investments.

What has been your exit track record from India? What is your current AUM in India?

We have demonstrated a stellar exit track record in India, having exited over eight investments in the last 10 years and delivering around 3x returns on the investment. Our Indian AUM stands at $1.4 billion.