Dropping Anchor In The Home Turf
After building a healthcare empire in the UAE, B.R. Shetty has set his eyes on the under-penetrated healthcare market in India. And his blueprint is ready.
For the UAE-based Indian billionaire entrepreneur Bavaguthu Raghuram Shetty, the journey of a thousand miles begins with one step. The step that Shetty is referring to is the one that he is currently gearing up to take in India, a country special to him for reasons more than one.
Shetty hails from India; he was born and brought up in small town Udupi in Karnataka before he immigrated to the UAE in 1973 to repay a loan that he had undertaken from Syndicate Bank. But, as the famous adage goes, ‘everything happens for a reason’ and destiny often has other plans.
While Shetty cleared his loan in a year, he stayed back to set up NMC Healthcare — his flagship company — in a nondescript one-room clinic and pharmacy in Abu Dhabi in 1975. Today apart from healthcare, Shetty has business interests in sectors such as pharmaceuticals, financial services and retail, among others. He is the Chairman of money remittance firm UAE Exchange and Vice Chairman of Travelex Group.
“It all began with a small dream,” says Shetty, founder and Chairman at BRS Ventures (holding company of NMC Health and BR Life in India), with a beaming smile as he gathers himself for an exclusive chat with BW Businessworld in his latest visit to India. He is accompanied by his son Binay Shetty, who serves as the Vice Chairman and CEO of the company.
Learning The Ropes
A pharmacist by profession, B.R. Shetty carved out his entrepreneurial journey by setting a strong vision for himself rather early in his career. Over the past four decades, NMC Healthcare has grown to be one of the largest private healthcare providers in the UAE that recorded a turnover of $1,603.4 million in 2017. Today, it has as many as 2,000 doctors and 18,000 support personnel under the NMC Healthcare umbrella spread across 145 facilities in 13 countries. NMC got listed on the London Stock Exchange in 2012 and became a part of the coveted Financial Times Stock Exchange 100 Index, also called the FTSE 100 Index, in 2017.
As a first generation entrepreneur, the journey wasn’t easy, recalls Shetty. “I had to learn the ropes of the healthcare business from the scratch and it was one step after the other that helped us expand our operations,” he says adding, he repaid his loan in the UAE by selling medicines. “In a vast, sandy desert, in the middle of hot summer, I became the country’s first outdoor salesman. I went from clinic to clinic to sell drugs to doctors, loading cartons and it wasn’t easy. But I was determined.”
Well, once an entrepreneur, always an entrepreneur
Having built a healthcare empire in the UAE, Shetty has now decided to set his eyes on the under-penetrated healthcare market in India. “It is now time to give back to a country I began from. After all, charity begins at home,” says the 75 year old. Besides, the opportunity in India in the healthcare sector is great.
“Entrepreneurship is not about making money alone. It is also about serving a purpose and solving a crisis. The plan has been always to do something for the betterment of the people of my country,” says Shetty, who established his presence in India in 2013 with BR Life, headquartered in Bangalore.
The company was recently in news for acquiring Bhubaneswar’s Kalinga Hospital, in a bid to expand his presence in the healthcare sector in India. The transaction was pegged at Rs 150 crore-200 crore.
On The Home Turf
BR Life began its journey in India four years ago with the acquisition of SUT Hospital in Thiruvananthapuram. Other hospitals in the BR Life sphere includes Sree Narayana Hospital in Raipur, SSNMC Super Specialty Hospital Bangalore and Mother & Child Hospital in Udupi. BR Life has a current capacity of around 1,600 beds in the country and in the next phase of expansion, Shetty expects to expand presence across India. He wants to establish a footprint in the National Capital Region, Odisha, Punjab, Madhya Pradesh, Chhattisgarh, Uttar Pradesh and Gujarat, among others.
When asked about the biggest challenge gripping the country, Shetty says it is ‘access to quality healthcare’. “India has qualified healthcare professionals but there is a requirement for even more. We have organisations that want to work for the betterment of society but it is still far from established.”
Going forward, Shetty plans to set up healthcare centres with a capacity of around 20,000 beds across the country by 2023 with an estimated investment of $600-700 million. His focus will be on urban, rural and tribal areas. “Currently, most of the quality healthcare facilities are present only in big cities. These need to be extended to tier-2 and -3 cities and rural and tribal areas as well,” says Shetty, adding “our ability to deal with pandemics as a nation, too, needs to be improved.”
The company has recently acquired a 100-acre land to build a medicity in Amaravati. “This is just the beginning,” says Shetty.
What’s Ailing Indian Healthcare Sector?
As per data available with healthcare venture capital fund Quadria Capital, over 70 per cent of the population in India currently lives in the hinterland. Of this 60 per cent is poor, 35 per cent is middle-class and a mere 5 per cent can be categorised as rich. Rural sector accounts for 70 per cent of communicable disease and surprisingly 50-70 per cent of non-communicable diseases.
To break down the numbers further, as much as 60 per cent hospitals, 75 per cent dispensaries and 80 per cent doctors are currently located in the urban areas in India servicing only 30 per cent of the country’s population. The situation in itself paints a grim picture with the unavailability of secondary or tertiary care services in rural areas (only 37 per cent of people have access to in-patient department) leading to higher costs of healthcare for rural population.
“While urban areas continue to attract investments, it is the rural sector that needs more attention,” says Sunil Thakur, Director and COO at Quadria Capital. There is great opportunity for providing services to the rural sector, but the challenge faced is on the supply side. One being the shortage of clinical and non-clinical manpower and the other being lack of basic infrastructure, points out Thakur. “Any business model that could bridge this divide and provide access, will ride the success wave in this huge market,” he says.
Another set of data collated from global studies indicate that approximately 400 million people in India do not have access to essential health services.
Health Is ‘Wealth’
The dismal penetration of healthcare in India signifies the mammoth scope and opportunity that public and private investments have. That perhaps explains the reasons why global investors stay bullish on India’s healthcare sector. While value-based treatment that seeks to meet the requirements of consumer-centric targeted therapies is the need of the hour in the country, what is creating a multiplicity of complexities at the current juncture is the dynamics at play in the context of industry risks, innovation, consumerism and regulation in this sector.
According to a report jointly published by KPMG and Ficci in 2016, the doctor-patient ratio in India stands at a dismal 1:1,700 and out of pocket expenditure as high as 62 per cent of total healthcare spending.
“Access to quality healthcare is one the biggest challenges in India today. The country has a lot of qualified healthcare professionals but there is a requirement for a lot more,” says Shetty. “Due to the sheer size and diversity of India, standardisation of healthcare system gets challenging,” he adds.
Healthcare was traditionally seen as a social sector in India, but with a strong advocacy for transformation over the past few years, entrepreneurs are increasingly realising the economic development opportunity both for national and State level.
“There is no better time than now for global healthcare organisations to make the right choice of placing India firmly on their evolutionary trajectory from a strategic perspective,” says Monish Gaurav Chatrath, Managing Partner of MGC & KNAV Global Risk Advisory LLP.
With investors such as TPG Growth and Temasek taking the lead in pursuing deals in India’s private health services market, Becton Dickinson and Boston Scientific taking the lead in medical devices and equipments; Johnson & Johnson Innovation eyeing early-stage innovations to accelerate in-house discovery efforts; and Munich Health showing the way with its joint venture in insurance, the sector is attracting significant investor interest from global players.
Besides, with the government announcing measures to cover 10 crore poor in this year’s Budget, the sector will need more private participation in the months to come. “The increasing role of the private sector that is gradually easing the dependency on the government-provided health infrastructure, is an aspect that provides encouraging signals for investors in the private sector,” says Chatrath.
However, one thing that Shetty is clear about is that he does not want to avail any capital from private equity and venture capital firms. “My expansion plans will be funded through internal accruals,” he says.
Earlier, Azaad Moopen, developer of healthcare facilities in Asia-Pacific and CMD of Aster DM Healthcare, too, bet big on India. Having begun in the Middle East and carving out a name for himself there, he has also been involved in the development of healthcare facilities in India. Recently the company made a debut on the country’s bourses but it was rather a lackluster one.
All in all, these are just the early years for Shetty. “An entrepreneur never rests,” he says, as he gears up for what he hopes is yet another long innings.