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Last year, we evaluated over 450 deals in the healthcare sector, exploring dynamic sub-segments such as Mental Rehabilitation, Insurtech, Longevity, Fitness and sports, Eldercare, Pain Management, Alternate Medicine, and more. This deep dive revealed exciting opportunities and critical trends shaping the future of healthcare in India.
Healthcare businesses that prioritize building trust unlock multiple monetization avenues. This begins with measuring customer outcomes (clinical & satisfaction) —a crucial step for creating credibility and long-term loyalty. Starting early on this journey enables faster value creation, as we’ve seen with successful companies in our portfolio and beyond.
Even in a digital-first world, physical interactions are proving invaluable in healthcare. Companies integrating offline touchpoints are not only enriching customer experiences but also unlocking new revenue streams. The lesson? Solve for customer experience first, and trust will follow.
Most healthcare sub-sectors require a comprehensive approach to scale. While need-gap-opportunity analysis throws up large numbers, the serviceability-paying ability filter reduces the ability to build businesses with more than $1bn in revenues today. For example, a children’s therapy business might complement its core offering with learning solutions or monetize SaaS tools—creating synergies across verticals. The key is to identify adjacencies early and strike a balance between lean experimentation and focus.
Combining functional needs with aspirational desires is a powerful strategy. Take protein supplementation—while essential for muscle mass, it's social positioning as part of a fitness lifestyle has accelerated adoption. Similarly, rising social acceptance of cosmetology has driven growth in this space for both men and women.
Despite progress, accessing the right advice—be it for fitness, surgery, or general well-being—remains a hurdle for many. While many sub-segments saw a 30%+ growth in the last year driven both by volume and price increase and we are seeing early signs of strong business formation with some companies touching 100cr+ ARRs, breakout companies are yet to emerge. We remain excited to partner with founders building in these spaces.
Mental health is a growing crisis in India. Studies show a weighted prevalence of 13.7% for lifetime mental health morbidity and 10.6% for current mental health conditions. We evaluated multiple companies catering to the diverse mental health needs of the Indian populace with unique approaches - from devices and online therapy to mental rehabilitation and spiritual wellness.
We are particularly excited about the mental rehabilitation market as it is a fragmented and rapidly growing space that also offers strong center-level unit economics (ALOS of 30 days and an ARPOB of Rs. 10,000). We also wrote about our views on the larger mental health space last year. We largely remain excited about curative mental health with combination treatments covering drugs, wearables, therapy, and IPD treatments.
The health insurance market has been growing at a 19% CAGR over the last five years and is projected to grow at 18% over the next three years. Private insurance players have grown at a CAGR of 27% over the last 5 years. Notably, private hospital players reported a revenue CAGR of 15.4% over the last three years, while the insurance segment (36% of total revenue) reported a revenue CAGR of 30% during the same period.
While retail and corporate are both ~50% by value, ARPU for retail is 3x of corporate. Insurance players that focused on retail were more profitable. We continue to look for companies that are building profitable models in insurance, especially retail health insurance.
Globally, the sector has gained immense traction, attracting over $15 billion in funding in CY24. In India, rising discretionary spending, fueled by increasing income levels, is creating demand for solutions that enhance lifespan and healthspan. Furthermore, India's aging population is growing rapidly, with the 60+ demographic expected to double by 2050 - a significant market opportunity for longevity-focused innovations.
We have evaluated multiple startups in this space working on different delivery models, including premium gyms and fitness centers, AI companions, personalized longevity programs, and nutraceutical products. While we think the Indian market is still nascent, we continue to look for companies that can build high ARPU and high LTV businesses.
Recreational sports in India is growing at a rapid pace. Recreational sports facilities in Tier 1 and 2 India alone account for ~ 4000 crs in annual revenues today. The online health and fitness industry is growing at a 31% CAGR and is currently valued at $2 billion. There is a rise in people trying out new fitness formats as well. Multiple online fitness companies have achieved 100 crs+ annual revenues already.
We interacted with multiple startups across various subspaces - offering online weight loss programs, gym/fitness center SaaS solutions, online personal training platforms, sports facilities aggregators, etc. We remain excited about the space, looking for companies that can build highly scalable operations.
India currently has around 150 million elderly people, a number expected to rise to 230 million in the next 10-12 years. The elderly population is projected to grow by 40% from 2021 to 2031, compared to an 8% increase in the overall population. The baby boomer generation, born in the 1950s and 60s, is now entering their senior years with significant financial resources. The rise of nuclear families—now accounting for about 55% of households—has also reduced the stigma associated with living alone.
We engaged with various companies building in the space, spanning facility management platforms for senior living communities, community-first platforms, concierge-based services, elder-specific IOT devices for fall detection, etc, and innovative fintech and MedTech solutions. We continue to look for large-scale, monetizable models in the space.
The Ayurveda market in India is valued at around $11bn growing at a CAGR of 17% over the past 5 years. Around 53% of the urban population uses Ayurvedic medicines. Despite the large market size, several gaps need to be addressed: 1. Discovery and transparency 2. Lack of standardization, and 3. Medical research-backed products.
Drawing parallels from China’s $22.7bn TCM market which is standardized through government effort, we think the Indian government's efforts to regulate and standardize the Ayurveda market can create potential opportunities. We continue to look for clinical outcomes’ first phygital models as well as product-first companies in the space.
According to the WHO, approximately 1.71 billion people worldwide are affected by musculoskeletal conditions. In India, it is estimated that 20% of the population, equivalent to 280 million people, are suffering from chronic pain issues. Despite the widespread prevalence of chronic pain in India, the spending per patient still remains low primarily due to unsatisfactory outcomes with the current physiotherapy and pain management solutions and limited spending power eventually leading patients to accept pain as part of life.
We evaluated multiple companies in this space delivering care via digital platforms (Human & AI led), physical centers, at-home medtech devices, and OSG (orthopedic soft goods) manufacturers & distributors. We continue looking for outcome-first full-stack models in pain management and rehabilitation and high-quality, OSG brands.
As we look ahead, several areas hold transformative potential:
AI is revolutionizing diagnostics, improving patient workflows, and enabling personalized treatments. This not only enhances patient care but also optimizes costs—a true game-changer.
With rising incomes and initiatives like PM-JAY (authorized over Rs $14.5bn providing coverage to the bottom 40% of India’s population), the demand for tailored healthcare solutions in Tier 2 and beyond is surging. This landscape is ripe for innovation.
The Indian pharmaceutical industry already supplies nearly 50% of generic drugs in the US. We believe there’s immense potential for Indian healthtech and biotech innovations to achieve similar global success.
The journey ahead is both challenging and exciting, and we are committed to tackling these opportunities head-on. If you’re building in healthcare, let’s connect—we’d love to collaborate and drive meaningful impact together.
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