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OrbiMed Announces Plans for $500 Million Healthcare Fund in India and Other Asian Countries

Posted on Mar 01, 2013 by Sergio Ulloa ()

New York-based OrbiMed Advisors have announced plans to launch a second Asia healthcare fund by the end of this year. In a report by Reuters, the healthcare fund management group plans to set aside about USD $500 million to invest in Asia's fast-growing markets, including India, China and other Asian countries. The fund could see as much as 65% invested in India, said OrbiMed's founder and Managing Partner Samuel Isaly. In addition, this new fund could be double the size of the $188 million Asia fund that was launched in 2008. "We're looking to make approximately 10 to 12 transactions," Isaly commented in the Reuters report, "We are running out of money in the existing fund." In 2012, Private equity funds quadrupled their investment in India's primary healthcare, placing their hopes on the expectation that consumer spending will rise and with it, the need for improved primary healthcare, which is believed to be worth about some $30 billion. Many international companies, including Goldman Sachs Group Inc, Warburg Pincus LLC, Sequoia Capital, the Government of Singapore Investment Corp and others, have already invested about $520 total in to India's basic healthcare industry, according to Thomson Reuters data. OrbiMed's first Asia-focused fund saw investment in Shasun Pharmaceuticals Ltd, a mid-sized drug maker; KIMS India, tertiary care hospital chain; Bharat Serums, a bio-pharmaceutical company and vaccines; and Ecron Acunova, a clinical research organization. "I would say we have a couple more investments to go in the old fund," said Sunny Sharma, a senior managing director with OrbiMed, who will be managing the Indian portfolio. About 40% of the 2008 fund was invested in India, along with investments in Korea and China. One reason for the heavy investment in China is its aging population. In January 2012, the country changed the sector from "restricted to "permitted", with the implication that overseas companies are able to own 100 percent of an operation in China. Other indicators that show China's healthcare industry is on the rise include the vast and rapid urbanization of Chinese cities and the growing incomes and size of China's middle class. As the country's demographic changes, so do people's needs, especially in terms of healthcare. Islay, who manages about $6.5 billion in healthcare assets worldwide, said that he expects many of the companies expanding in China to go public in the next year. He added that he is confident that the returns on the new fund could be as much as 20%.  The FTSE Asian Sector Health Care Index, which tracks healthcare stocks in Asia, increased by about 15 percent during the last year. Of these stocks, about 45% are Indian. "The portfolio is looking very good - with consistent performance across many companies," Sharma said. India's healthcare industry continues to show promise for those looking to invest in it. It was the country's second-largest industry last year, with a value of about $1.23 billion, just following the information technology industry, according to a report by PricewaterhouseCoopers. "India is one of the most attractive emerging markets because of its size, its democratic institutions, and its rapid growth prospects," commented Isaly.
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