Goldman Sachs investing in Cancer Care in India
Cytecare to invest over $100 million in five years
The private equity arm of US investment banking major Goldman Sachs (NYSE:GS) along with a consortium of five other investors has invested in Cytecare Hospitals Private Limited, which established its flagship hospital in Bangalore, India in 2016 to provide specialised diagnostic and treatment services for cancer.
Cytecare today announced the closure of a $31 million Series A round, which will be utilized by the company to fund its long term strategy of establishing an oncology franchise in four to five cities in India.
“India, with its large and rapidly growing population, accounts for nearly 20 percent of cancer deaths in the developing world. Cytecare, with its experienced leadership and multi-disciplinary team of clinicians, is positioned to build a nation-wide cancer care network throughout India and address that need in the way we have already done so in Australia, Brazil and China. This investment is also consistent with our strategy to invest in critical sectors and infrastructure that assist in the continued growth and development of India,” said Ankur Sahu, co-head of private equity investing in Asia at Goldman Sachs in a statement.
Cancer Care — A Profitable Business Model
Interestingly the announcement comes less than two months (April 10th, 2018) after Goldman Sachs released a report that sparked controversy, entitled “The Genome Revolution,” in which analysts ask a forthright question “Is curing patients a sustainable business model?”
“… Where an incident pool remains stable (eg, in cancer) the potential for a cure poses less risk to the sustainability of a franchise,” wrote the analyst.
According to the International Agency for Research on Cancer, there will be over 22 million new cases a year by 2030, a significant increase from 14 million in 2012.
“There will be a 12–15 percent year-on-year growth in cancer incidence in the country over the next 10–12 years,” said Suresh Ramu, Co-founder and CEO, Cytecare.
A recent article in the Economist quoted Eric Schmidt of Cowen, an investment firm, saying that oncology offers the highest returns on investment of any therapeutic category.
Cancer is a curse, but also a growth market for investors — Economist [February 1st, 2018]
Responding to a question Dr. Ferzaan Engineer, Co-founder and Chairman, Cytecare said “Cytecare is a for-profit hospital. I think there is nothing wrong with it. We need a sustainable and profitable model to keep upgrading infrastructure.”
Goldman Sachs’ Global investments in Oncology
On 26th March 2018, the Merchant Banking Division of Goldman Sachs (GS MBD) made a significant capital investment in Grupo Oncoclínicas, the largest private cancer treatment group in Brazil, making it the majority shareholder.
In May 2017, Goldman Sachs Private Equity teamed up with Queensland Investment Corporation (QIC) and China’s Pagoda to acquire majority stake in Icon Group of Australia for A$1 Billion.
“Cytecare will benefit from the global network of class-leading oncology companies that Goldman Sachs is helping build worldwide through the creation of significant opportunities for research, cross-training and sharing of best practices. This partnership and investment adds strategic expertise and financial strength to fuel the next stage of Cytecare’s expansion,” said Dr. Ferzaan Engineer.
Lavanya Ashok, Managing Director, Private Equity (PIA) at Goldman Sachs will join Cytecare’s board of directors. Its existing board members and advisors include: Ravi Achar, Shikhar Dharamsey, Vishal Bali, Akila Krishnakumar, Dr Naren Ramakrishnan, Dr Oppel Greeff, John Goodacre, Gillian Corken, Dr Gerard Hoogland and Dr A S Arvind.
Co-founded by Dr. Ferzaan Engineer (Chairman), Suresh Ramu (CEO) and Himanshu Shah (CFO), Cytecare’s plans to create a comprehensive organ-specific oncology platform that supports prevention, treatment and patient-centric care.
Cytecare’s 150-bed hospital has catered to over 5000 patients since it was established in November 2016. In addition to patients from all over India, the hospital has received patients from Africa, Eastern Europe and the Middle East.
Cytecare’s Future Plans
Going forward, Cytecare plans to reach 100,000 cancer patients in India over a 7 to 8 year period. Cytecare will invest INR 700 crore on the oncology platform over the next 4–5 years. The company is targeting annual revenues of over 1000 crores in its mature years (7–8 years from now).
The expansion will be a replication of the hub and spoke model that the company is establishing in Bangalore. Cytecare already has an arrangement to conduct screening camps in Hassan, nearly 200 km away from Bangalore.
A few days back, on the occassion of World No Tobacco Day, Dr Vikram Kekatpure, Senior Consultant, Head and Neck Surgical Oncology had said that Cytecare plans to set up an Information Hub in Kolkata.
“We are currently in the process of identifying new cities to execute our hub-and-spoke growth strategy,” said Suresh Ramu. The infrastructure-heavy hub will be a centre of excellence for research and innovation. “We are currently creating a set of criteria to evaluate cities to expand. There will be a bias for larger cities.”
“Hari Menon (a Haemato Oncology Specialist from the Tata Memorial Centre)is one of twenty-four oncologists in the centre. This is the largest concentration of oncologists in one centre,” said Suresh Ramu. “Our organ-site focussed treatments will make a world of difference in patient outcomes. We are also focussing on advanced diagnostics and genomic therapy.”
“We have already enrolled with 14 to 15 insurance comapnies. I am happy to see a lot of well-insured people coming in,” said Dr. Ferzaan Engineer.
“Through our partnership with Goldman Sachs and their strong global network and large portfolio in healthcare and insurance companies across the world, we will be able to fully realize our goal of creating a new benchmark for cancer treatment and care in India,” said Suresh Ramu.
Goldman Sachs in India
Goldman Sachs is an active investor in India, deploying more than $3.4 billion in capital since 2006. The firm has been serving Indian clients since the early 1990s and established an onshore presence in December 2006 following a ten-year joint venture.
Goldman Sachs plans to invest $200–300 million a year in India over the next three to four years.
Goldman Sachs to invest $1 billion in India in 3–4 years — Livemint [May 23rd, 2017]
The firm has has invested in several firms in India : Shalby Ltd, ReNew Power Ventures, Tejas Networks, Pepperfry, Amber Enterprises Pvt. Ltd, SAMHI hotels and Piramal Realty, BPL Medical Technologies Ltd, Nova Medical Centres, Tikona Digital Networks and Essel Highways.
Incidentally, Lloyd Blankfein, who has led Goldman Sachs for the past twelve years, survived a run-in with cancer after being diagnosed with lymphoma in 2015. He declared himself cancer-free about a year later following chemotherapy treatments.
The Genome Revolution report produced by Salveen Richter and team for Goldman Sachs, also said that China had a significant lead over the US in CRISPR and CAR-T studies.
Goldman Sachs: China Beating U.S. in Gene Editing Arms Race — Fortune [April 13th, 2018]
Goldman Sachs will be organising its 39th Annual Global Healthcare Conference in Palos Verdes, Los Angeles on June 12–14, 2018. The event is expected to host several companies doing path-breaking research in oncology.
