Pierre Omidyar is best known as the founder of the online auction company e-Bay, which he grew from an “odd little Web site” to one of Web commerce’s biggest and longest-lasting success stories.
But his philanthropic investment firm, called the Omidyar Network — which invests money in for-profit start-ups that have a social impact as well as makes grants to non-profits — has also been very active in India.
It has quietly invested almost $100 million in early stage entrepreneurial activity in India since 2009, and is quickly becoming one of the key financial players in a burgeoning affordable heath care industry, aimed at the majority of India’s population who can’t afford or don’t have access to health care. (Read more about the industry.)
“The sectors we work in typically impact the neediest and the most disadvantaged in our society,” said Jasjit Mangat, director of investment at the Omidyar Network, in a telephone interview.
So far in 2012, investors have invested $16 million in seven early stage affordable health care deals in India, Mr. Mangat said, and Omidyar Network plans to invest another $15 million in the sector in 2013.
“Growth in this sector can help a large number of people gain convenient access to health care at a reasonable cost,” he said. “Plus the technology and business-model innovations that are emerging in this sector have a huge export market potential,” he said.
The Omidyar Network’s investments in the sector go beyond new medical devices. The company, like many investors looking at affordable health care space, is also investing in health care delivery companies, who aim to make medical care more affordable and accessible by making it cheaper to reach patients.
In addition to direct investments, Omdiyar has been active in health care delivery through two “feeder funds”: the $17 million Song Fund, a partnership with Google and the George Soros-promoted Soros Economic Development Fund, and Elevar Equity, which backs two private equity funds with total capital of $94 million that invest in India and Latin America.
The Song Fund’s investments include Be Well Hospitals, a chain of 40-bed hospitals offering basic surgeries and outpatient consulting to low-income consumers in smaller Indian cities and towns, as well as the EyeQ chain of hospitals, which specializes in affordable eye care through 16 centers in New Delhi, Haryana, Uttar Pradesh and Uttarakhand. EyeQ does basic cataract surgery for as low as 4,000 rupees, or about $70, by streamlining its medical processes and cutting administrative costs.
Elevar has invested in Glocal Healthcare, a chain of 30- to 100-bed hospitals that aim to provide low-cost hospital services that meet World Health Organization standards to low-income rural India. According to the Glocal Web site, approximately 17 diseases make up 85 percent of India’s disease load of common ailments. So Glocal has designed its hospitals to focus on addressing only these conditions. Glocal’s plans are ambitious – it is planning 50 hospitals in six states in the next 18 months and wants to be in every district of the country within the next six years.
Newly adopted Indian government insurance programs, especially the highly successful cashless, portable smart card-powered Rashtriya Swasthya Bima Yojana, have motivated hospitals to lower costs in health care delivery and become more efficient.
Omidyar is also about to invest in a new medical device company, OneBreath, a start-up that makes low-cost, portable, rechargeable ventilators.
The chief executive of OneBreath, A. Vijayasimha, said in a phone interview from Bangalore that the company was about to get its first round of funding, about $3 million, from a consortium of investors. The consortium includes medical doctors from the San Francisco Bay Area, among other investors.
OneBreath plans to apply for United States Food and Drug Administration approval by 2013, and to set up one manufacturing facility in India and a second in China, Mr. Vijayasimha said. The ventilators keep critically ill patients breathing when their respiratory systems are unable to function, and because the ventilators are portable and battery operated, they can be used in rural areas which have no access to big hospitals and limited electricity.
OneBreath is designed to address two distinct problems: emergency readiness in developed countries and the shortage of ventilators in developing countries, Mr. Vijayasimha said. And they are a fraction of the price: a OneBreath ventilator will cost the user around $3,000, compared to $10,000 to $12,000 for normal hospital models, Mr. Vijayasimha said.
To cut the price, “we’ve just removed the bells and whistles and made it simpler — which actually ends up making the product more reliable by reducing the risk of mechanical component failures,” he said.
Mr, Mangat declined to comment on the actual deal, but was very enthusiastic about the product. “It’s a smarter redesign” of a traditional ventilator, he said. “It has better features, better access — it’s portable — and is almost four to five times cheaper,” he said.
“That combination of pricing, access and features out there is a killer,” he said, his voice rising with excitement as he explained how crucial it is to get health care facilities closer to the rural poor. “We have to be able to get these devices closer to these people — we have to lower the floor,” he said.
Next: India’s many developing country challenges, including dearth of doctors, make low-cost health care difficult: the Stanford-India Biodesign program and others try to create solutions from the ground up.
Jyoti Pande Lavakare is an author and columnist who has covered entrepreneurs from India and Silicon Valley, including producing features for All India Radio in New Delhi, and writing columns for Mint and the Business Standard. She is currently working on her first novel, “The Memory of Pain.
