Life sciences is the next logical area for India: Blackstone CEO

CEO Stephen A Schwarzman spoke to Pavan Lall in a video chat about the future of commercial realty in India, recovery from a global recession, India's return to growth path, Covid-19 vaccine and more

Co-founder, CEO and chairman of the world’s largest private equity firm Blackstone Stephen A Schwarzman, as the guest of honour at IIT Bombay convocation, will address the graduating class over Zoom on Sunday. Having invested $6 billion in India last year, New York-headquartered Blackstone is looking at the next big growth area in the country. Schwarzman, who had visited India just before the lockdown in March to promote his book What It Takes: Lessons In the Pursuit of Excellence, spoke to Pavan Lall in a video chat about the future of commercial realty in India, recovery from a global recession, India’s return to growth path, Covid-19 vaccine and more. Edited excerpts:

As the largest landlord in India, give us a sense of the future of commercial real estate.

Not only are we the largest landlord but also one of the largest business groups with $40 billion in asset value. And both areas have IT and computer science as a primary theme. Worldwide, IT has done the best because of people operating from home. Over 50 per cent of real estate for us is driven by IT, so this is a huge positive in the longer term. Part of good investing is trade asset allocation and we allocated it to IT throughout many of our activities. India, by the way, is our best-performing market. 

IT is clearly an Indian stronghold. What will the next one be?

I think a very logical one in which India already has a position is life sciences, which would involve different phases of pharma and equipment. This would be an area where India obviously has experience and one with strong potential.

Last year you said if the world went into a recession, it would not be that easy to get out of it. What are your thoughts now?

The debate is whether the recovery is L-shaped, V-shaped or square-root shaped…. I think it’s probably like a square root, but depends what measure you want to take. 

If the baseline is 2019, it will take several years to do that. In the US, McKinsey estimates two and a half years to get back to 2019-levels but amazingly some parts are booming ahead: technology, certain parts of retail adapted to online sales and so the world has uneven outcomes in every country.

Your view of the Indian economy from the outside-in?

India has slowed down but interestingly its stock market has recovered quite well and that is a source of confidence for every country in the world with the exception of China, which will have an economic decline this year overall. If you're used to growing at 5, 6 or 7 per cent, then around (-)3 per cent may seem like the end of the world. But stepping back, it will be better than the rest now. From the outside, India should resume its path to growth in 2021 and get stronger in 2022. The size of the workforce is the largest below 35 years. 

What do you have to say on the timeline for a Covid-19 vaccine?

Certainly by the first quarter of 2021, there will be a number of vaccines to make it through their phase 3 trials. Experts anticipate positive results. The issue will not be if it will work but how rapidly can you put it into production for billions of doses--so it will be pushing the global system. Most think by the end of the year 2021, there will be widespread distribution of the vaccine. There are over 200 being made and I guess six or eight are going into major phase 3 testing. I think you will have some good news before the end of the first quarter but that doesn't mean you will have vaccines straight away.

Your advice to students and young executives at this point?

As I also said in my book, when you have major changes there are huge opportunities and huge problems. Around the world for example, food delivery service has been a huge boom, there has been a re-emphasis on fixing people’s homes and buying things for that. High-quality entertainment has also been a focus area as people go out less. Don't get emotionally upset by changes but look at how one can take advantage by developing goods and services. Typically, more people can be hired at a time like that, so you can get a workforce together faster.