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April, 2010

Sector structure/Market size

The healthcare industry in the country, which comprises hospital and allied sectors, is projected to grow 23 per cent per annum to touch US$ 77 billion by 2012 from the current estimated size of US$ 35 billion, according to a Yes Bank and an industry body report published in November 2009. The sector has registered a growth of 9.3 per cent between 2000-2009, comparable to the sectoral growth rate of other emerging economies such as China, Brazil and Mexico. According to the report, the growth in the sector would be driven by healthcare facilities, both private and public sectors, medical diagnostic and pathlabs and the medical insurance sector. According to the report, diagnostics would contribute US$ 2.5 billion to the healthcare industry by 2012.

An increasing number of public and private healthcare facilities are expected to propel demand for the industry, accounting for another US$ 6.7 billion in this period.

Health Insurance

The Indian health insurance market has emerged as a new and lucrative growth avenue for both the existing players as well as the new entrants. According to a latest research report "Booming Health Insurance in India" by research firm RNCOS released in April, 2010, the health insurance market represents one the fastest growing and second largest non-life insurance segment in the country. The Indian health insurance market has posted record growth in the last two fiscals (2008-09 and 2009-10). Moreover, as per the report, the health insurance premium is expected to grow at a CAGR of over 25 per cent for the period spanning from 2009-10 to 2013-14.

According to the Yes bank and an industry body report published in November 2009, the medical insurance sector would account for US$ 3 billion in the next three years, up from the estimated current size of over US$ 1 billion

Health insurance premium collections touched US$ 1.31 billion in 2008-09 compared to US$ 1.3 billion in the previous year, the Insurance Regulatory and Development Authority (IRDA) said in its annual report for 2008-09.

Investments in Healthcare

As per data released by the Department of Industrial Policy and Promotion (DIPP), the drugs and pharmaceuticals sector has attracted FDI worth US$ 1.66 billion between April 2000 and January 2010, while hospitals and diagnostic centres have received FDI worth US$ 761.18 million in the same period.

Healthcare major, Fortis Hospitals plans to invest US$ 53.7 million, to expand its facilities pan-India.

Moreover, in March 2010, Fortis Healthcare announced the largest overseas acquisition by an Indian company in the healthcare space. It bought the entire 23.9 per cent stake held by TPG Capital in Singapore's Parkway Holding Ltd for US$ 686 million.

Asia's leading hospital chain, Columbia Asia Group, which already has six hospitals in the country, plans to ramp-up its operations in India by opening eight more multi-speciality community hospitals with a total capacity of 800 beds by mid-2012. The group has earmarked a total investment of US$ 177.1 million for the 14 hospitals.

Medical Tourism

According to a new report published by RNCOS, titled "Booming Medical Tourism in India" released in September 2009, medical tourism in India has emerged as the fastest growing segment of the tourism industry despite the global economic downturn. High cost of treatments in the developed countries, particularly the USA and UK, has been forcing patients from such regions to look for alternative and cost-effective destinations to get their treatments done. The Indian medical tourism industry is presently at a nascent stage, but has an enormous potential for future growth and development.