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Healthcare Sector in India

December, 2012

Brief Overview

The healthcare industry forms the backbone of any nation's well being and can be broadly divided into five segments namely hospitals, pharmaceuticals, diagnostics, medical equipment & supplies and medical insurance.

The Indian healthcare sector is expected to reach US$ 100 billion by 2015 from the current US$ 65 billion, growing 20 per cent year-on-year (y-o-y), as per rating agency Fitch. The industry aims to touch US$ 79 billion in 2012 and US$ 280 billion by 2020, on back of increasing demand for specialised and quality healthcare facilities.

In order to strengthen bilateral cooperation, India and Netherlands have signed a memorandum of understanding (MoU) in health and medicine.

The Pharmaceuticals Export Promotion Council of India (Pharmexcil) is promoting 'iPhex 2013' to showcase country's pharmaceutical products. Medicine exports from India are pegged at about Rs 64,000 crore (US$ 11.62 billion), and about 50 per cent goes to the emerging markets, as per Dr P V Appaji, Director-General, Pharmexcil.

Market Size

The hospital services market, which represents one of the most important segments of the Indian healthcare industry, is expected to be worth US$ 81.2 billion by 2015.

Further, the healthcare segment offers an attractive growth opportunity for the information technology (IT) and business processing outsourcing (BPO) industry. The market for outsourced services to healthcare payers is expected to increase from US$ 9 billion in 2011 to US$ 15 billion in 2016, according to research firm NelsonHall.

In addition, the Indian pharmaceutical market is also expected to grow at a compound annual growth rate (CAGR) of 15.3 per cent during 2011-12 to 2013-14, as per Barclays Capital Equity Research report on India Healthcare & Pharmaceuticals.

Trends and Investments

The healthcare and life sciences sector has received the maximum investment from private equity (PE) and venture capital (VC) players, attracting US$ 817 million across 29 investments till August 2012, according to data from Venture Intelligence. Last year, 38 deals were recorded in the sector worth US$ 421 million.

The hospital and diagnostic centre in India has attracted foreign direct investment (FDI) worth US$ 1.48 billion, while drugs & pharmaceutical and medical & surgical appliances industry registered FDI worth US$ 9.78 billion and US$ 571.91 million, respectively during April 2000 to October 2012, according to data provided by Department of Industrial Policy and Promotion (DIPP).

The private sector has emerged as a vibrant force in India's healthcare industry, lending it both national and international repute.

Some of the major investments in the sector include:

  • ExlService Holdings has announced the acquisition of US-based Landacorp Inc. The acquisition will provide Exl with an end-to-end solution for the healthcare industry
  • Trivitron Healthcare has formed a joint venture (JV) with Italy-based Diasorin Group to enter the immunodiagnostics market. The JV company will be called DiaSorin Trivitron Healthcare Pvt Ltd with Trivitron holding 49 per cent stake
  • Fidelity Growth Partners India (FGPI) has invested Rs 400 crore (US$ 72.60 million) in medical technology firm Trivitron Healthcare. The company has also set up centres of innovation for biomedical equipment in collaboration with the Indian Institute of Technology (IIT), Chennai
  • Thyrocare Technologies, a Mumbai-based medical diagnostics services provider, has raised about Rs 120 crore (US$ 21.78 million) from private equity (PE) firm Norwest Venture Partners (NVP)
  • Apollo Group of Hospitals has launched its telemedicine service in Yangoon, Myanmar. The facility will allow Myanmar to consult Indian doctors and have accessibility to quality treatment and latest medical technology. As per company's press statement, the network will primarily provide infrastructure supports like Tele-Education, Tele-Medicine, Internet, videoconferencing and VOIP services via satellite and fibre optic network
  • eHealth Access Pvt Ltd has launched 'Virtual Medical Kiosk', which enables patient-doctor consultation in a secure environment. The medical kiosk will bring the medical practitioner closer to the people in need of medical consultation, as per Mr Ramprabhu T K, Co-founder and Technology Director, eHealth Access. This facilitates on-demand, real-time consultations with medical professionals any time of the day," said Mr Ramprabhu
  • The Council of Scientific & Industrial Research (CSIR) and Hewlett-Packard (HP) have launched a cloud-enabled eHealth centre, a move to bring diagnostic services to the doorsteps of people living in remote areas