Healthcare
India offers a huge patient pool, favourable regulatory environment and cost advantage for conducting clinical trials.

Healthcare Industry in India

Latest update: June, 2014

Healthcare sector growth trend

By 2017, the healthcare industry size is expected to touch US$ 160 billion.

Healthcare sector growth trend

Market break-up by revenues

Of total healthcare revenues in the country hospitals account for 71 per cent.

Market break-up by revenues

Per-capita healthcare expenditure

Per capita healthcare expenditure is estimated at a CAGR of 15.7 per cent during 2008–15 to US$ 88.7 by 2015.

Per-capita healthcare expenditure

Shares in healthcare spending in India, 2015

Shares in healthcare spending in India, 2015

Updated: June, 2014

SECTORAL REPORT | April, 2014

Brief Introduction

India has been awarded a ‘Polio Free’ status by way of an official certification presented by the World Health Organisation (WHO). India is among other countries in the South East Asian region which have been certified as being free of the polio virus. India has been polio free since January 2011, as per Mr Ghulam Nabi Azad, Minister for Health and Family Welfare, Government of India.

Healthcare in India today provides existing and new players with a unique opportunity to achieve innovation, differentiation and profits. In the next decade, increasing consumer awareness and demand for better facilities will redefine the country’s second largest service sector employer.

India's primary competitive advantage over its peers lies in its large pool of well-trained medical professionals. Also, India's cost advantage compared to peers in Asia and Western countries is significant — cost of surgery in India is one-tenth of that in the US or Western Europe.

In India, the diagnostics sector has been witnessing immense progress in innovative competencies and credibility. Technological advancements and higher efficiency systems are taking the market to new heights. The RNCOS report, 'Indian Diagnostic Market Outlook to 2015', highlights that the IVD equipment market will grow at a compound annual growth rate (CAGR) of around 15 per cent from 2012 to 2015.

Market Size

The healthcare sector in India is expected to grow at a CAGR of 15 per cent to touch US$ 158.2 billion in 2017 from US$ 78.6 billion in 2012, according to a report by Equentis Capital.

India being a country with a growing population, its per capita healthcare expenditure has increased at a CAGR of 10.3 per cent from US$ 43.1 in 2008 to US$ 57.9 in 2011, and going forward it is expected to reach US$ 88.7 by 2015.

The factors behind the growth of the sector are rising incomes, easier access to high-quality healthcare facilities and greater awareness of personal health and hygiene.

Healthcare providers in India are expected to spend US$ 1.08 billion on IT products and services in 2014, a four per cent increase over 2013.

Investments

The private sector has emerged as a vibrant force in India's healthcare industry, lending it both national and international repute. The sector’s share in healthcare delivery is expected to increase from 66 per cent in 2005 to 81 per cent by 2015. The private sector's share in hospitals and hospital beds is estimated at 74 per cent and 40 per cent, respectively.

According to data released by the Department of Industrial Policy and Promotion (DIPP), hospital and diagnostic centres attracted foreign direct investment (FDI) worth Rs 11,272.32 crore (US$ 1.87 billion) between April 2000 and February 2014.

Some of the major investments in the Indian healthcare industry are as follows:

  • Jaypee Group plans to diversify into healthcare by investing in excess of Rs 2,000 crore (US$ 332.68 million) over the next 3–4 years to set up a hospital chain with a minimum capacity of 3,000 beds.
  • Helion Venture Partners has invested Rs 27 crore (US$ 4.49 million) in multi-specialty dental care chain Denty's, as demand for quality patient care increases rapidly in India.
  • Medwell Ventures Pvt Ltd has acquired Bengaluru-based Nightingales Home Health Services, which has more than 5,000 families subscribing to its annual care plans. The company expects to establish a network in 10 Indian metro clusters serving over a million families in the coming years.
  • Strand Life Sciences has partnered with the Mazumdar-Shaw Medical Foundation (MSMF) to set up a lab that aims to bring down the cost of detecting cancer.
  • GE Healthcare and Cancer Treatment Services International have announced plans to launch 25 cancer detection and treatment centres all over India with an investment of Rs 720 crore (US$ 119.77 million) in the next five years.
  • ChrysCapital has invested around US$ 40 million in Torrent Pharma, expanding its portfolio of healthcare companies and taking up the total exposure in the sector to nearly US$ 300 million.

Government Initiatives

The Planning Commission has allocated US$ 55 billion under the 12th Five-Year Plan to the Ministry of Health and Family Welfare, which is about three times the actual expenditure under the 11th Five-Year Plan. The 12th Plan focuses on providing universal healthcare, strengthening healthcare infrastructure, promoting research and development (R&D) and enacting strong regulations for the healthcare sector.

Some of the major initiatives taken by the government to promote the healthcare sector in India are as follows:

  • All India Institute of Medical Sciences (AIIMS) spends at least Rs 2 million (US$ 33,271.51) annually on each faculty member, according to a study by the institute's hospital administration.
  • Sikkim has become India's first state with 100 per cent sanitation coverage, according to a report of the drinking water and sanitation ministry. "The state has also sensitised people to adopt a holistic approach to improve sanitation and hygiene for a clean environment while accelerating overall development in the state," according to the Government of Sikkim.
  • India and Maldives have signed three agreements after delegation level talks between Mr Abdulla Yameen Abdul Gayoom, President, Maldives, and Dr Manmohan Singh, Prime Minister of India, on January 2, 2014. The pacts include a Memorandum of Understanding (MoU) on health cooperation.
  • The Union Cabinet has approved the proposal for setting up of National Cancer Institute (NCI) at a cost of Rs 2,035 crore (US$ 338.51 million). NCI will be set up in the Jhajjar campus (Haryana) of All India Institute of Medical Sciences (AIIMS), New Delhi. The project is estimated to be completed in 45 months.
  • Mr Sis Ram Ola, Union Minister of Labour and Employment, Government of India, has inaugurated the state-of-the-art ESIC Model Hospital at Jaipur, Rajasthan.

Road Ahead

Telemedicine is a fast emerging sector in India. In 2012, the telemedicine market in India was valued at US$ 7.5 million, and is expected to grow at a CAGR of 20 per cent to US$ 18.7 million by 2017.

India's competitive advantage also lies in the increased success rate of Indian companies in getting Abbreviated New Drug Application (ANDA) approvals. India also offers vast opportunities in R&D as well as medical tourism.

The Indian medical tourism industry is pegged at US$ 1 billion per annum, growing at around 18 per cent and is expected to touch US$ 2 billion by 2015.

There is a significant scope for enhancing healthcare services considering that healthcare spending as a percentage of GDP is rising. Rural India, which accounts for over 70 per cent of the population, is set to emerge as a potential demand source. Only three per cent of specialist physicians cater to rural demand.

There are vast opportunities for investment in healthcare infrastructure in both urban and rural India. About 1.8 million beds are required by the end of 2025. Additionally, 1.54 million doctors and 2.4 million nurses are required to meet the growing demand.

Exchange Rate: INR 1 = US$ 0.0166 as on June 27, 2014

References: Department of Industrial Policy and Promotion (DIPP), Union Budget 2012-13, RNCOS Reports, Media Reports, Press Information Bureau (PIB)

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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