Indian healthcare sector is growing at a 15 per cent CAGR to reach US$ 158.2 billion by 2017.

Healthcare Industry in India

Latest update: August, 2015

Strong growth in healthcare expenditure

•Healthcare industry is growing at a tremendous pace owing to its strengthening coverage, services and increasing expenditure by public as well private players 

•During 2008-20, the market is expected to record a CAGR of 17 per cent 

•The total industry size is expected to touch USD160 billion by 2017 and USD280 billion by 2020 

•As per the Ministry of Health, development of 50 technologies has been targeted in the FY16, for the treatment of disease like Cancer and TB 


Rise in per capita healthcare expenditure


•Per capita healthcare expenditure is estimated at a CAGR of 11.3 per cent during FY 2008–15E to US$ 91 billion by 2015

•This is due to rising incomes, easier access to high-quality healthcare facilities and greater awareness of personal health and hygiene

• Greater penetration of health insurance aided the rise in healthcare spending

• Economic prosperity is driving the improvement in affordability for generic drugs in the market

Passenger vehicle exports from India

Last Updated: August, 2015

SECTORAL REPORT | August, 2015


Healthcare has become one of India’s largest sectors - both in terms of revenue and employment. Healthcare comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment. The Indian healthcare sector is growing at a brisk pace due to its strengthening coverage, services and increasing expenditure by public as well private players.

Indian healthcare delivery system is categorised into two major components - public and private. The Government, i.e. public healthcare system comprises limited secondary and tertiary care institutions in key cities and focuses on providing basic healthcare facilities in the form of primary healthcare centers (PHCs) in rural areas. The private sector provides majority of secondary, tertiary and quaternary care institutions with a major concentration in metros, tier I and tier II cities.

India's competitive advantage lies in its large pool of well-trained medical professionals. India is also cost competitive compared to its peers in Asia and Western countries. The cost of surgery in India is about one-tenth of that in the US or Western Europe.

Market Size

The overall Indian healthcare market today is worth US$ 100 billion and is expected to grow to US$ 280 billion by 2020, a compound annual growth rate (CAGR) of 22.9 per cent. Healthcare delivery, which includes hospitals, nursing homes and diagnostics centers, and pharmaceuticals, constitutes 65 per cent of the overall market.

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.

India requires 600,000 to 700,000 additional beds over the next five to six years, indicative of an investment opportunity of US$ 25-30 billion. Given this demand for capital, the number of transactions in the healthcare space is expected to witness an increase in near future. The average investment size by private equity funds in healthcare chains has already increased to US$ 20-30 million from US$ 5-15 million#.

The Indian medical tourism industry is pegged at US$ 3 billion per annum, with tourist arrivals estimated at 230,000. The Indian medical tourism industry is expected to reach US$ 6 billion by 2018, with the number of people arriving in the country for medical treatment set to double over the next four years.


The hospital and diagnostic centers attracted Foreign Direct Investment (FDI) worth US$ 3.14 billion between April 2000 and June 2015, according to data released by the Department of Industrial Policy and Promotion (DIPP).

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

  • Mylan Inc signed a deal to acquire the female health care businesses of Famy Care Limited, a specialty women’s health care company, for US$ 750 million in cash and additional contingent payments of up to US$ 50 million.
  • Apollo Hospitals Enterprise (AHEL) plans to add another 2,000 beds over the next two financial years, at a cost of around Rs 1,500 crore (US$ 225.28 million).
  • Malaysia-based IHH Healthcare Berhad has agreed to buy 73.4 per cent stake in Global Hospitals Group, India's fourth-largest healthcare network, for Rs 1,284 crore US$ 192.84 million.
  • Temasek Holdings Pte Limited acquired the entire 17.74 per cent stake of Punj Lloyd Limited in Global Health Private Limited, which owns and operates the Medanta Super Specialty Hospital in Gurgaon.
  • CDC, a UK based development finance institution, invested US$ 48 million in Narayana Hrudayalaya, a multi-speciality healthcare provider. With this investment, Narayana Health will expand affordable treatment in eastern, central and western India.
  • Apollo Health and Lifestyle Limited (AHLL), a wholly-owned subsidiary of Apollo Hospitals Enterprise, acquired Nova Specialty Hospitals at an estimated cost of Rs 135-145 crore (US$ 20.3-21.8 million).
  • IHH Healthcare Berhad acquired a controlling 51 per cent equity stake in Hyderabad-based Continental Hospitals Limited for about approximately US$ 45.4 million.
  • Sanofi-Synthelabo (India) Limited invested Rs 90 crore (US$ 13.52 million) in Apollo Sugar Clinics Limited (ASCL), a unit of its subsidiary Apollo Health and Lifestyle Limited.
  • AHEL entered into a definitive agreement worth US$ 9 million to acquire 51 per cent in Assam Hospitals Limited (AHL), which runs a 220-bed hospital in Guwahati.
  • Carlyle Group acquired a stake in Metropolis Healthcare Limited, an operator of pathology laboratories in India, for an undisclosed sum.

Government Initiatives

India's universal health plan that aims to offer guaranteed benefits to a sixth of the world's population will cost an estimated Rs 1.6 trillion (US$ 24.03 billion) over the next four years.

Some of the major initiatives taken by the Government of India to promote Indian healthcare industry are as follows:

  • The Competition Commission of India (CCI) in its meeting has approved the proposed merger between Sun Pharma and Ranbaxy, subject to the parties inter alia carrying out the divestiture of their products relating to seven relevant markets for formulations.
  • India and Sweden celebrated five years of Memorandum of Understanding (MoU). The cooperation in healthcare between India and Sweden will help in filling gaps in research and innovative technology to aid provisioning of quality healthcare.
  • Mr J P Nadda, Union Minister for Health & Family Welfare, Government of India has launched the National Deworming initiative aimed to protect more than 24 crore children in the ages of 1-19 years from intestinal worms, on the eve of the National Deworming Day.
  • Under the National Health Assurance Mission, Prime Minister Mr Narendra Modi's government would provide all citizens with free drugs and diagnostic treatment, as well as insurance cover to treat serious ailments.
  • All the government hospitals in Andhra Pradesh would get a facelift with a cost of Rs 45 crore (US$ 6.76 million), besides the establishment of 1,000 generic medical shops across the State in the next few months.
  • Mission Indradhanush launched by Mr JP Nadda aims to immunise children against seven vaccine preventable diseases namely diphtheria, whooping cough, tetanus, polio, tuberculosis, measles and hepatitis B by 2020. Government has set a target of 95 per cent immunisation cover by end of 2016.
  • The E-health initiative, which is a part of Digital India drive launched by Prime Minister Mr Narendra Modi, aims at providing effective and economical healthcare services to all citizens. The programme aims to make use of technology and portals to facilitate people maintain health records and book online appointments with various departments of different hospitals using eKYC data of Aadhaar number.

Road Ahead

India is a land full of opportunities for players in the medical devices industry. The country has also become one of the leading destinations for high-end diagnostic services with tremendous capital investment for advanced diagnostic facilities, thus catering to a greater proportion of population. Besides, Indian medical service consumers have become more conscious towards their healthcare upkeep.

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. To sum up, there are vast opportunities for investment in healthcare infrastructure in both urban and rural India.

Exchange Rate: INR 1 = US$ 0.01502 as on September 10, 2015

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

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

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