Last Updated: September 17, 2014
Dr Wolfgang Beier
CEO, Oncology Services Europe
Updated: June, 2014
SECTORAL REPORT | April, 2014
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.
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.
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:
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:
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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