Healthcare
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: March, 2015

Healthcare sector growth trend in India

The Indian healthcare industry size is expected to touch US$ 160 billion by 2017 and US$ 280 billion by 2020.

Healthcare sector growth trend in India

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 in India

Per capita healthcare expenditure in India is estimated to grow at a CAGR of 15.4 per cent during 2008-15 to reach US$ 88.7.

Per-capita healthcare expenditure in India

Shares in healthcare spending in India, 2015

Private sector's share in healthcare delivery is expected to increase from 66 per cent in 2005 to 81 per cent by 2015.

Shares in healthcare spending in India, 2015

Updated: March, 2015

SECTORAL REPORT | October, 2014

Introduction

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

The 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 primary competitive advantage 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.

Market Size

According to estimates, the overall Indian health care market today is US$ 65 billion, of which the hospital supplies and health care equipment segment is believed to be only around US$ 4.5-5 million. Health care delivery, which includes hospitals, nursing homes and diagnostics centres, and pharmaceuticals, constitutes 65 per cent of the overall market.

India requires 600,000 to 700,000 additional beds over the next five to six years, which potentially throws an opportunity of more than US$ 25-30 billion. While the existing hospitals would look at expanding their capabilities, a lot of new properties would also come up.

Overall the number of transactions in the healthcare space is going to grow as companies are seeking growth capital. The average investment size by private equity funds in healthcare chains has increased to US$ 20-30 million which was around US$ 5-15 million, said Mr Abhishek P Singh, Associate Director for Healthcare, PricewaterhouseCoopers (PwC).

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.

Investments

The hospital and diagnostic centres attracted foreign direct investment (FDI) worth US$ 2,793.72 million between April 2000 and January 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 has signed a deal to acquire the female health care businesses of Famy Care Ltd, a specialty women’s health care company, for US$ 750 million in cash and additional contingent payments of up to US$ 50 million.
  • Sanofi-Synthelabo (India) Ltd had invested Rs 90 crore (US$ 14.47 million) in Apollo Sugar Clinics Ltd (ASCL), a unit of its subsidiary Apollo Health and Lifestyle Ltd.
  • 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$ 241.24 million), as per Mr Prathap C Reddy, Founder and Executive Chairman, Apollo Hospitals.
  • Temasek Holdings Pte Ltd has acquired the entire 17.74 per cent stake of Punj Lloyd Ltd in Global Health Pvt Ltd, which owns and operates the Medanta super specialty hospital in Gurgaon, Haryana.
  • CDC, the UK’s development finance institution, has invested US$ 48 million in Narayana Hrudayalaya hospitals, a multi-speciality healthcare provider. With this investment, Narayana Health will expand affordable treatment in eastern, central and western India.
  • Apollo Health and Lifestyle Ltd (AHLL), a wholly-owned subsidiary of Apollo Hospitals Enterprise, has acquired Nova Specialty Hospitals at an estimated cost of Rs 135-145 crore (US$ 21.71-22.32 million).

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$ 25.73 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.
  • Generic drug maker Mylan Inc and the US-based Abbott Industries have received the CCI’s nod to proceed with their merger.
  • 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$ 7.23 million), besides the establishment of 1,000 generic medical shops across the State in the next few months.

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.

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.

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$ 0.016 as on March 24, 2015

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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