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Last Updated: September 04, 2015
Dr Wolfgang Beier
CEO, Oncology Services Europe
Latest update: August, 2015
•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
•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
Last Updated: August, 2015
SECTORAL REPORT | August, 2015
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.
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.
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:
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:
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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