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 centres (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. India ranks 145th among 195 countries in terms of quality and accessibility of healthcare.
- The healthcare market can increase three-fold to Rs 8.6 trillion (US$ 133.44 billion) by 2022.
- Indian medical tourism market is growing at the rate of 18 per cent year on year and is expected to reach US$ 9 billion by 2020. There is a significant scope for enhancing healthcare services considering that healthcare spending as a percentage of Gross Domestic Product (GDP) is rising. The government’s expenditure on the health sector has grown to 1.4 per cent in FY18E from 1.2 per cent in FY14. The Government of India is planning to increase public health spending to 2.5 per cent of the country’s GDP by 2025.
- Health insurance is gaining momentum in India. Gross direct premium income underwritten by health insurance grew 18.2 per cent y-o-y to Rs 24,864.01 crore (US$ 3.56 billion) in FY20 (up to September 2019).
The hospital and diagnostic centers attracted Foreign Direct Investment (FDI) worth US$ 6.34 billion between April 2000 and June 2019, according to data released by the Department of Industrial Policy and Promotion (DIPP).
Some of the recent investments in the Indian healthcare industry are as follows:
- The value of merger and acquisition (M&A) deals in hospital sector jumped by record 155 percent at Rs 7,615 crore (US$ 1.09 billion) in FY19.
- In August 2019, Microsoft India and Apollo Hospitals Group entered in agreement to set up a National Clinical Coordination Committee for AI-powered Cardiovascular Disease Risk Score API.
- In January 2019, National Company Law Tribunal (NCLT) approved Tri-County Premier Hearing Services Inc’s plan to acquire Bhilai Scan and Research Pvt Ltd (BSR) Diagnostics Ltd for Rs 67 crore (US$ 9.29 million).
- Healthcare sector in India witnessed 23 deals worth US$ 679 million in H12018.
- India and Cuba have signed a Memorandum of Understanding (MoU) to increase cooperation in the areas of health and medicine, according to Ministry of Health and Family Welfare, Government of India.
- Fortis Healthcare has approved the de-merger of its hospital business with Manipal Hospital Enterprises. TPG and Dr. Ranjan Pal could invest Rs. 3,900 crore (US$ 602.41 million) in Manipal Hospital Enterprise.
Some of the major initiatives taken by the Government of India to promote Indian healthcare industry are as follows:
- The Government of India aims to increase healthcare spending to three percent of the Gross Domestic Product (GDP) by 2022.
- In February 2019, the Government of India established new All India Institute of Medical Sciences (AIIMS) at Manethi, District Rewari, Haryana at a cost of Rs 1,299 crore (US$ 180.04 million).
- The Union Cabinet approved setting up of National Nutrition Mission (NNM) with a three-year budget of Rs 9,046 crore (US$ 1.29 billion) to monitor, supervise, fix targets and guide the nutrition related interventions across ministries.
- On September 23, 2018, Government of India launched Pradhan Mantri Jan Arogya Yojana (PMJAY), to provide health insurance worth Rs 500,000 (US$ 7,124.54) to over 100 million families every year.
- In August 2018, the Government of India has approved Ayushman Bharat-National Health Protection Mission as a centrally Sponsored Scheme contributed by both center and state government at a ratio of 60:40 for all States, 90:10 for hilly North Eastern States and 60:40 for Union Territories with legislature. The center will contribute 100 per cent for Union Territories without legislature.
- The Government of India has launched Mission Indradhanush with the aim of improving coverage of immunisation in the country. It aims to achieve atleast 90 per cent immunisation coverage by December 2018 which will cover unvaccinated and partially vaccinated children in rural and urban areas of India.
Following are the achievements of the government in the year 2017:
- As of July 2019, around 125.7 million families have enrolled as beneficiaries under Pradhan Mantri Jan Arogya Yojana (PMJAY). The scheme has enrolled 16,085 hospitals, including 8,059 private hospitals and 7,980 public hospitals. It to include 19 Ayush packages in the treatment scheme.
- As of September 2019, about 50 lakh people have received free treatment under the Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana.
- The number medical colleges in India increased to 529 in FY19 from 381 in FY13.
- According to Sample Registration System Bulletin-2016, India has registered a 26.9 per cent reduction in Maternal Mortality Ratio (MMR) since 2013.
India is a land full of opportunities for players in the medical devices industry. India’s healthcare industry is one of the fastest growing sectors and it is expected to reach $280 billion by 2020. The country has also become one of the leading destinations for high-end diagnostic services with tremendous capital investment for advanced diagnostic facilities, thus catering to a greater proportion of population. Besides, Indian medical service consumers have become more conscious towards their healthcare upkeep.
Indian healthcare sector is much diversified and is full of opportunities in every segment which includes providers, payers and medical technology. With the increase in the competition, businesses are looking to explore for the latest dynamics and trends which will have positive impact on their business. The hospital industry in India is forecasted to increase to Rs 8.6 trillion (US$ 132.84 billion) by FY22 from Rs 4 trillion (US$ 61.79 billion) in FY17 at a CAGR of 16-17 per cent.
The Government of India is planning to increase public health spending to 2.5 per cent of the country’s GDP by 2025.
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.