Healthcare in India

The Indian Healthcare sector is expected double its size to US$ 100 billion by 2015 from the present US$ 50 billion, according to recent findings by ratings agency Fitch. Some of the driving factors for the growth of the sector include growing population, increasing lifestyle related health issues, cheaper treatment costs, thrust in medical tourism, improving health insurance penetration, increasing disposable income, government initiatives and focus on Public Private Partnership (PPP) models.

Another report by an industry body has stated that India’s spent on healthcare is expected to be 8 per cent of GDP by 2012, from 5.5 per cent in 2009. Private sector expenditure in the healthcare segment is expected to reach US$ 45 billion by 2012.

The Investment Commission of India has also estimated the sector to grow to US$ 79 billion by 2012, progressing at 15 per cent annually.

According to a report by PriceWaterhouseCoopers, an estimated 189 million people in the country will be more than 60 years of age by 2025, needing higher healthcare spends.

A combined study by an industry body and Ernst & Young suggests that India will need as many as 1.75 million additional beds by the end of 2025. Further, an investment of US$ 86 billion is required to achieve 1 doctor, 2 beds and 2.3 nurses per 1000 population by 2025.

As per a recent CII-McKinsey report, the growth of the healthcare sector can contribute 6 to 7 per cent of gross domestic product (GDP) and increase employment by at least 2.5 million by 2012. McKinsey-CII report also estimates the number of potential insurable lives at 315 million with a potential of US$ 7.7 billion in health insurance premium by 2015.

Medical tourism in India has also received a boost with arrival of patients from countries with advanced medical systems. This underlines the fact that India has good infrastructure and talent.

According to a new report published by RNCOS, titled "Booming Medical Tourism in India" India’s share in the global medical tourism industry will reach around 3 per cent by the end of 2013. The report states that medical tourism is expected to generate revenue around US$ 3 billion by 2013, growing at a CAGR of around 26 per cent during 2011–2013. The number of medical tourists is anticipated to grow at a CAGR of over 19 per cent during the forecast period to reach 1.3 million by 2013.

Hospital trade is a growing business opportunity for other sectors such as food retail as some large hospitals are getting almost 1,000-1,500 outpatients per day and visitors for inpatients who are also potential customers. Food retail has about 15 per cent of its business coming from hospitals. Au Bon Pain has one outlet at Cradle, a maternity hospital in Bengaluru, and is likely to set up four more in one year through this format. The US-based bakery chain is now looking at West Asia and India as potential growth markets for this format.

The rural healthcare sector is also witnessing considerable growth, with the sector adding around 15,000 health sub-centres and employing 28,000 nurses and midwives during the last five years, as per the Rural Health Survey Report 2009 of the Ministry of Health. As per the report, the primary health centres in the country has reached 20,107, growing by 84 per cent.

The Indian health insurance market is also on an upsurge providing lucrative growth avenue for both the existing players as well as the new entrants. According to the RNCOS report, the health insurance market is one the fastest growing and second largest non-life insurance segment in the country. Posting tremendous growth in the last two fiscals, the health insurance premium is expected to grow at a CAGR of over 25 per cent for the period spanning from 2009-10 to 2013-14.

The Andhra Pradesh government has successfully implemented the US$ 59.68 million Health Management Project funded by the Department for International Development (DFID) of the UK. Other states as well are considering implementing similar models.

With 3G there are possibilities of remote treatment and diagnosis of patients through mobile phones. Also, with the number of cellphone users currently at 600 million and rapidly increasing by 20 million every month, some telecom operators and value-added service developers such as Nokia and BlackBerry are considering usage of mobile phones for diagnostic and treatment support, remote disease monitoring, health awareness and communication.

As per the report, "Healthcare Information Technology Market in India" released by Frost & Sullivan electronic medical record (EMR) services have a high growth potential at an estimated compound annual growth rate (CAGR) of 13.5 per cent from 2009 to 2016. With many new private hospitals opening in the next few years, investment in EMR is expected to become a necessity for these hospitals.

Further, as per an industry body report medical devices and supplies market in India is expected to touch US$ 1.7 billion in 2010. It is expected to reach US$ 2.2 billion by 2012.

Government initiatives in the public health sector have recorded some noteworthy successes over time with focus on investments related to better medical infrastructure, rural health facilities etc.

• 100 per cent FDI is permitted for health and medical services under the automatic route.
• The National Rural Health Mission (NHRM) had allocated US$ 10.15 billion for the upgradation and capacity enhancement of healthcare facilities.
• Moreover, in order to meet revised cost of construction, in March 2010 the Government allocated an additional US$ 1.23 billion for six upcoming AIIMS-like institutes and upgradation of 13 existing Government Medical Colleges.

Source: Consolidated FDI Policy, DIPP