The Indian healthcare sector is growing at a compound annual growth rate (CAGR) of 15 per cent is expected to touch US$ 250 billion by 2020. The sector has experienced a remarkable growth driven by a number of factors such as increase in the average life expectancy and average income levels, rising awareness for health insurance, growing lifestyle related health issues, cheaper costs for treatment, thrust in medical tourism, government initiatives and focus on Public Private Partnership (PPP) models.
The sector markets five major segments - Hospitals (generate 71 per cent revenue), Pharmaceutical (generate 13 per cent revenue), Diagnostics (generate 9 per cent revenue), Medical Equipment and Supplies (generate 4 per cent revenue) and Medical Insurance (generate 3 per cent revenue).
As the demand for healthcare services in India is increasing, delivering affordable healthcare to India's billion-plus population itself presents enormous challenges and signifies enormous opportunities for the medical community and other service providers. Further, RNCOS in its latest report, "Indian Healthcare - New Avenues for Growth", says that India represents a splendid investment opportunity in the healthcare sector with ever-growing population and the continued rise in the number of diseases.
Further, the Planning Commission has allotted US$ 83 billion under the 12thth Five Year Plan for healthcare spending; this is about US$ 60 billion more as compared to the 11th Plan. As a result, the share of healthcare in total plan allocation is set to rise to 2.5 per cent of GDP in the 12th Plan from 0.9 per cent in the 11th Plan.
- FDI inflow in hospital and diagnostic centres was US$ 1,542.35 million from April 2000 to December 2012
- FDI inflow in medical and surgical appliances stood at US$ 584.14 million during the same period
- The drugs and pharmaceuticals sector has attracted FDI worth US$ 9,783.31 million between April 2000 and December 2012
- According to RNCOS new research report "Booming Hospital Services Market in India", the country needs to cover the cumulative deficit of around 2.8 million hospital beds by 2014 to match up with the global average of 3 beds per 1000 population. Currently, the market is dominated by unorganized investors, and this scenario is likely to continue in near future as well. Huge private sector investments will significantly contribute to the development of hospital industry, comprising around 80 per cent of the total market
- Most Indian metros have hospitals with world-class infrastructure, processes and outcomes. However, 70 per cent of the healthcare infrastructure is confined to the top 20 cities of India. In order to reach the remaining population, innovations both in healthcare products and delivery are required
- Less than 15 per cent of the Indian population is covered by any kind of health insurance, either voluntary or as part of the Employees State Insurance, Central Government Health Scheme or Community Insurance, providing significant opportunity to new players in the health insurance market
- Medical tourism in India has also received a boost with arrival of patients from countries with advanced medical systems. According to RNCOS report, 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
- India needs high healthcare spending with an estimated 189 million people in the country will be more than 60 years of age by 2025, according to a report by PriceWaterhouseCoopers
- Electronic medical record (EMR) services have a high growth potential at an estimated CAGR of 13.5 per cent from 2009 to 2016, as per the report, "Healthcare Information Technology Market in India" released by Frost & Sullivan. With many new private hospitals opening in the next few years, investment in EMR is expected to become a necessity for these hospitals
- The advances in medical science and bio-medical engineering on one hand and telecommunication and information technology on the other are offering wide opportunities for improved healthcare in India. The high rural population and moderate per capita income results in increased demand for telemedicine in India
- The proportion of imports is highest in the Indian medical equipment and medical implants segments and contribute approximately 85 per cent of the market. Investment opportunity exists in areas such as in-vitro diagnostics, X-ray machines, ECG machines, patient monitoring, etc.
- 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
Investment Policy Updates
The Government has taken several steps required for non-resident Indians (NRIs) to invest in healthcare and to develop healthcare sector infrastructure within a short span of time. The Government of India (GoI) has decided to increase health expenditure to 2.5 per cent of gross domestic product (GDP) by the end of the Twelfth Five Year Plan (2012-17), from the existing 1.4 per cent. Dr Manmohan Singh, the Prime Minister of India, also emphasised on the need for increased outlay to healthcare sector during the Twelfth Five Year Plan.
Some of the initiatives taken up by the GoI for enhancement of the healthcare sector are:
- 100 per cent FDI is permitted for health and medical services under the automatic route
- Proposal to extend concessional basic customs duty of 5 per cent with full exemption from excise duty/CVD to six specified lifesaving drugs/vaccines
- Pradhan Mantri Swasthya Suraksha Yojana being expanded to cover upgradation of seven more Government medical colleges
- Exemption from Excise Duty/ Countervailing duty ('CVD') is proposed on specified lifesaving drugs
Source: Consolidated FDI Policy, DIPP
PPP (Public Private Partnership) must be seen in the context of viewing the medical sector as a national asset with health promotion as a goal for all health providers, private or public.
Ghulam Nabi Azad
Union Minister for Health and Family Welfare
Spice Global has made an investment of Rs 400 crore (US$ 74.47 million) in a new healthcare foray to launch multi-speciality Saket City Hospital in New Delhi
Nipro Corporation has set up India's first dialyser manufacturing facility at Shirwal near Pune, with an investment of Rs 700 crore (US$ 130.32 million). It has been given mega project status by the State Government
Apollo Group of Hospitals has launched its telemedicine service in Yangoon, Myanmar. The facility will allow Myanmar to consult Indian doctors and have accessibility to quality treatment and latest medical technology without physical presence at Apollo Hospitals in India
Dubai-based health care major, DM Healthcare is close on two key acquisitions of hospitals in India for Rs 538 crore (US$ 100.15 million), as part of its Rs 1,200 crore (US$ 223.39 million) expansion in India over the next two years
The Council of Scientific & Industrial Research (CSIR) and Hewlett-Packard (HP) have launched a cloud-enabled eHealth centre, a move to bring diagnostic services to the doorsteps of people living in remote areas
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