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Overview

Healthcare has become one of India’s largest sectors – both in terms of revenue and employment. The industry stood as the fourth largest employer in 2017 as the sector employed a total of 319,780 people and may see a threefold jump in value terms to reach $ 372 bn by 2022.

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.

Growing incidence of lifestyle diseases, rising demand for affordable healthcare delivery systems due to the increasing healthcare costs, technological advancements, the emergence of telemedicine, rapid health insurance penetration and government initiatives like e-health together with tax benefits and incentives are driving healthcare market in India.

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.

100% FDI is allowed under the automatic route for greenfield projects. For investments in brownfield projects, up to 100% FDI is permitted under the government route.

Market Size

The healthcare market can increase three fold to $ 372 billion by 2022.

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.

Investment

The hospital and diagnostic centers attracted Foreign Direct Investment (FDI) worth US$ 6 billion between April 2000 and December 2018, 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:

  • Healthcare sector in India witnessed 23 deals worth US$ 679 million in 2018.
  • 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.

Government Initiatives

Some of the major initiatives taken by the Government of India to promote Indian healthcare industry are as follows:

  • 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.

Achievements

Following are the achievements of the government in the year 2017:

  • In 2017, the Government of India approved National Nutrition Mission (NNM), a joint effort of Ministry of Health and Family Welfare (MoHFW) and the Ministry of Women and Child development (WCD) towards a life cycle approach for interrupting the intergenerational cycle of under nutrition.
  • As of September 23, 2018, the world’s largest government funded healthcare scheme, Ayushman Bharat was launched.
  • As of November 15, 2017, 4.45 million patients were benefitted from Affordable Medicines and Reasonable Implants for Treatment (AMRIT) Pharmacies.
  • As of December 15, 2017, the Government of India approved the National Medical Commission Bill 2017, it aims to promote area of medical education reform.

Industry Scenario

  • By 2020, India is expected to rank amongst the top 3 healthcare markets in terms of incremental growth
  • By 2020, the healthcare information technology market is expected to grow 1.5 times from current $ 1 bn
  • By 2022, the diagnostics market is expected to grow at a CAGR of 20.4% to reach $ 32 bn from $ 5 bn in 2012
  • During 2015-20, the in-patient market is expected to grow at a CAGR of 13%
  • The hospital industry in India, accounting for 80% of the total healthcare market, is witnessing a huge investor demand from both global as well as domestic investors. The hospital industry is expected to reach $ 132 bn by 2023 from $ 61.8 bn in 2017; growing at a CAGR of 16-17%.
  • The medical tourism industry in India is expected to double its value to become a $ 6 bn industry by 2018 from $ 3 bn in 2017. Medical tourist arrivals in India increased by over 50% to 200,000 in 2016 from 130,000 in 2015.
  • The diagnostics industry in India is currently valued at $ 4 bn. The share of organized sector is almost 25% in this segment (15% in labs and 10% in radiology).
  • The primary care industry is currently valued at $ 13 bn. The share of organized sector is practically negligible in this case.

References:

  1. Sector: Healthcare // https://www.investindia.gov.in/
  2. Healthcare Industry in India // https://www.ibef.org/