Empowering healthcare

The Indian healthcare ecosystem is evolving rapidly. Enthusiasm for China is faltering amid geopolitical tensions and concerns over revenues. Investors are under pressure, as high interest rates drive up funding costs, and backers having become increasingly nervous about continuing to invest in China are turning to India and Southeast Asia, even as experts warn they face a steep learning curve and potentially limited choice of exit routes in many of these markets. India overtook China as the largest market for healthcare buyout deals in the Asia-Pacific in 2022, according to Bain & Co. For H1 2023, China saw USD 1.9 billion in such buyout deals, compared with USD 3.1 billion in India.

Private large hospitals are expected to report a strong performance in Q2 FY24 on a sequential basis. Better occupancy rates and improving average revenues per operating bed (APROB) are the key reasons. The sector, valued at ₹12 lakh crore in FY22, is expected to reach ₹25.4 lakh crore by FY27, expanding at a CAGR of 20.53 percent. After a slowdown in Q1 FY24, volumes for established diagnostic chains too are expected to grow by 12–15 percent in Q2 FY24.

The Indian MedTech industry is being prepped to be a ₹4 lakh crore (USD 50 billion) industry by 2030, from ₹80,000 crore (USD 11 billion) in 2023, a CAGR of 15–18 percent. The government must be given credit. With an overall outlay of ₹5000 crore under the PLI scheme, a huge fund is still available for smaller companies in this space. An investment of ₹2000 crore has already been sanctioned to 26 investors. In the next 3–5 years, the cost of medical devices is expected to reduce by 10–20 percent. Alongside, the National Medical Device Policy 2023, a separate policy for exports, will help India become self-reliant.

Promotion of Research and Innovation in Pharma-MedTech Sector (PRIP) scheme has been recently introduced to augment the entire value chain of the domestic manufacturing industry. With its foundation entrenched in the synergies of ICMR, DBT, and DST, it will help create an ecosystem for India to become a leader in innovative medical devices through incubating an entrepreneurial environment, and steer the industry from a cost-centric competitiveness mindset to an innovation-driven growth one. Such initiatives open India to the world in the form of skilled labor, increased capital flows, and shifting manufacturing bases.

While the government is propelling the industry toward PPP, NITI Aayog is steering it to develop robust quality standards, mutual trust, and investment in R&D. CII, in turn, is pushing for transformative innovation rather than incremental innovation.

The Indian healthcare sector is certainly on a roll!