FY24 is anticipated to be a turning point for hospital companies in India – earnings are poised to rise more than 17 percent over the next three years. A higher count of specialty surgeries, improved occupancy level, and overall improvement in ARPOB are leading to enhanced revenue generation. The priority of the hospitals has shifted toward capacity addition in the existing facilities and an asset-light model, which should lead to faster breakeven periods and healthier return ratio. The companies are now raising prices in selective test portfolio as against their earlier focus on maintaining volume share. This includes the diagnostic labs that have from Q4FY23 itself taken price hikes, largely in the specialized test segment. For most, margin benefits may be offset by their proposed network expansion, some to Tier-III towns and others in areas where they have no presence. Going forward, the earning momentum is expected to sustain.
Shifting gears, medical equipment financing is getting investor attention. A ₹33,000-crore market in 2022, it is poised for a 13.2-percent CAGR to reach ₹74,000 crore in 2028. With rapid transformations and advanced technologies as AI, ML, and IoT sensors, older redundant equipment is being replaced to keep up with the changing dynamics. Of new medical equipment, rental equipment, and refurbished equipment, the new medical equipment holds the largest market share, owing to the risk of failures as well as infection transmission from the use of rental or refurbished equipment. The rising medical and healthcare industry, as well as quickly developing R&D efforts in this sector, will continue to propel the market forward at a rapid pace.
Another sector that is back on track is medical value travel (MVT) or medical tourism. Estimated at ₹47,000 crore in 2022, medical tourism is expected to climb to ₹72,000 crore by 2026. The country’s world-class healthcare infrastructure facilities, accredited hospitals, vast pool of highly skilled medical professionals, a range of medical treatment, procedures at a fraction of the cost compared to developed countries, and the ingrained philosophy of Sarve Bhavantu Sukhinah (may everyone be happy, healthy, and no one suffer) is propelling the industry to build a resilient and sustainable MVT ecosystem crucial for the growth and development of the healthcare sector.
The Prime Minister’s meeting, on his recent trip to United States, with a group of leading health experts, who shared their rich perspectives on ways to augment healthcare capacities in India and integrate the latest technologies, is music to the ears!