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Healthcare growth avenues

Healthcare has become one of India’s largest sector, both in terms of revenue and employment. 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.

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. India ranks 145 among 195 countries in terms of quality and accessibility of healthcare.

Market size
The healthcare market can increase three-fold to Rs 8.6 trillion (USD 133.44 billion) by 2022.

Indian medical tourism market is growing at 18 percent YoY and is expected to reach USD 9 billion by 2020. 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 healthcare sector has grown to 1.6 percent of the GDP in FY20BE from 1.3 percent in FY16.

Health insurance is gaining momentum in India. Gross direct premium income underwritten by health insurance grew 17.16 percent YoY to Rs 51,637.84 crore (USD 7.39 billion) in FY20.

Hospitals and diagnostic centers attracted foreign direct investment worth USD 6.72 billion between April 2000 and March 2020, according to the data released by Department for Promotion of Industry and Internal Trade (DPIIT). Some of the recent investments in the Indian healthcare industry include:

In May 2020, Jubilant Generics Ltd entered into a non-exclusive licencing agreement with US-based Gilead Sciences Inc to manufacture and sell the potential COVID-19 drug Remdesivir in 127 countries, including India.
In May 2020, Carlyle Group acquired 74 percent stake in animal health focused pharmaceutical company, SeQuent Scientific Ltd., for about Rs 1,580 crore (USD 224.15 million).
In April 2020, first COVID-19 sample collection mobile lab of the country, namely Mobile BSL-3 VRDL Lab, was launched, which can process more than 1,000 samples in a day and enhance country’s capabilities in fighting COVID-19.
The value of merger and acquisition (M&A) deals across hospitals jumped by a record 155 percent to Rs 7,615 crore (USD 1.09 billion) in FY19.
In August 2019, Microsoft India and Apollo Hospitals Group entered in agreement to set up a National Clinical Coordination Committee for AI-powered Cardiovascular Disease Risk Score API
In January 2019, National Company Law Tribunal (NCLT) approved Tri-County Premier Hearing Services Inc’s planned to acquire Bhilai Scan and Research Pvt Ltd (BSR) Diagnostics Ltd for Rs 67 crore (USD 9.29 million).
India and Cuba 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 approved the de-merger of its hospital business with Manipal Hospital Enterprises. TPG and Dr Ranjan Pal could invest Rs 3,900 crore (USD 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:

In Union Budget 2020-21, Rs 35,600 crore (USD 5.09 billion) has been allocated for nutrition-related programmes.
The government has announced Rs 69,000 crore (USD 9.87 billion) outlay for the health sector that is inclusive of Rs 6,400 crore (USD 915.72 million) for PMJAY in Union Budget 2020-21.
The Government of India aims to increase healthcare spending to three percent of the gross domestic product (GDP) by 2022.
In February 2019, the Government of India established a new All India Institute of Medical Sciences (AIIMS) at Manethi, District Rewari, Haryana at a cost of Rs 1,299 crore (USD 180.04 million).
The Union Cabinet approved setting up of National Nutrition Mission (NNM) with a three-year budget of Rs 9,046 crore (USD 1.29 billion) to monitor, supervise, fix targets and guide the nutrition related interventions across ministries.
On September 23, 2018, Government of India launched PMJAY, to provide health insurance worth Rs 500,000 (USD 7,124.54) to over 100 million families every year.
In August 2018, the Government of India 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 northeastern states and 60:40 for Union Territories with legislature. The center will contribute 100 percent for Union Territories without legislature.
The Government of India launched Mission Indradhanush with an aim of improving coverage of immunisation in the country. It aimed to achieve atleast 90 percent immunisation coverage by December 2018 and cover unvaccinated and partially vaccinated children in rural and urban areas of India.

Some of the recent achievements of government include:

As of July 2019, around 125.7 million families enrolled as beneficiaries under Pradhan Mantri Jan Arogya Yojana (PMJAY). The scheme enrolled 16,085 hospitals, including 8,059 private hospitals and 7,980 public hospitals. It included 19 AYUSH packages in the treatment scheme.
As of September 2019, about 50 lakh people received free treatment under the Ayushman Bharat.
The number medical colleges in India increased to 529 in FY19 from 381 in FY13.
According to Sample Registration System Bulletin-2016, India has registered a 26.9 percent reduction in maternal mortality ratio (MMR) since 2013.

Road ahead
India is a land full of opportunities for players in the medical devices industry. The country has also become one of the leading destinations for high-end diagnostic services with tremendous capital investment for advanced diagnostic facilities, thus catering to a greater proportion of population. Besides, Indian medical service consumers have become more conscious toward their healthcare upkeep.

Indian healthcare sector is much diversified and is full of opportunities in every segment, which includes providers, payers, and medical technology. With the increase in the competition, businesses are looking to explore for the latest dynamics and trends which will have positive impact on their business. The hospital industry in India is forecast to increase to Rs 8.6 trillion (USD 132.84 billion) by FY22 from Rs 4 trillion (USD 61.79 billion) in FY17 at a CAGR of 16-17 percent. The Government of India is planning to increase public health spending to 2.5 percent of the country’s GDP by 2025.

India’s competitive advantage also lies in the increased success rate of Indian companies in getting Abbreviated New Drug Application (ANDA) approvals. India also offers vast opportunities in R&D as well as medical tourism. To sum up, there are vast opportunities for investment in healthcare infrastructure in both urban and rural areas.

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