Healthcare has become one of India’s largest sectors – both in terms of revenue and employment. Healthcare comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance, and medical equipment.
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.
Fourth-largest employer. India is expected to rank amongst the top three healthcare markets in terms of incremental growth by 2020. In FY17, Indian healthcare sector stood as the fourth-largest employer as the sector employed a total of 319,780 people. The sector is expected to generate 40 million jobs in India by 2020. In May 2017, the Asian Research and Training Institute for Skill Transfer (ARTIST) announced plans to create around one million skilled healthcare providers by 2022.
Impressive growth prospects. Indian healthcare sector is expected to record a threefold rise, at a CAGR of 22 percent during 2016–2022 to reach USD 372 billion in 2022 from USD 110 billion in 2016. India ranks 145th among 195 countries in terms of quality and accessibility of healthcare. There is immense scope for enhancing healthcare services penetration in India, thus presenting ample opportunity for development of the healthcare industry.
Strong fundamentals and cost advantage. Rising income levels, ageing population, growing health awareness, and changing attitude towards preventive healthcare is expected to boost healthcare services demand in future. The low cost of medical services has resulted in a rise in the country’s medical tourism, attracting patients from across the world. Moreover, India has emerged as a hub for R&D activities for international players due to its relatively low cost of clinical research.
Favorable investment environment. Conducive policies for encouraging FDI, tax benefits, and favorable government policies coupled with promising growth prospects have helped the industry attract private equity, venture capitals, and foreign players.
Rising manpower. The number of doctors possessing recognized medical qualifications (Under IMC Act), registered with state medical councils/medical council of India, increased to 841,104 in 2017 from 827,006 in 2010.
Market overview and trends
The healthcare market functions through following segments:
- Government hospitals, which include healthcare centers, district hospitals, and general hospitals.
- Private hospitals, which include nursing homes and mid-tier and top-tier private hospitals.
Pharmaceuticals. It includes manufacturing, extraction, processing, purification, and packaging of chemical materials for use as medications for humans or animals.
Diagnostics. It comprises businesses and laboratories that offer analytical or diagnostic services, including body-fluid analysis.
Medical equipment and supplies. It includes establishments primarily manufacturing medical equipment and supplies, e.g., surgical, dental, orthopedic, ophthalmologic, laboratory instruments, etc.
Medical insurance. It includes health insurance and medical reimbursement facility, covering an individual’s hospitalization expenses incurred due to sickness.
Telemedicine. Telemedicine has enormous potential in meeting the challenges of healthcare delivery to rural and remote areas, besides several other applications in education, training, and management in health sector.
Medical tourism – A new growth factor for India’s healthcare sector
The presence of world-class hospitals and skilled medical professionals has strengthened India’s position as a preferred destination for medical tourism. Superior-quality healthcare, coupled with low treatment costs in comparison to other countries, is benefiting Indian medical tourism, which has, in turn, enhanced the prospects of the Indian healthcare market.
Treatment for major surgeries in India costs approximately 20 percent of that in developed countries. India also attracts medical tourists from developing nations due to lack of advanced medical facilities in many of these countries. Indian medical tourism market is growing at the rate of 22–25 percent and is expected to reach USD 6.0 billion by 2018 from USD 3.0 billion in 2017. The number of foreign tourist arrivals (FTAs) in India on medical visa grew 15.9 percent year-on-year to an estimated 495,056 in 2017 from 427,014 in 2016.
Yoga, meditation, Ayurveda, allopathy, and other traditional methods of treatment are major service offerings that attract medical tourists from European nations and the Middle-East to India. The Ministry of AYUSH, Government of India, has been implementing various initiatives to promote Ayurveda, yoga, and other AYUSH systems of medicine on an international level and was allocated Rs 15.28 crore (USD 2.36 million) in 2017-18 for this purpose. The Government of India has liberalized its policy by permitting 100 percent FDI in the AYUSH sector for wellness and medical tourism segment.
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 (USD 7124.54) 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 central and state governments, in the ratio of 60:40 for all states, 90:10 for hilly North-Eastern states and 60:40 for Union Territories with legislature. The central government will contribute 100 percent for Union Territories without legislature.
The Government of India has launched Mission Indradhanush with the aim of improving coverage of immunization in the country. It aims to achieve at least 90 percent immunization coverage by December 2018, which will cover unvaccinated and partially vaccinated children in rural and urban areas of India.
India is a land full of opportunities for players in the medical devices industry. India’s healthcare industry is one of the fastest-growing sectors and it is expected to reach USD 280 billion by 2020. 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 towards 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 the latest dynamics and trends, which will have positive impact on their business. The hospital industry in India is forecasted 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.
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 in medical tourism. To sum up, there are vast opportunities for investment in healthcare infrastructure in both urban and rural India.