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The Make in India initiative of the government seems to be stuttering. In the face of increasing demand, the indigenous vendors are not able to meet the requirement of the government and private hospitals. Whereas procurement by the Center and the BJP-run states has declined drastically, partly to be attributed to the clause restricting imports from a country that shares land border with India added in the tender document, and largely that the extremely discerning buyer is finding some of the India-made products not adequate, net imports have seen a 21-percent increase, in the period November 2022 to October 2023 to ₹61,263 crore.

There is no slackness at the customer’s end. The healthcare sector’s investments mainly centered around hospitals and health tech start-ups in 2023. Hospitals received the majority share of 62 percent of all PE/VC investments, followed by health tech with a 23-percent share. On average, the script of the top 7 players (Narayana Health, Aster DM, Max Healthcare, Global Healthcare, Fortis, Apollo Hospitals, and Rainbow Children’s Medicare) saw over 50 percent year-to- date improvement this year. The year saw the emergence of new IPO hotspot markets, outpacing traditional IPO powerhouses, with India being one of them. The number of IPOs in India went up by 86 percent, compared to a five-year average, according to an EY report. The healthcare sector recorded 14 IPOs in 2023, a marginal increase over the 12 in 2022.

The country’s healthcare industry has a good track record, having grown at a CAGR of 22 percent since 2016, to ₹30.5 lakh crore in 2022. 2023 has been a remarkable year too, with notable mergers and acquisitions, consolidation, private equity investments, record surge in stock prices, and improving financial performance. The market is poised for an estimated ₹23.37 lakh crore by 2028, with ₹2.46 lakh crore in private capital investment expected over the next 5 years.

Government initiatives are expected to continue. The government aims to raise healthcare expenditure as a percentage of GDP. A scheme for four MedTech parks at ₹400-crore investment, along with the PLI scheme offering ₹3420 crore, will boost domestic manufacturing of vital medical equipment, propelling the medical devices industry from its current ₹90,200 crore valuation to ₹4.1 lakh crore by 2030.

Shifting gears, as we approach the interim Union Budget FY25, recommendations are pouring in from all quarters. The industry has high expectations. An increased healthcare expenditure to 2.5 percent of the GDP, rationalization of GST rates for healthcare services and equipment, investment in skilling of healthcare professionals, and lower import tariffs for diagnostic equipment are some of the asks.

The Indian healthcare market presents a compelling investment landscape. However, addressing the gaps remains crucial for realizing the full potential of this rapidly expanding sector.

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