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Healthcare Industry In India to reach US$ 372B by 2022

India’s healthcare industry is one of the fastest growing industries and it is forecasted to touch US$ 280 billion by 2020 and US$ 372 billion by 2022.

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Definition / Scope

Healthcare refers to hospitals, clinical trials, medical devices, medical tourism, telemedicine, outsourcing, health insurance and medical equipment. It basically consists of companies providing medical services, medical insurance and medical equipment.

Market Overview

In India, healthcare industry is one of the largest sectors in terms of employment and revenue. The sector’s fast growth is supported by rising incomes, growing health awareness, lifestyle diseases and access to insurance. The healthcare market in India functions through six segments which are described below-

Hospitals – The hospitals in India is categorized as government hospitals and private hospitals. The public healthcare system includes healthcare centres, secondary and tertiary care institutions and district hospitals. The private sector includes nursing homes and mid-tier and top-tier hospitals.

Pharmaceutical – It comprises of extraction, processing, manufacturing and packaging of chemical materials for use as medicines.

Medical Equipment and Supplies – It includes companies manufacturing medical equipment such as surgical, lab instruments, dental, orthopaedic, etc.

Diagnostics – It comprises of laboratories that offers diagnostic services made on the basis of medical signs and patient-reported symptoms.

Medical Insurance – It is a type of insurance for losses from accident, medical expense and disability.

Telemedicine – It is the use of telecommunication and technology to deliver healthcare services to rural areas or far distance.

Key Metrics

Metrics Value Explanation
Base Year 2018 Researched through internet


Top Market Opportunities

  • By 2020, India is forecasted to rank among the top three healthcare markets in terms of incremental growth.
  • Indian healthcare stood as the fourth largest employer employing around 319,780 people. The sector is forecasted to create 40 million jobs in India by 2020.
  • In order to achieve a doctor-to-population ratio of 1:1,000, India will require 2.07 million more doctors by 2030.
  • As of 2017, less than 27 per cent of the population in India is covered through health insurance. Many companies are offering health insurance coverage to employees, providing opportunities for insurance players.
  • The medical tourism has become a new growth factor for India's healthcare sector. Medical tourism in India is expected to reach US$ 6 billion in 2018 from US$ 3 billion in 2017 due to easier norms for medical visa approvals.

Market Drivers

Rising Demand

The demand for health care is mounting with rising income, growing elderly population, and better awareness of good health. With the rising income, the ability to access healthcare also rises. The Per capita GDP of India is forecasted to reach US$ 3,273.85 in 2023 from US$ 1,982.70 in 2017. The elderly population is also forecasted to increase from the present 98.9 million to nearly 168 million by 2026.

Investments

According to the data released by the Department of Industrial Policy and Promotion, the hospital and diagnostic centers attracted FDI worth US$ 5.25 billion between April 2000 and June 2018. 23 deals worth US$ 679 million in H12018 were also observed in the healthcare sector in India. A MoU was signed between India and Cuba to increase cooperation in the areas of health and medicine.

Policy Support

By 2022, the Government of India targets to increase healthcare spending to 3 per cent of the GDP. The government also aims to develop India as a global healthcare hub. Other support from government includes reductions in customs duty on life saving equipment and encouraging policies for FDI.

Increase in lifestyle diseases

The increasing urbanization and modern day living has led to about 50 per cent of the spending on in-patient beds for lifestyle diseases. The lifestyle diseases are replacing the communicable and traditional diseases. Diseases such as heart disease, diabetes and obesity and becoming common.

Medical Tourism

The presence of world class hospitals, superior quality health care, skilled medical professionals and low treatment cost has positioned Nepal as a preferred destination for medical tourism. The cost of major surgeries costs merely 20 per cent of that in developed countries. The medical tourism market is growing at the rate of 22-25 per cent.

Hosp cases.PNG

Market Restraints

The existing infrastructure in healthcare sector is not enough to meet the needs of population. The public healthcare sector is under-financed and short-staffed. The 74 per cent of the doctors cater to third of the urban population. The doctor to patient ratio is 1:1,700 which is very low.

Industry Challenges

Urban and Rural Gap

Majority of the healthcare professional and services are concentrated in urban areas. The top tier and mid tier hospitals are present only in urban areas. The rural health care includes primary health care , sub-center and CHCs. Also, the health care infrastructure is three-tiered in rural areas.

Low government spending

The public expenditure on health sector is only around 1.4 per cent of GDP. China spend 5.6 times more, 125 times more. Also, Indian spent more than 62 per cent of their health expenses from their out of pocket expenses. This is very high compared with 13.4 per cent and 54 per cent in the US and China respectively.

Insurance

India has one of the lowest per capita healthcare expenditure in the world. The government's contribution to insurance is quite low when compared with other nations. The India's government contribution to insurance is merely 32 per cent as opposed to 83.5 per cent in the UK. Many people in India still do not have health insurance. As a result, they health expenses are incurred from their personal savings.

Technology Trends

  • The development of information technology and integration with medical electronics has now made possible to provide high quality medical care at home. The home healthcare market is estimated to touch US$ 4.46 billion by 2018 and US$ 6.21 billion by 2020.
  • Telemedicine is growing rapidly in India that is helping to bridge the rural-urban gap in terms of medical facilities. Hospitals like Apollo, Narayana Hrudayalaya and AIIMS have adopted telemedicine and entered into a number of PPPs. This market is forecasted to expand at a CAGR of 20 per cent during FY16-20.
  • The adoption of AI bases applications has helped people to talk directly to doctors and solve problems of patients, doctors and overall healthcare industry.

Pricing Trends

Most of the medical treatments are cheaper in India in comparison to other countries. The below table shows the cost of different medical treatments in India and other countries.

Cost cc.PNG

Regulatory Trends

  • Ayushman Bharat, the world’s largest government funded healthcare scheme, was launched on September 23, 2018.
  • The Government of India launched Mission Indradhanush which aims to achieve at least 90 per cent immunization coverage by December 2018.
  • The Government of India announced the signing of MoA between India and WHO to aid in improving public health in April 2018.
  • In order to set up All India Institute of Medical Sciences (AIIMS), the Government of India approved US$ 170.14 million in May 2018.
  • In April 2018, the Government of India signed MoU with the medical agencies of BRICS countries for cooperation in the area of medical products.
  • On Sep, 2018, the Government of India launched Pradhan Mantri Jan Arogya Yojana, to provide health insurance up to US$ 7,124.54 to over 100 million families every year.
  • There is a provision for tax exemption for domestically manufactured medical technology products up to 15 years.
Govt exp.PNG

Market Size and Forecast

  • The hospital industry in India reached worth US$ 61.79 billion in FY 17.
  • The number of doctors increased from 827,006 in 2010 to 841,104 in 2017.
  • Medical tourism is growing by 22-25 per cent and this industry is forecasted to double its size to US$ 6 billion by 2018.
  • The government’s expenditure on health sector increased from 1.2 per cent in FY 2014 to 1.4 per cent in FY18E.
  • The number of medical colleges increased from 314 in FY 11 to 476 in FY18.
  • The pharmaceutical market grew 5.5 per cent in 2017 with a turnover of US$ 18.06 billion
No of mc.PNGPharma.PNGNo of doc.PNGMkt size of hc.PNG

Market Outlook

  • Healthcare market in India is expected to reach US$ 372 billion by 2022.
  • The hospital industry in India is forecasted to expand at a CAGR of 16-17 per cent to touch US$ 132.84 billion by 2022.
  • The medical devices market is expected to cross US$ 11 billion by 2022.

Technology Roadmap

Technology is expected to bring drastic change in the healthcare sector. With the help of Artificial Intelligence applications, people will be able to talk directly to doctors and expertise. The introduction of electronic medical records system will help patients to keep their all medical records properly and also allow them to access data anywhere and at anytime. It is estimated that by 2020, 20 per cent of healthcare will achieve productivity through the adoption of AI between 15 to 20 per cent. In the future, healthcare providers will also adopt IoT based asset tracking and inventory management system to improve patient's safety and operational efficiency. The Internet of Medical things like mobile and wearable devices will be used to identify the risk factors and provide preventive treatments to the patients.

Competitive Factors

India has large pool of well qualified medical professionals. Also, India is cost competitive compared to its other Asian countries and Western countries. The cost of surgery in India is about one-tenth of that in the US or Western Europe. The increased success rate of Indian companies in getting Abbreviated New Drug Application (ANDA) has also become competitive advantage for India.

Key Market Players

The key players in public healthcare industry are as below:

AIIMS, Delhi

All India Institute of Medical Sciences (AIIMS) is run independently under the Ministry of Health and Family Welfare. It is India's most esteemed hospital and popularly known for its medical professionals team all over the world. It has medical research public university, medical college and government hospital all combined into one.

PGIMER, Chandigarh

Post Graduate Institute of Medical Education and Research (PGIMER) is not only the best government hospital in India but also imparts medical education and trains young medicos to provide the best healthcare to the people.

Tata Memorial Hospital, Mumbai

This is the only government hospital in India to have a special cancer research wing. Nearly 60 per cent of cancer patients receive primary care at the hospital of which over 70 per cent are treated free of cost.

CMC, Vellore

This hospital has 39 major and 18 minor operation theatres, nearly 3,000 beds, 95 wards, about 3 million outpatients, and 4 lakh inpatients.

The key players in private healthcare industry are as below:

Fortis Healthcare Ltd, New Delhi

Fortis Healthcare Ltd is an integrated healthcare delivery service provider. The company is involved in establishing, maintaining, managing and operating hospitals, healthcare, medicare, and health research centers.

Thyrocare Technologies Limited

The company operated with a centralized processing lab in Mumbai India for esoteric tests and regional processing lab in metro cities of India and other parts of Asia.

Apollo Hospitals, Chennai

It has emerged as the single largest private hospital group in South Asia. The company operates health care services and operates standalone pharmacies. It operates hospitals, clinics, dispensaries and laboratories.

Medanta, Gurgaon

Medanta offers world class and affordable treatment. It is spread across massive 2.1 million sq.ft. campus and provides 1600 plus beds and house facilities for 22 plus super specialties all under one roof.

Lilavati Hospital, Mumbai

It is a premier multi-specialty hospital with the state-of-the-art facilities, best medical expertise and research. The hospital is famous for diagnostic services, maternity services, neurosciences, orthopedics, etc.

Strategic Conclusion

By 2020, India is expected to rank among the top three healthcare market in terms of incremental growth. The rising population, improving economic conditions, ageing population and better health awareness is expected to boost the healthcare market in India. Thus, there lies immense opportunity in healthcare market for health service providers, players and medical technology.

Further Reading

Appendix

  • CAGR - Compound Annual Growth Rate
  • CHC- Community Health Center
  • FDI – Foreign Direct Investment
  • GDP - Gross Domestic Product
  • MoA – Memorandum of Association
  • MoU – Memorandum of Understanding
  • PHCs – Primary Healthcare Centre
  • PPP – Public Private Partnership
  • US – United States


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