INDIAN HEALTHCARE INDUSTRY- CHALLENGES & OPPORTUNITIES

Posted on 02-April-2020 at 02:10 PM

India added 450 million people over the 25 years to 2019, a period during which the proportion of people living in poverty fell by half. This period of rising prosperity has been marked by a "dual disease burden", a continuing rise in communicable diseases and a spurt in non-communicable or "lifestyle" diseases, which accounted for half of all deaths in 2015, up from 42 percent in 2001-03.


The result of this disease burden on a growing and ageing population, economic development and increasing health awareness is a healthcare industry that has grown to $81.3 billion (Rs 54,086 lakh crore) in 2013 and is now projected to grow to 17 percent by 2020.

The doctor-to-population ratio in India is 1:2148. The infant mortality rate is 64 per 1,000 live births. The overall mortality rate has declined from 27.4 in 1991 to 8 per 1,000 population in 2002, and life expectancy at birth has increased from 37.2 years to 60.6 years over the same time period.


Challenges


Though hospitals, dispensaries, public health centers and other medical facilities are present, they are not sufficient to cater to the growing needs of India’s substantial population. Rural access to quality medical service has to be improved. The inadequate manpower of doctors in public sector hospitals is also a concern for health authorities. Furthermore, the infrastructure required in the hospitals, like medicine, furniture and equipment, are not adequate to serve the population. Compounding the problem, government spending on healthcare services is not up to the World Health Organization (WHO) norms of gross domestic product in healthcare.

 

Though the public sector is not expanding its healthcare services, private, co-operative and other non-profit organizations have started hospitals and are providing medical services to the public. Moreover, the Government of India is taking other steps to improve healthcare. For example, the Government has, from time to time, appointed various committees to address the pervasive problems in the healthcare sector. In addition, it has demonstrated a strong commitment to population control, including the implementation of family planning programs geared towards controlling the population.


India's existing infrastructure is just not enough to cater to the growing demand.


While the private sector dominates healthcare delivery across the country, a majority of the population living below the poverty line (BPL) — the ability to spend Rs 47 per day in urban areas, Rs 32 per day in rural areas — continues to rely on the under-financed and short-staffed public sector for its healthcare needs, as a result of which these remain unmet.

 

With the lowest government spend and public spend, as a proportion of gross domestic product (GDP), and the lowest per capita health spend — China spends 5.6 times more, the US 125 times more — Indians met more than 62 percent of their health expenses from their personal savings, called "out-of-pocket expenses", compared with 13.4 percent in the US, 10 per cent in the UK and 54 per cent in China.


Market Size

The healthcare market can increase three fold to Rs 8.6 trillion (US$ 133.44 billion) by 2022.

India is experiencing 22-25 per cent growth in medical tourism and the industry is expected to reach US$ 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 the health sector has grown to 1.4 per cent in FY18E from 1.2 per cent in FY14. The Government of India is planning to increase public health spending to 2.5 per cent of the country's GDP by 2025.


Investment

The hospital and diagnostic centers attracted Foreign Direct Investment (FDI) worth US$ 6.09 billion between April 2000 and March 2019, according to data released by the Department of Industrial Policy and Promotion (DIPP). Some of the recent investments in the Indian healthcare industry are as follows:


  • Healthcare sector in India witnessed 23 deals worth US$ 679 million in 2018
  • India and Cuba have 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.

Road Ahead

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 $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 for 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 (US$ 132.84 billion) by FY22 from Rs 4 trillion (US$ 61.79 billion) in FY17 at a CAGR of 16-17 per cent.


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 India.

 

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