International Joint Ventures and Merger & Acquisitions

Healthcare Industry in India

Wed, 06 September 2023

The healthcare industry in India is currently experiencing remarkable growth, with various sectors such as hospitals, telemedicine, and medical tourism expanding rapidly. Several factors, including increased healthcare coverage, government initiatives, and growing investments, are propelling this expansion.
Projections indicate that the hospital sector is on track to reach a market size of USD 132 billion by the year 2023. Simultaneously, telemedicine is emerging as a rapidly growing sector and is expected to become a USD 5.4 billion market by 2025. Key government programs like Ayushman Bharat and substantial investments in medical education play pivotal roles in shaping this landscape. India's healthcare sector not only significantly contributes to the country's economy but also generates substantial employment opportunities. Additionally, it has been successful in attracting medical tourists from around the world, further boosting its growth. Moreover, the sector is fostering research and development activities, promising a bright and promising future for the healthcare industry in India.
 

Market Overview

The healthcare industry in India is currently experiencing remarkable growth, with various sectors contributing to its expansion. For instance, the MedTech industry, valued at USD 11 billion and boasting a robust CAGR of 15%, is expected to reach a substantial USD 50 billion by 2030. Hospitals play a significant role, accounting for 80% of the healthcare market, and are anticipated to reach a market value of USD 132 billion by 2023. Furthermore, India's medical tourism market is poised for substantial growth, with estimates suggesting it will expand to USD 13 billion by 2026. In the diagnostics sector, there is an increasing presence of organized players. The Ayushman Bharat program has been instrumental in enhancing access to primary healthcare, resulting in the issuance of over 390 million Digital Mission numbers. The healthcare infrastructure in India is on an upward trajectory, with an estimated value of USD 349.1 billion expected by FY22, thanks to the growing number of medical colleges and healthcare professionals. Initiatives like Abbott's conversion of Primary Health Centres (PHCs) into Health and Wellness Centres (HWCs) underscore the sector's commitment to serving underprivileged communities, emphasizing its crucial role in both the nation's well-being and its economy.
 

Growth Drivers

The healthcare landscape in India is experiencing rapid evolution, characterized by several significant trends and driving factors. One such trend is the adoption of Robotic Process Automation (RPA), which is effectively improving operational efficiency across the industry. The increasing demand for healthcare services is being fueled by factors like rising incomes, an aging population, and the growing popularity of medical tourism. Another notable shift is in disease patterns, with a particular emphasis on addressing Non-Communicable Diseases (NCDs). This shift necessitates a move towards prioritizing preventive care strategies. In terms of policy support and incentives, measures such as allowing 100% Foreign Direct Investment (FDI) and the Atmanirbhar Bharat Abhiyaan are actively encouraging investments in the healthcare sector. The emergence of telemedicine, the expansion of insurance coverage, substantial investments in medical infrastructure, and a surge in mergers and acquisitions (M&A) activities all contribute to the dynamic growth and transformation of the healthcare sector in India.
 

Recent Trends

India's healthcare landscape is rapidly evolving, with several key trends shaping its transformation. Telemedicine, encompassing teleconsultation and e-pharmacy services, is experiencing explosive growth and is projected to reach a market value of USD 5.5 billion by 2025, bolstered by government initiatives like e-Sanjeevani. Artificial Intelligence (AI) is revolutionizing healthcare, with AI start-ups addressing various healthcare challenges, exemplified by Tata Trust's India Health Fund. The market for mobile and wearable health devices is surging, expected to reach 129 million units by 2030. Robotic surgery is on the rise, with a 20% CAGR, poised to reach USD 350 million by 2025, offering precision and improved surgical outcomes. Lifestyle diseases, including high cholesterol and obesity, now account for 50% of in-patient spending. India's CoWIN platform for vaccine delivery is gaining global recognition, with nearly 76 countries considering its adoption. Health insurance is witnessing significant growth, supported by government initiatives, providing protection to healthcare workers during the COVID-19 response. Technological advancements such as digital health resources, Electronic Medical Records (EMRs), telemedicine, 'Health ATMs,' and digital clinics are gaining traction. The Universal Immunization Programme (UIP) is expanding, involving healthcare workers as vaccinators, while point-of-care medical tests are becoming more accessible, facilitating faster diagnosis and treatment while reducing hospital congestion.
 

Why Invest in India?

India's healthcare sector enjoys robust government support through substantial budget allocations and regulatory measures aimed at fortifying the industry. The nation's growing demand for healthcare services is propelled by factors such as rising incomes, heightened health consciousness, and the prevalence of lifestyle-related diseases. Notably, the sector's expansion has positioned it as a major employer, with a workforce of 4.7 million individuals as of 2021. India presents promising opportunities, with an increase in public healthcare expenditure and a significant role in global health, exemplified by its contributions to COVID-19 vaccine production. Furthermore, the burgeoning medical workforce, currently numbering 1.3 million, underscores India's preparedness to meet its healthcare demands.
 

Industry Segmentation

 

Increased Spending on Healthcare

India's healthcare sector has emerged as a significant contributor to the economy, experiencing rapid expansion with a projected Compound Annual Growth Rate (CAGR) of 22.52% from 2016 to 2022. Anticipated to reach a substantial value of USD 372 billion by 2022, this growth is fueled by factors such as the broadening of healthcare coverage, enhanced service quality, and increased investments. Furthermore, the e-health market is gaining momentum, with expectations of reaching USD 10.6 billion by 2025, reflecting the widespread adoption of digital health solutions. Collaborative endeavors with institutions like the World Bank underscore India's commitment to strengthening healthcare infrastructure and readiness, positioning the sector for sustained growth and resilience.
 

How to bring a Boost in the Industry?

The healthcare and pharmaceutical sector in India is characterized by vigorous merger and acquisition (M&A) activity, reaching a significant value of USD 4.32 billion in the first half of 2022, highlighting its appeal to investors. Industry participants are embracing distinctive and varied business strategies, providing comprehensive healthcare services within a single ecosystem. Cost-effective approaches, as demonstrated by institutions like Narayana Hrudayalaya, prioritize accessible healthcare. Furthermore, partnering with startups for pioneering solutions is an increasingly popular trend, promoting collaborative development and innovation within the sector.
 

Medical Tourism in India

India's healthcare industry has firmly positioned itself as a favoured destination for medical tourism, driven by a range of compelling factors. The nation stands out for its provision of world-class healthcare services at significantly lower treatment costs, drawing patients from developed countries. India's rich array of healthcare offerings, coupled with government support and policies like permitting 100% Foreign Direct Investment (FDI) in the wellness and medical tourism sector, have all contributed to its flourishing medical tourism sector. The establishment of the 'National Medical & Wellness Tourism Board' and the extension of e-medical visas to citizens of 156 countries further bolster India's standing as a premier medical tourism destination. Despite facing temporary setbacks due to the COVID-19 pandemic, India maintains its position as a cost-effective and appealing choice for international patients seeking top-notch healthcare.
 

Traditional Medical Care

The traditional healthcare sector in India, primarily comprising Ayurveda and Unani medicines, is poised for substantial growth, with an anticipated market size reaching approximately USD 9 billion by 2022. This sector has expanded its offerings to encompass holistic practices such as yoga, herbal medicine, and spa services, mirroring the increasing acceptance of traditional remedies among the populace. Recent developments, coupled with government support and investments in infrastructure, demonstrate India's commitment to enhancing healthcare accessibility and readiness. Prominent industry players are strategically establishing wellness centers, and notable trends include the development of a digital repository for traditional medical knowledge and a rising interest from private equity firms in the sector. These trends underscore the sector's evolving significance within India's healthcare landscape.
 

Government Policies and Support

 

Regulatory Framework

India's healthcare industry is governed by a comprehensive and intricate regulatory framework that encompasses a range of laws, agencies, and regulations, each responsible for overseeing different facets of healthcare, pharmaceuticals, medical devices, clinical research, and more. These regulatory bodies include the Ministry of Health and Family Welfare (MoHFW), the Central Drugs Standard Control Organization (CDSCO), the Medical Council of India (MCI), the Pharmacy Council of India (PCI), the National Pharmaceutical Pricing Authority (NPPA), the Drug Controller General of India (DCGI), the National Medical Commission (NMC), the National Accreditation Board for Hospitals & Healthcare Providers (NABH), and the Clinical Establishments Act.
 

Licenses and Permits

Operating a business in India, especially in the healthcare sector, typically entails obtaining various licenses and permits to ensure adherence to legal and regulatory mandates. The specific licenses and permits necessary can vary depending on factors such as the type of healthcare business, its location, and the range of services offered. Below are some common licenses and permits required for businesses related to healthcare in India:

 

FDI in the Industry

Foreign Direct Investment (FDI) has played a crucial role in driving the growth of India's healthcare sector, supported by favourable policies and increasing demand. The industry has witnessed substantial FDI inflows, totalling approximately USD 19.90 billion from April 2000 to June 2022. In the fiscal year 2022-23, until December 2022, India has attracted FDI inflow amounting to USD 36,746 million, underscoring the sustained interest of investors. Noteworthy investments, such as Aster DM Healthcare's INR 900 crore plan for expansion in India, highlight the sector's ongoing expansion and its attractiveness for investment. Hospitals, diagnostic centres, and medical appliance businesses stand out as key beneficiaries of FDI in this sector.
 

Accreditation Schemes

In India, accreditation programs play a vital role in upholding the quality and standards of healthcare services. These programs are formulated to assess and officially certify healthcare establishments, including hospitals and clinics, using a range of criteria. Among the notable accreditation schemes in the Indian healthcare sector are:

 

Growing Opportunities

India's healthcare infrastructure confronts significant challenges and opportunities, necessitating substantial investments to bridge existing resource gaps. Notable initiatives like the National Health Mission and national disease control programs are geared towards improving access to high-quality healthcare. In line with meeting escalating demands, India has set ambitious goals of allocating over USD 500 billion for medical infrastructure development by 2030, which includes objectives like achieving three hospital beds per 1,000 people and bolstering the healthcare workforce. Concurrently, the health technology (health-tech) sector is experiencing robust growth, attracting substantial venture capital investments, positioning India as a noteworthy global player in this field. The medical devices market is thriving, with projections indicating it will reach USD 11 billion in 2022, driven by factors like an aging population and the appeal of India as a medical tourism destination. Research initiatives, such as the Longitudinal Ageing Study of India (LASI), are contributing to the tailoring of healthcare services for the elderly, underscoring India's unwavering commitment to advancing healthcare standards.
 

Major Players in the Industry

 

Conclusion

In summary, India's healthcare industry stands at a critical juncture, poised for significant growth and transformation. Factors like increased demand, heightened health consciousness, and the post-COVID-19 landscape have propelled the sector forward. Both the public and private sectors are pivotal, with initiatives like Ayushman Bharat enhancing accessibility and private innovations driving progress. The pharmaceutical and health-tech sectors have thrived, attracting investments and elevating India's global stature. Challenges such as infrastructure gaps and workforce shortages persist, but government commitments and private sector dynamism instil confidence in overcoming these obstacles. India's healthcare sector is on a trajectory towards achieving universal health coverage, elevating care quality, and making substantial contributions to the nation's economy. With innovation, collaborative partnerships, and policy support, India aspires to emerge as a global leader in healthcare, ultimately enhancing the well-being of its population.

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