Healthcare Industry in India

Overview

India’s healthcare system has undergone major changes in recent times and has become one of the largest industries in terms of employment and revenue. Indian healthcare systems consist of two major components namely; Public (or the Government) and Private. The government or the public healthcare sector consists of few secondary healthcare institutions in few major cities focussed to providing basic healthcare by setting up community-level healthcare centers mostly in the rural areas. While the private sector largely concentrates in metro, tier I and tier II cities. India has a large number of well-specialized medical personnel in various medical fields which gives it a competitive edge. India is also cost effective when compared to other countries in Asia and in the West.

The Healthcare Industry in India is segmented as;

Hospitals
Pharmaceuticals
Diagnostics
Medical Equipment and Supplies
Medical Insurance
Telemedicine

Healthcare Market Size in India

The Healthcare Industry in India was estimated at INR 18.8 trillion and it is expected to reach INR 25 trillion by 2022. The industry is expanding at a CAGR of 22% till 2022.

Competitive Landscape

India’s healthcare industry is primarily dominated by hospitals that accounts for approxiamtely 80% of the total market. The increase in medical tourism is paving a way for foreign investors to invest in Indian healthcare industry. Some of the leading hospitals include; Apollo, Aster DM Healthcare and Fortis Healthcare. As the world is becoming digitalized, we see a lot of new players entering the digital healthcare space in the country. Some well known players are; Practo, 1MG, Pharmeasy, Netmeds, Medlife and Lybrate. We see a fierce competition in the healthtech companies as more people are adapting to the technology enabled healthcare services.

Growth Drivers for Indian Healthcare Industry

Favourable Government Initiatives & Policy

Pradhan Mantri Jan Arogya Yojana (PMJAY) was launched in 2018 to provide health insurance worth INR 500,000 to over 100 million families every year.
Ayushman Bharat-National Health Protection Mission was approved to cover secondary and tertiary care hospitalization of poor and vulnerable families in the country.
Mission Indradhanush was introduced in 2014 aimed to achieve 90% full immunization coverage for all children upto two years of age both in rural and urban areas.
The government of India approved a 100% FDI in Greenfield and Brownfield projects.
Single window clearance e-portal to improve ease of doing business in the country.

Medical Tourism

Over the years, India has transformed into a top-tier destination for medical tourism. Low cost of medical treatment is the major reason that motivates many tourists to visit India for their medical assistance. Also the process to obtain a visa is much more efficient when compared to other countries.

Rising Minimally Invasive Procedures

An increasing number of hospitals are transitioning towards minimally invasive surgeries in recent times. These surgeries benefit the patients by early discharge from hospital and return to normal life and for the hospitals with higher profitability.

Changing Disease Profile

Increasing prevalence of life-style and non-communicable diseases such as diabetes, cardiovascular diseases etc among young adults may fuel the demand for healthcare in the country.

Increased Affordability

The rapidly growing middle class population, their rising income levels and awareness increases the demand for better healthcare services.

Challenges for Indian Healthcare Industry

Low Spending on Healthcare

Indian government’s spending on healthcare still remains a major challenge for the industry. According to the 2021 budget, public expenditure stood at 1.2% of the overall GDP of the country. This is too low when compared to WHO’s recommendation of 5%.

Inadequate Healthcare Infrastructure

Being the second most populous country in the world, the current healthcare infrastructure is insufficient to meet the demands of the expanding population. Lack of well-equipped medical institutes burdens the industry. Also, the doctor-population ratio is 1:1456 against 1:1000 recommended by WHO. The country faces a severe shortage of doctors and specialists especially in the rural areas and makes it difficult for healthcare to reach every citizen.

Low Insurance Penetration

Over 80% of the population in India is not covered under health insurance and due to this the economically backward people are not able to access proper healthcare.

Impact of Covid-19 on Indian Healthcare Industry

The healthcare industry has been at the epicenter of the coronavirus pandemic. Similar to other industries in the country, it also faced severe challenges. The private healthcare sector that accounted for a major portion of inpatient care faced various challenges due to changing government regulations, increasing cost of human resources, high procurement cost of medical consumables & disposables, unreasonable price caps etc. Although, majority of the people prefer private healthcare over government healthcare, privately run hospitals suffered massive losses during the pre-covid times and now the situation has turned worse leaving hospitals with uncertainty on profitability for the post-covid period. According to FICCI, footfall & test volumes declined by 70-80 per cent and the healthcare sector in India witnessed a revenue drop of 50-70 per cent by end of March 2020.

Future Outlook

Although India was not equipped to manage the crisis during the initial period, with the government’s ample support healthcare system in India was able to withstand the coronavirus pandemic. India turned a global leader in manufacturing and exporting of medical equipment, disposables, drugs and vaccines to other covid-19 affected countries. Due to the pandemic restrictions, we can expect a downward trend in medical tourism for a short term period. Also, we anticipate an increased adoption to latest technologies, telehealth, mobile hospitals that might lead to the next generation of healthcare for the country.

Market Insights