The Indian healthcare industry is a goldmine for investors

Indian healthcare and healthcare infrastructure industry is a goldmine for investors. There is a tremendous demand for healthcare in India stemmed from numerous structural drivers. Growing middle-class population, elevated per capita income, the surge in lifestyle diseases, and increased health awareness are fueling growth in the industry. 

Relatively underdeveloped healthcare infrastructure in India further makes it a potential sector to look into. By the end of FY 22, the size of the industry will reach USD 349.1 billion, climbing by 17% on an annual basis. 

Besides hospitals, healthcare centres,  pathology & diagnostic centres, there is also immense potential in other ancillary verticals. Medical tourism, clinical research,  health tech, generic drugs, etc are some of the prominent categories where India has consolidated a strong foothold. These categories will continue to attract increased investments. Likewise, other categories such as value-added drugs, medical device manufacturing, online pharma commerce, health insurance, etc will continue to pique investor interest. 

Hospitals and health centres comprise around ~ 80% of the overall healthcare industry in India. The country’s pharma sector was sized at USD 40 billion in FY 20 and is expected to reach USD 60 billion by FY 24. India is also one of the major players in global generic exports. The medical device manufacturing market is presently underdeveloped but is expected to reach USD 49.3 billion by FY 2025, growing at a CAGR of 34.9%. 

Demand & Supply Gap 

Growth in the middle class and a surge in per capita income has led to a rise in demand for healthcare services in India. Around 65% of the Indian population are aged less than 35. Likewise, ~ 50% of the Indian population is aged below 25. Indians’ youth are now becoming more health-conscious, resulting in increased demand for healthcare services. 

There is a substantive increase expected in the older population leading to further growth in demand. Indians aged 60+ comprised 8.6% of the population in 2011 and is expected to reach 16% of the population by 2041. 

Lifestyle diseases such as diabetes and hypertension are also increasing at an unprecedented rate. In 2020, the total volume of diabetics in India reached 77 million, climbing at a CAGR of 4.4% in 10 years. The diabetic care market (medicine, consultation, lab test etc) is estimated to be around USD 8.1 billion, as per India Watch research. 

Unfortunately, supplies in the market have not so far matched demand. Indian metros have seen considerable investment in hospitals and diagnostic centres. The same is not true about Tier 2 & 3 cities and rural catchments. India has 8.6 beds/ 10,000, which is lower than other emerging economies such as China and Brazil. 

However, a demand-supply mismatch also makes the healthcare sector conducive to investment and growth. As demand for quality healthcare services is soaring, investments in the industry can give robust profits in the coming years. 

Deep Structural Policy Reforms 

The Indian government is also committed to developing a vibrant healthcare industry through deep structural policy reforms and increased budgetary allocations. The National Health Policy, outlined in 2017 has stipulated to increase the healthcare expenditure to 2.5% of the overall GDP by 2025. In the present union budget (FY 22), the total healthcare funds allocated have been USD 30.5 billion, rising by around 136.8% compared to the previous edition. 

100% FDI is allowed in constructing hospitals under automatic routes. 100% FDI is allowed under automatic route in investing in greenfield pharma projects. 74% FDI is allowed under automatic route to invest in brownfield pharma projects. 100% FDI under automatic route is permitted in medical device manufacturing. 

Already USD 26.9 billion of FDI money has been poured into the Indian healthcare industry. The highest amount has so far been directed towards the pharma industry followed by the hospitals & diagnostics. 

Government is also committed to making quality healthcare affordable and accessible to the 1.3 billion Indian population under the flagship of Ayushman Bharat. Under Ayushman Bharat it has launched PM-JAY (Pradhan Mantri Jan Arogya Yojna) to spread universal healthcare insurance plans for every Indian household. The focus of Ayushman Bharat is not just secondary and tertiary care but also preventive & primary health services. 

GOI is reaching to private players to develop effective PPP based models for affordable and quality healthcare service provision. 

There are lucrative income tax holidays for private healthcare service providers. 100% deduction on profits for 5 years are provided for private hospitals (50 beds or above) operating in non-metros. Similarly, hospitals operating in rural areas (100 beds or above) can also avail the same. There is a provision of income tax exemption for 15 years for domestically manufactured medical technology.

 

Information & Research Services for Investors 

Investments in the Indian healthcare industry is bound to rise. However to succeed in India also require access to valuable information & data. This is where India Watch comes into the picture. We can help International & domestic investors to make informed decisions through tailormade research and advisory. 

• Insights and data on industry size, growth trends, demand forecast, etc. 
• Information on competition, value chain, vendors, etc.
• Custom studies on customer assessment, market trends, market segments, market share, etc.
• Consultation on pricing strategy
• Detailed feasibility reports on new hospitals, diagnostic centres, healthcare centres.
• Business set-up support for new ventures
• Marketing strategy, content, and PR support