Healthcare in India
The Indian healthcare sector, currently at US$ 65 billion, is expected to reach US$ 100 billion by 2015, growing at around 20 per cent a year. Some of the major factors driving the growth in the sector include increasing population, growing lifestyle related health issues, cheaper costs for treatment, thrust in medical tourism, improving health insurance penetration, increasing disposable income, government initiatives and focus on Public Private Partnership (PPP) models.
FDI inflow in hospital and diagnostic centres was US$ 1.1 billion during April 2000 and November 2011
- FDI inflow in medical and surgical appliances stood at US$ 472.6 million during the same period
- The drugs and pharmaceuticals sector has attracted FDI worth US$ 5.0 billion between April 2000 and November 2011
- India is expected to witness the largest number of merger and acquisitions (M&As) in the pharmaceutical and healthcare sector.
- The expectations of M&A activity in the pharma and healthcare sector could be explained by factors such as the impending patent cliff in the US, the increasing attractiveness of India as a low-cost R&D destination and the increasing success of Indian firms in getting ANDA approvals.
- According to a report, an estimated 189 million people in the country will be more than 60 years of age by 2025, needing higher healthcare spends.
- India will need as many as 1.75 million additional beds by the end of 2025. Further, an investment of US$ 86 billion is required to achieve 1 doctor, 2 beds and 2.3 nurses per 1000 population by 2025.
- Medical tourism in India has also received a boost with arrival of patients from countries with advanced medical systems. This underlines the fact that India has good infrastructure and talent.
- Hospital trade is a growing business opportunity for other sectors such as food retail as some large hospitals are getting almost 1,000-1,500 outpatients per day and visitors for inpatients who are also potential customers. Food retail has about 15 per cent of its business coming from hospitals.
- The Indian health insurance market is also on an upsurge providing lucrative growth avenue for both the existing players as well as the new entrants. According to the RNCOS report, the health insurance market is one the fastest growing and second largest non-life insurance segment in the country. Posting tremendous growth in the last two fiscals, the health insurance premium is expected to grow at a CAGR of over 25 per cent for the period spanning from 2009-10 to 2013-14.
- With 3G there are possibilities of remote treatment and diagnosis of patients through mobile phones. Also, with the number of cellphone users currently at 600 million and rapidly increasing by 20 million every month, some telecom operators and value-added service developers such as Nokia and BlackBerry are considering usage of mobile phones for diagnostic and treatment support, remote disease monitoring, health awareness and communication.
- Electronic medical record (EMR) services have a high growth potential at an estimated compound annual growth rate (CAGR) of 13.5 per cent from 2009 to 2016. With many new private hospitals opening in the next few years, investment in EMR is expected to become a necessity for these hospitals.
Investment Policy Updates
Government initiatives in the public health sector have recorded some noteworthy successes over time with focus on investments related to better medical infrastructure, rural health facilities etc.
- 100 per cent FDI is permitted for health and medical services under the automatic route.
- The National Rural Health Mission (NHRM) had allocated US$ 10.15 billion for the upgradation and capacity enhancement of healthcare facilities.
- Moreover, in order to meet revised cost of construction, in March 2010 the Government allocated an additional US$ 1.23 billion for six upcoming AIIMS-like institutes and upgradation of 13 existing Government Medical Colleges.