Healthcare segment proceeds to surprise in India. Popular estimates suggest that the overall Indian healthcare market is worth around US$ 100 billion and is expected to grow to US$ 280 billion by 2020, a Compound Annual Growth Rate (CAGR) of 22.9 %; GDP may be growing at 7-8%. The healthcare market in India is big and growing speedily, at the same time it is one of the largest sectors in India both in terms of revenue and employment.
Key growth drivers:
In India, corporate hospital chains have been making a prime role in driving the growth and expansion in the medical segment. Revenue of the top 3 major hospitals chains (Apollo Hospitals, Fortis Health and Kovai Medical) have grown at a CAGR of over 20% over a period of FY10-14 mainly due to their brand equity and quality of service. Healthcare sector will be mainly driven by the factors like:
- Changing lifestyles,
- Increasing affordability,
- Rising health insurance penetration,
- Rising the need for innovative healthcare,
- Rising the need medical care facilities,
- Ageing population,
- Medical tourism amongst others.
India is the 2nd most populated country in the world with over 1.2 bn population and in terms of population expected to outstrip China over the next 10-15 years as per few surveys. Along with this India’s working population is also becoming good size which will help Indian economy to spring up at a much faster pace than the other egressing economies. In 2001, the working population in India was at ~58% (age group of 15-60 years) and anticipated to be close to 64% in 2026. Even so, with the raise in young working population and change in their lifestyle, there has been an increment in lifestyle related disorders like: Atherosclerosis, cancer, diseases associated with smoking and alcohol, diabetes, heart disease, hypertension, premature mortality, stroke and etc; Ultimately, growing population and rising lifestyle diseases, the healthcare sector may see further increase in revenue growth in near future.
On the other hand, healthcare infrastructure is imbued and immuring behind compeers and inadequate medical care infrastructure. Despite of the substantial investments, there are serious inadequacies in the India’s medical care.
- Chairing healthcare indicators continue to fall
- Healthcare spending in India as % of GDP is one of the lowest amongst its peers
- Comparatively with other emerging markets medical insurance penetration has been low
- Total bed density stays significantly lower than the World Health Organization (WHO) guidelines
- Medical care workforce remains poor and underutilized
- Several public-private healthcare partnerships have been led up however very few have been able to put in service in a successful manner
Indian healthcare market puts up vast opportunities for healthcare investors; the immense needs and inadequate healthcare infrastructure lays out immense opportunities. To beguile these opportunities, private players are working up for specific potentialities, formulating innovative business models and actively working together with the Government of India. In the last 10 years the private medical sector has developed across the value chain:
- Healthcare delivery has witnessed the outgrowth of hospital chains; throughout history, Apollo and Fortis were the leading chain hospitals and presently, many more players have been instituted in this model like Manipal, CARE, Global Hospital, Narayana Hrudayalaya, etc.
- Advanced business models are being spread with – Single specialty, low-priced, home health hospitals like: Vasan eye care, HCG, Axiss Dental and so on.
- Diagnostic services are also expanding for instance: Dr. Lal Path Labs, Metropolis, SRL diagnostics well based in across the India.
The healthcare industry has seen substantial entrepreneurial activity and the medical care ecosystem has been spreading out few last few years. The elaborations have been endorsed by meaningful investor interest:
- Entrancing big outlook for the Indian healthcare
- Players are dealing typical challenges and issues in an innovative manner and
- Making a prominent and productive medical care business model
To conclude, the Indian healthcare market puts up lucrative opportunities for private players to make gainful and ascendible businesses across the healthcare value chain. In recent past, the healthcare delivery and medical devices players has saw substantial entrepreneurial activity, which has resulted to the initiation of many novel patient care business models. In defiance of this, since the fairly large patient needs and current healthcare infrastructure cols, definitely there would be wonderful opportunities and would contribute to the egression of many good healthcare players in India.