INDIAN HEALTH SECTOR
Indian service sector is the major contributor of Indian fast pace growth with the contribution of nearly 55% of GDP for the fiscal year 2006-07.
Healthcare sector is one of the fastest growing service sectors in India. Indian healthcare sector is contributing around 4% of GDP and witnessing the 15% CAGR.
In India healthcare services is divided between public healthcare services & private healthcare services. Public healthcare services run by central & state govt. at the subsidized or the free of cost rate. At the other hand Private healthcare services run by big corporate houses at the world class level.
In the healthcare sector, private healthcare services witnessing the robust growth because of world class services at the cheapest prices. Private healthcare services attracting lots of foreign patients.
The booming private healthcare services creating the way of opportunities for investments. The growing Indian economy & middle class needs huge medical infrastructure for fulfilling the demand.
Indian healthcare sector has open the gate for various opportunities lies in the sector. Sectors, which are ready for the take off in current booming healthcare sector of India, are as below:
Training & Education
Medical Equipment Market
India has the ample opportunities in the healthcare because of skilled doctors, nurses & technical staff. India provides cheapest services compare to USA & UK.
The Indian economy is attracting lots of foreign investments due to its positive & constant growth rate. Indian GDP is growing at a rate of 7.5-8% rate because of major contribution from manufacturing & service sector.
Indian healthcare industry is divided into two sectors, one is public sector & the other is private sector. Public sector hospitals are run by central & state govt. In these hospitals facilities are provided at free of cost or at subsidized rates to low income group in rural & urban areas. But the other hand Indian private sector hospitals are providing world class medical facilities at the cheapest rate as compare to other countries like U.S.A & U.K. These world class facilities are attracting lots of foreign patients.
The US$34bn Indian healthcare industry is growing at the rapid pace & is projected to grow to nearly US$40bn by 2012, according to PWC.
The Indian healthcare sector recorded a highest yoy growth rate in 2007, according to Reuters. Indian healthcare sector recorded a 42% growth in its earnings in 2007.
India is attracting more foreign patients because of its world class facilities. In yr.2000 the total number of visitor are only 10, 000 which is about 100,000 in yr.2005. Indian is giving tough competition to its peer Singapore with an annual growth rate of 30%. We are not far behind from the global medical hub (Singapore), who attracts 150,000 patients annually.
Indian healthcare sector is not growing only from its foreign patients; Indian middle class is also its potential clients because of growing purchasing power. If India is growing at the constant growth rate of 8.5-9%, then Indian middle class will be 583mn by 2025 from the current 50mn, according to McKinsey. With this growing middle class India would be a 5th largest consumer market by 2025. So, there is huge demand for infrastructure, healthcare services & education. According to CII India needs around US$50bn annually for the next 20years to meet the gap of demand & supply. India needs to add 2 million beds to the existing 1.1 million by 2027, and requires immediate investments of US$ 82 billion.
Indian healthcare sector is one of the largest service sectors in the country, which employs more than 4mn people. A joint study by the Confederation of Indian Industry and McKinsey shows:
India medical tourism attracting around US $350 mn annually & has the potential to attract US$2bn by 2012 with the current rate of growth.
We are assuming that the current spending on healthcare would grow by 100% over the coming years & the major beneficiary would be the private sector capturing the growth from US$ 14.8bn to US$ 33.6bn in 2012.
Indian healthcare industry is growing at a CAGR of 15% from 2001 to 2007. In 2007 industry revenues stood at RS.2390.79cr versus Rs.2055.67cr in 2006 with the increment of 16% in revenues & the total profit earned by the sector in 2007 is Rs.97.75cr versus RS.68.94cr in 2006 with the increment of 42%.
India is a vast country & has the huge population. This huge population needs the good & cheap health services. In India, govt. provides the subsidized health services for poor & needy people. In 2002 National Health Policy determined to provide preventive, primitive and curative care services for health India. During the 10th five year plan annual allocation for the sector are as:
Besides the government initiatives, there is huge opportunity left for the private sector because of slow process, lack of quality health services & research. Indian private healthcare sector emerged as the fastest growing service sector in the country. Medical tourism emerges as one of the hottest sector in India.
Indian private sector is also making huge investments in the healthcare sector. Indian healthcare sector is producing large opportunities for the overseas investments. Indian healthcare sector attracted US$ 379mn in 2006 i.e. 6.3% of the total private equity investment of US$ 5.93bn.
Apollo hospitals a big player in private healthcare services having big plans for future. Apollo has 39 hospitals in India, having a capex plan of US$ 203mn by 2009. This will count 9600 bed from 8000 now.
Its peer Fortis healthcare Ltd. is going to increase its strength from 12 hospitals to 28 hospitals from 2012.
George Soros's fund Quantum and Blue Ridge bought 10 per cent in Fortis Healthcare.
Manipal Health Systems rose over US$ 20 million equity from IDFC Private Equity Fund.
Bangalore-based HealthCare Global Enterprises rose over US$ 10 million in equity from IDFC.
Metropolis Health Services, a diagnostic chain, rose over US$ 8 million in equity from ICICI Venture.
Investment firms Apax Partners, IFC and Trinity Capital have invested over US$ 200 million in hospital firms.
Indian healthcare sector is showing tremendous opportunities for the private sector because of huge supply & demand mismatch. Healthcare sector is giving the tremendous opportunities in the various segments. Some of these segments are as under:
The USP of Indian medical tourism is world class services at the cheapest price. India provides cheapest health services in various segments compare to U.S.A & U.K.
The above figure shows the huge gap in cost between USA & India. Indian Medical Tourism industry attracts patients from Southeast Asia, Africa and the Middle East. Indian Medical Tourism Industry is growing at the rate of 30% annually. Industry attracts 150000 patients last year & expecting 15% increase for this year. According to McKinsey & the CII study, Indian medical tourism sector becomes to $1bn by 2012.
Medical infrastructure is the key demand for growth in healthcare industry. Besides the growth in sector we are still behind in healthcare infrastructure compare to Thailand, Korea & China. As per the Ernst & Young study, in India bed per thousand population ratio stands at 1.03 as against an average 4.3 of countries like Thailand, Korea & China. We need excess 1mn bed to achieve the ratio of 1.85 per thousand by 2012. There is huge investment (about $69.7bn) needed from the private sector for adding the additional 896500 bed to meet the above ratio.
Telemedicine is another segment after medical tourism which can drives Indian healthcare sector rapidly. In India 70% of total population lived in the urban & rural areas & the 75% of doctors based in cities. There is huge crunch in the per bed ratio of doctor & nurses in India. According to WHO, nurse per bed ratio is 0.87 in India compare to 1.2 for the world.
Telemedicine is the technology which if used properly, would help to meet the crunch of doctors. We believe that telemedicine will be very effective in the Indian conditions.
Training & Education
India is facing the shortage of trained medial professional. These professional includes doctors, nurses, technicians & healthcare administrators. According to sources India need 450,000 doctors in 2012. This figure shows that there is huge opportunity for domestic & international players in the healthcare training & education sector.
Medical Equipment Market
Indian healthcare sector is not so modernized in the terms of medical equipment as compare to its peers. There is huge demand for modern medical equipments in the industry. In 2006 Indian medical equipment market stands at $2.17bn growing at the rate of 15% per annum & it will become $4.97bn market by 2012. Currently India imports 65% of total medical equipment demand.
In healthcare sector clean environment for patients is essential. Clean environment consist clean surroundings & clean medical textiles (bed sheets, patients dress etc.). Study says that medical textile industry will be double to $753mn by 2012 from the current $405mn.
Health Insurance Sector
In India per capita expense on health is very low. People hugely depend upon the subsidized govt. health services. So, there is huge opportunity for health insurance provider in this sector. According to sources premium grew 133% for private players & for the overall industry premium grew at 47% in Q1 2006. The health insurance premium will grow to $3.8bn by 2012 to $711mn in 2006.
India has a huge population, especially in the rural areas, that has had no access to modern medical services may be spreading ripple of concern amongst the country's medical organizations, as it mirrors the poor penetration of drugs in India. But for global pharma majors, this represents a potential market for clinical trials of a wide range of untested drugs. Clinical trials have the potential of becoming a $1bn industry by 2010.
Union budget 2008-09 has some good news for Indian Healthcare Sectors. The recent announcement & its impact on the sector are as below:
by, Manish Marwah