Indian healthcare industry, currently pegged at $35 billion is expected to cross $75 billion by 2012 and $150 billion by 2017 according to Technopak Advisors' report titled 'India Healthcare Trends 2008'.
Healthcare in India has made tremendous progress over the years and is expected to grow by an average of 5.8 per cent for the next five years and to go up to 8.5 per cent in 2012. This is the only sector which has defied the global economic slow down.
From setting up hospitals, diagnostic centres , pharmacies and medical colleges have opened up a wide array of opportunities for healthcare providers.
The Government of India had launched the National Rural Health Mission (NRHM) in 2005. It aims to provide quality healthcare for all and increase the expenditure on healthcare from 0.9 per cent of GDP to two to three per cent of GDP by 2012.
Factors driving the growth are increase in patients, need for more beds, faster diagnostics leading to early treatment, awareness on preventive health disorders, affordability, medical insurance, mandatory wellness check-ups by corporate companies, better technology, modern facility and skill development.
Further the changing demographics and rise in income levels have led to a burgeoning middle class who will be demanding good and affordable healthcare. The resulting lifestyle changes will also see a rise in health-related issues among the relatively more affluent segment of the population that would require specialized treatment.
Healthcare is also getting its booster doses from venture capitalists, financial institutions and private equity who have pumped in funds to spur developments in brownfield and greenfield expansions, start-up activity and R&D activity, say industry analysts. ICICI Ventures, IDC Private Equity, Evolvence India Life Sciences Fund, IFC, Ashmore Milestone Capital, Baring Private Equity India, India Value Fund and IDG Ventures India, Feedback Ventures and Apax Partners are planning to invest at least $ one billion in the healthcare sector in the next five years, according to market sources.
Venture Intelligence, Chennai, in its study titled "Private Equity Pulse on Healthcare & Life Sciences" focus on segments such as diagnostic services, medical devices, hospital chains and wellness products for investments by PE and VC firms .
At present there are a large, medium and small hospitals, nursing homes, and government medical centres which are offering quality healthcare. Among the leading names are Apollo, Fortis, Narayana Health City, Wockhardt, Global Hospitals and Columbia Asia. There are also dedicated centres to treat orthopaedics, ophthalmology, oncology, neurology and nephrology. These include Healthcare Global Enterprises, Nethradhama, HOSMAT, Bangalore Kidney Foundation, National Institute of Mental Health & Neuro Sciences(NIMHANS).
While Apollo is the largest healthcare provider in the country with 7,500 beds 47 hospitals and 970 pharmacies pan India, 40 per cent revenues are from pharmacists. Fortis has gained the market leadership of being the second largest healthcare major after Apollo after acquiring 10 Wockhardt Hospitals last month for Rs. 909 crore .Recognized as the largest deal in the healthcare space, Fortis which has a strong foothold in the north can now access healthcare markets in Bangalore, Mumbai and Kolkata. The aggregate capacity of Fortis network is now 5180 beds spread over 38 hospitals.
India's cardiac care major Narayana Hrudayalaya has signed a Memorandum of Understanding (MoU) with the Gujarat government to set up a 5000-bed Health City in Ahmedabad with an investment of Rs 480 crore early this year. The facility will be built on a 37-acre area at the site of Monogram Mills in Bapunagar, Ahmedabad and will be Asia's longest hospital spread over half a kilometer, measuring 12.5 lakh sq ft. Under this agreement, Narayana Hrudayalaya Health City plans to invest Rs 480 crore and will begin operations with a 1000-bed heart hospital. This will be followed by cancer, kidney, neurosurgery and women & child welfare hospitals of 1000-beds each in subsequent phases. This will also include a nursing college and paramedical training centre to raise skilled manpower for this mega project. The management is aiming at an OPD load of 15,000 patients per day. "The Health City will bring us a step closer to our vision of making world-class healthcare services and cutting-edge medical technologies available at affordable costs to the common man. . "This project will also generate direct employment for 2000 people and indirect employment for 5000 people in the state.
Targeted to be commissioned by June 2010, Narayana Hrudayalaya Health City will offer cutting edge surgeries in paediatric and adult cardiac care at the doorstep of the people of Gujarat," said Dr. Devi Shetty, managing director, Narayana Hrudayalaya.
According to a industry report, automation and integration, crucial for the Indian healthcare space needs $82 billion to bridge the gap and another $485 billion to improve the healthcare needs in the next one decade. Information technology would have a revenue growth of 2.5 per cent and cost reduction of 355 per cent, said Arvin Babu, partner, Greylock a premier global venture capital firm based in the US.
While there are many opportunities for growth, the challenge will be in meeting demand and supply of affordable healthcare for India's large population. It will not be an easy task given that the current healthcare system in the country which varies from state to state and each state having its own structures and processes in healthcare delivery.
There have been suggestions for introducing major reforms in the healthcare infrastructure development process such as the use of the private-public partnership models and foreign investments. Columbia Asia is a multinational company headquartered in Kuala Lumpur, Malaysia. It is the only health care organization which is completely FDI-funded in India, said Tufan Ghosh, CEO, Columbia Asia Hospitals.
From 2005, India has been gaining prominence in medical tourism. The country's medical expertise and infrastructure together with international certifications like Joint Commission International (JCI ) have been able to attract a number of patients from the developed countries besides those in the South and East Asia region.
India is witnessing a significant increase in patients from the developed countries and is now ranked second in medical tourism market after Thailand. The hospitals in India have treated 4.5 lakh patients compared to Thailand's 12 lakh cases over the last two years. The long patient waiting list especially in the United Kingdom and Europe are driving the patients to India. Treatment cost is lowest in India and it is 20 per cent of the average cost incurred in the US. In Singapore, Thailand and South Africa it is 30 per cent of the cost in the US. Medical tourism showcases potential of Indian healthcare sector to the world which is having a poor picture of India for incidence of AIDS, TB, cancer, malaria and diabetes, according to the Deloitte report.
There are also several improvements in ambulatory healthcare. We will see a reduction in the amount of time that a patient spends in the hospital. This is because medicine now no longer requires in-patient care and where required, the amount of time is reduced. Technology and specialized treatments are also helping to reduce the time spent in hospitals, said Ghosh.
The fast growth in the sector has created many areas of opportunities for investors including in infrastructure and equipment. It has led to the increased availability of private healthcare services in the country with the growth of hospital chains such as Columbia Asia.
A growing healthcare industry will also fuel growth in the health insurance business which is still in its infancy as the Indian population with health insurance is still low. We can expect to see growth in this area with the introduction of new insurance products, he said.
Additionally, we can expect more growth in medical tourism which according to a study by McKinney could become a $ two billion industry by 2012. Apart from the availability of world class medical facilities, the selling point of the industry are its cost -effectiveness combined with tourist attractions, added Ghosh.