Healthcare and retail are the two most sought after destinations in India when it comes to sunrise sectors though no one knows when & where the actual sun rise will happen.
Taking a cue from the US healthcare system , where the market is worth $ 2.3 trillion with no accountability and driven by caregivers and not by consumers , It is glaring to note that despite a per capita spend of about $ 7000 , the system has failed to deliver . With this short rider , three things needs to be understood. One , that massive investments in healthcare do not make it better result - oriented . Second , any system that is not driven by customers cannot be a lasting one .Third , any system that is under a blanket cover is widely misused and most abused by the care givers and care seekers both.
India VS USA
A decade back, if anyone needs to have a high-end surgical procedure , one had to travel to US and spend lakhs of rupees for getting an appointment and reports from a US hospital. The last 10 years things have totally changed. Now , we have medical tourism. People have realised that Indian doctors and the healthcare system is world class and the cost is 10-30 times lesser than the US system . In addition , there is hardly any waiting period. So , in all, India has come of age and is a great healthcare destination . This is one reason which has attracted investments in healthcare in a big way.
The global healthcare investment destinations Brazil, India , Russia , China and Middle East are also the global investment destinations .
A WHO study conducted in 2008, wherein people of about 46 nations ranked health as main concern before other issues as financial problems , housing or crime clearly indicates that health is a serious issue the World over. The age old slogan of food ,clothing and shelter is fast changing to food, clothing and healthcare.
Indian healthcare system – key points :
● Private sector accounts for 82.7 per cent of the entire healthcare spends .
● General Government expenditure as a percentage of total expenditure on health is 17.3 per cent
● Spending on health by household as a percentage of total expenditure is 8.2 per cent
● Indian healthcare accounts for 5.2 per cent of GDP
● Out of 40 richest people in India , nine are from healthcare Industry
● Increasing ageing population is adding to the pill popping population
● Greater health awareness is making people taking to wellness and preventive care
● Aggressive growth of health insurance
● Need gap and faith gap in the government run healthcare facilities
● Indian healthcare is at a nascent stage so the base is low and hence the growth will be steep
● Government’s big push to healthcare via $ 2.5 billion JNRHM ( Jawahar Lal Nehru Rural health mission )
● By 2020, most of India would fall into the middle income group
If we see the density per 1000 population : The ratio of doctors etc. is as follows
● Physicians – 0.60
● Nurses – 0.80
● Midwives- 0.47
● Dentist – 0.06
● Pharmacists-0.56
● Hospital beds -0.70
India is short of six lakh doctors , 10 lakh nurses and two lakh dental surgeons . According to planning commission , we just turn out 22000 doctors a year.
In all , the Indian healthcare system is outdated, underfunded and over -loaded.
Indian Government spends just about Rs.280 per capita on healthcare . Though, the WHO claims it to be about $ 100 per person. According to the WHO data, Indian healthcare system is more than 100+ $ Billion !!!
An average rural resident has to travel two kms to reach a chemist , six kms for a blood test and 20 kms for a hospital.
Above all, the current healthcare system just serves about 35 per cent of the population .
It is important to note that, to reach an average of one bed for thousand people, India needs three lakh beds . Each bed cost approximately Rs. 25 lakhs. So for three lakh beds , we require an investment upwards of Rs 75000 crore .
Investors will have to look at this simple maths . Each bed cost Rs.25 Lakh. At 100 per cent occupancy for 365 days and with Rs. 1000 income per day per bed , It requires seven years to break even ( assuming the following maths . Investment per bed of Rs.250,0000 /365 days occupancy X 1000 rupees per day profit = 6.84Years ) . We know it well, that most of the towns in India cannot throw more than Rs.500 per day per bed . This will take the break even to 14 years. This single point makes the investment in healthcare unattractive . And could have been a major reason why two of the biggest business houses walked away from this business after making tall announcements
The biggest challenge is, innovating and coming out with low cost healthcare facilities . Only 20 per cent of the hospital beds are in rural areas which account for 70 per cent of the population.
This throws a big opportunity . What India needs is low cost specialised care centres and not just tertiary hospitals , which everyone is venturing into . No major healthcare group will be able to leave a mark in healthcare unless the basics of healthcare are not addressed . This , in itself is a big opportunity in healthcare ; the primary & preventive care centers , the day care centres etc.
Diagnostics
The irony in the land of billion plus people is that, we have just 40,000 labs in the country . Only 59 are accredited . Only five national chains exists in India . In the next five years , this will be a major thrust area. This area needs a major push in terms of increasing reach and investments
Mobile health
There are about 400 million cell phones in the country . With a density of 40 per cent, the final convergence of healthcare will be in the form of mobile health solutions .
This is a nascent area as of now . Investments in VAS ( Value Added Services ) related to health will be a major investment & revenue generator. Telemonitoring and home monitoring is 0.33 per cent in developing countries and 22 per cent in developed countries .
Benefits of telehealth are documented . It is a known fact that, telemonitoring reduces hospital and emergency room visits by 35-75 per cent
Telephonic disease management increases enrolment rates to as high as 76 per cent
In urban India , one out of 10 people have access to Internet
Telehealth has a great investment potential and is the key to success of chronic and rural healthcare
Preventive care & wellness industry
This is one major area for investments . Points to note on wellness industry :
● 2/3 rd of population are below 35 years in age
● Indians are genetically predisposed to cardiac problems and diabetic
● 50 per cent of the affluent people go at least once a month to fitness centres
● There are 5000 registered gyms in India
● Nutraceutical and dietary supplements market is $ 560 million and is growing at 20 per cent every year
● Organic foods and health supplements present a good investment opportunity
Corporate wellness – big investment opportunity
● 82 per cent of the firms agree that preventive healthcare increases productivity and profitability
● Absenteeism is a big loss to the corporate sector
● There are no established firms in India that have taken to address this growing market
● There is a definite need for sector & industry specific corporate wellness programmes
Corporate wellness is an untapped industry in India .
Nature care: Ayurveda herbals
● There is a definite bend towards natural products
● Opportunity lies in products and services
● It starts with being an additional therapy in chronic segment
● At present, this sector just dominates the skincare and cosmetic segment
● Profits are higher compared to traditional pharma
In fact, there will be a logical progression from ‘Curative’ to ‘Preventive’ to ’Predictive’ healthcare . Each in itself is an industry
If the investment opportunities are tapped from the very point that patient has a symptom till the time his medicine is dispensed, they would follow the following steps
Between the time the patient has a symptom and he reaches the doctor – the following are the investment opportunities
Start of symptoms-
● Telehealth helpline , health helpline
● E-consultation
● Counselling and home diagnostics
Doctor’s chamber –
● Wellness information kiosks
● Non-invasive and instant diagnostic kits
● Integrated clinic with diagnostic and pharmacy
Between the time the doctor examines the patient and writes the prescription, the following are the investment opportunities
Doctor’s prescription-
● Electronic health record
● E-prescription
● Cheaper medicines – generics
● Health counselling
● Second opinion
● Referral consultation
● High end diagnostics
After the patient leaves the doctor’s chamber and if he is a chronic patient , the following are the investment opportunities
Chronic patients
● Follow up & disease specific health plans
● Home- based care
● Physiotherapists
● Low fat , high fibre foods and health supplements
● Weight control/loss clinics
● Dietician & nutrition centres and clinics
● Fitness trainers
Day care surgery centers
Geriatric care centers
Health care – emerging opportunities
● Training of health care professionals on soft skills
● Hospital management , project management , consulting and housekeeping companies
● Equipment leasing and servicing companies
● Paramedic and other technician service providers
● Medical tourism companies
● Health insurance / TPA’s - This sector just covers 1.08 per cent of the population
● Healthcare IT
● Specialist chains for dental, opthalmology, gynaecology , pediatrics, skin care , immunization and vaccination centers
● Low cost mobile health stations and operation theatres
● Nationwide ambulatory services including air ambulance
Unfortunately, everyone is just interested in investing in hospitals and tertiary care . Whereas , the opportunity in other levels of healthcare are more attractive and the need of the hour.
-The author is an international healthcare,
retail expert & speaker and is on the board of several companies in the US &
India across retail, hospital chains, disease management, pharma R&D, diagnostics and
biotechnology, among others.