Healthcare

Introduction

Healthcare has become one of India’s largest sector, both in terms of revenue and employment. Healthcare comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment. The Indian healthcare sector is growing at a brisk pace due to its strengthening coverage, services and increasing expenditure by public as well private players.

Indian healthcare delivery system is categorised into two major components – public and private. The Government, i.e. public healthcare system, comprises limited secondary and tertiary care institutions in key cities and focuses on providing basic healthcare facilities in the form of primary healthcare centres (PHCs) in rural areas. The private sector provides majority of secondary, tertiary, and quaternary care institutions with major concentration in metros and tier I and tier II cities.

India’s competitive advantage lies in its large pool of well-trained medical professionals. India is also cost competitive compared to its peers in Asia and Western countries. The cost of surgery in India is about one-tenth of that in the US or Western Europe. India ranks 145 among 195 countries in terms of quality and accessibility of healthcare.

Investment

Hospitals and diagnostic centers attracted Foreign Direct Investment (FDI) worth US$ 6.72 billion between April 2000 and March 2020, according to the data released by Department for Promotion of Industry and Internal Trade (DPIIT). Some of the recent investments in the Indian healthcare industry are as follows:

  • In May 2020, Jubilant Generics Ltd entered into a non-exclusive licencing agreement with US-based Gilead Sciences Inc to manufacture and sell the potential COVID-19 drug Remdesivir in 127 countries, including India.
  • In May 2020, Carlyle Group acquired 74% stake in animal health focused pharmaceutical company, SeQuent Scientific Ltd, for about Rs 1,580 crore (US$ 224.15 million).
  • In April 2020, first COVID-19 sample collection mobile lab of the country, namely ‘Mobile BSL-3 VRDL Lab’, was launched, which can process more than 1,000 samples in a day and enhance country’s capabilities in fighting COVID-19.
  • The value of merger and acquisition (M&A) deals across hospitals jumped by a record 155% to Rs 7,615 crore (US$ 1.09 billion) in FY19.
  • In August 2019, Microsoft India and Apollo Hospitals Group entered in agreement to set up a National Clinical Coordination Committee for AI-powered Cardiovascular Disease Risk Score API
  • In January 2019, National Company Law Tribunal (NCLT) approved Tri-County Premier Hearing Services Inc’s planned to acquire Bhilai Scan and Research Pvt Ltd (BSR) Diagnostics Ltd for Rs 67 crore (US$ 9.29 million).
  • India and Cuba signed a memorandum of understanding (MoU) to increase cooperation in the areas of health and medicine, according to Ministry of Health and Family Welfare, Government of India.
  • Fortis Healthcare approved the de-merger of its hospital business with Manipal Hospital Enterprises. TPG and Dr Ranjan Pal could invest Rs 3,900 crore (US$ 602.41 million) in Manipal Hospital Enterprise.

Government Initiatives

Some of the major initiatives taken by the Government of India to promote Indian healthcare industry are as follows:

  • In Union Budget 2020-21, Rs 35,600 crore (US$ 5.09 billion) has been allocated for nutrition-related programmes.
  • The Government has announced Rs 69,000 crore (US$ 9.87 billion) outlay for the health sector that is inclusive of Rs 6,400 crore (US$ 915.72 million) for PMJAY in Union Budget 2020–21.
  • The Government of India aims to increase healthcare spending to 3% of the Gross Domestic Product (GDP) by 2022.
  • In February 2019, the Government of India established a new All India Institute of Medical Sciences (AIIMS) at Manethi, District Rewari, Haryana at a cost of Rs 1,299 crore (US$ 180.04 million).
  • The Union Cabinet approved setting up of National Nutrition Mission (NNM) with a three-year budget of Rs 9,046 crore (US$ 1.29 billion) to monitor, supervise, fix targets and guide the nutrition related interventions across ministries.
  • On September 23, 2018, Government of India launched Pradhan Mantri Jan Arogya Yojana (PMJAY), to provide health insurance worth Rs 500,000 (US$ 7,124.54) to over 100 million families every year.
  • In August 2018, the Government of India approved Ayushman Bharat-National Health Protection Mission as a centrally sponsored scheme contributed by both center and state Government at a ratio of 60:40 for all States, 90:10 for hilly Northeastern States and 60:40 for Union Territories with legislature. The center will contribute 100% for Union Territories without legislature.
  • The Government of India launched Mission Indradhanush with an aim of improving coverage of immunisation in the country. It aimed to achieve atleast 90% immunisation coverage by December 2018 and cover unvaccinated and partially vaccinated children in rural and urban areas of India.

Achievements

Following are the achievements of the Government:

  • As of July 2019, around 125.7 million families enrolled as beneficiaries under Pradhan Mantri Jan Arogya Yojana (PMJAY). The scheme enrolled 16,085 hospitals, including 8,059 private hospitals and 7,980 public hospitals. It included 19 AYUSH packages in the treatment scheme.
  • As of September 2019, about 50 lakh people received free treatment under the Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana.
  • The number medical colleges in India increased to 529 in FY19 from 381 in FY13.
  • According to Sample Registration System Bulletin-2016, India has registered a 26.9% reduction in Maternal Mortality Ratio (MMR) since 2013.

Road Ahead

India is a land full of opportunities for players in the medical devices industry. The country has also become one of the leading destinations for high-end diagnostic services with tremendous capital investment for advanced diagnostic facilities, thus catering to a greater proportion of population. Besides, Indian medical service consumers have become more conscious towards their healthcare upkeep.

Indian healthcare sector is much diversified and is full of opportunities in every segment, which includes providers, payers, and medical technology. With the increase in the competition, businesses are looking to explore for the latest dynamics and trends which will have positive impact on their business. The hospital industry in India is forecast to increase to Rs 8.6 trillion (US$ 132.84 billion) by FY22 from Rs 4 trillion (US$ 61.79 billion) in FY17 at a CAGR of 16–17%.

The Government of India is planning to increase public health spending to 2.5% of the country’s GDP by 2025.

India’s competitive advantage also lies in the increased success rate of Indian companies in getting Abbreviated New Drug Application (ANDA) approvals. India also offers vast opportunities in R&D as well as medical tourism. To sum up, there are vast opportunities for investment in healthcare infrastructure in both urban and rural India.

Note: Conversion rate used in April 2020, Rs 1 = US$ 0.013123

References: Department for Promotion of Industry and Internal Trade (DPIIT), RNCOS Reports, Media Reports, Press Information Bureau (PIB)