The Healthcare sector is becoming one of the largest sectors in India in terms of employment and revenue generation. The Healthcare sector consists of various services and infrastructure which include hospitals, clinical trials, medical equipment and devices, tele-medicine and outsourcing, health insurance and medical tourism. For the potential investors and business houses study of financial analysis of Indian Healthcare Sector is becoming increasingly important.
Importance of Financial Analysis of Indian Healthcare Sector
The rapid growth of the healthcare sector in India can be attributed to its comprehensive and increased coverage, increase in public and private expenditure in the healthcare sector and increase in various healthcare services. With many Indian healthcare industries listed and traded on the share market, more and more Indian companies in the health sector are entering merger and acquisitions with domestic and foreign companies to drive growth and gain new markets.
The Indian Healthcare Sector
The Indian Healthcare sector can be categorised into public and private sectors. The public sector managed by the government consist of limited primary and secondary health service in urban regions while it focuses in the rural area is to provide primary health care services and facilities such as primary healthcare centres. Whereas, the private healthcare sector contains a significant proportion of primary, tertiary, secondary and quaternary healthcare services and institutions majorly concentrating in the urban Tier I and Tier II cities.
The competitive advantage India’s healthcare sector is its vast pool of well-trained medical professionals, medical services being much economical as compared to many Western and Asian countries with the cost of surgery in India costing the only 1/10th of the in the United States or Western Europe.
Market Size of India’s Healthcare Sector
India’s healthcare market is predicted to grow three-fold to over US$ 133 billion by 2022 with the Indian healthcare sector experiencing a growth rate of almost 25% annual growth in medical tourism, and same expected to be worth US$ 6 billion in 2018. The hospital industry in India stood at over US$ 62 billion in 2017 and is estimated to grow at a compound annual growth rate of 16-17% by 2023, expected to reach US$ 132 billion.
In India, there is significant scope for growth and advancement of healthcare services as the allocation of healthcare budget is increasing annually. The Rural regions of India where over 2/3rd of the Indian population reside is a potential source of demand in these regions. The Indian Government provided a grant-in-aid in 2017 for setting up of AYUSH educational institutions in States and Union Territories.
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Between 2000 and 2017, the healthcare sector in India attracted almost US$ 5 billion in Foreign Direct Investment (FDI) in various diagnostic centers and hospitals. Some of the recent investments made in the Indian healthcare industry are as follows:
- A MoU or a Memorandum of Understanding was signed between Cuba and India to increase cooperation in the areas of health and medicine.
- The de-merger of its hospital business with Manipal Hospital Enterprises has been approved by Fortis healthcare. An investment of over US$ 600 is expected to be made in Manipal Hospital Enterprise.
Initiatives by Government of India
Some of the significant steps or initiatives undertaken by the Indian Government in promoting the Indian healthcare industry are as follows:
- Based in a helicopter, the first every “Air Dispensary” in India will be launched in the North East Region and the project has received a funding of over US$ 3 million from the Ministry of Development of Northeast Region.
- The Indian Government has launched an immunisation program called the Intensified Mission Indradhanush whose mission is to enhance reach and coverage of immunisation and ensure every child under the age of two and every pregnant woman is benefited with the routine immunisation programme.
- The National Nutrition Mission was set-up the Union Cabinet with a three-year period budget of over US$ 1.4 billion to give direction to nutrition-related initiatives across all states.
- The Indian Government has committed to increasing total healthcare expenditure from present 1.15 per cent of the GDP to 2.5 per cent of the GDP by 2025.
- The Union Cabinet of India approved the continuation of National Health Mission with a budget of over US$ 13 billion in March 2018.
- The Indian Government approved to sign various MoUs with the medical agencies for different BRICS nations for increasing cooperation in the field of medical research and pharmaceutical products.
- The Indian Government apprised the signing of MoU with the WHO to for improvement of the public health sector in India.
- In May 2018, the Indian government approved a budget of US$ 170 million for setting up AIIMS, better known as the All India Institute of Medical Sciences in Deoghar, Jharkhand.
The Road Ahead
The Indian healthcare market is full of opportunities for the players in the medical devices industry. The Indian healthcare industry is one of the fastest growing sectors and is expected to reach $275 billion with a decade. Many private healthcare companies are expected to come up with an IPO and trade on the Share Market. India is also becoming one of the leading destinations for high-end diagnostic services with enormous capital investment in advanced diagnostic facilities, thus being able to serve to a more substantial proportion of the population. Besides, the Indian public or the consumers of medical service are becoming increasingly conscious towards the upkeep of the health.
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The competitive advantage of the Indian healthcare industry also lies in the increasing success rate of Indian companies in obtaining the Abbreviated New Drug Application (ANDA) approvals. India also offers vast opportunities in research and development along with medical tourism. In conclusion, India has vast potential and numerous opportunities to invest in healthcare infrastructure in both urban and rural India.
Article contributed by: Prajakta Pingulkar
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