Ever evolving healthcare industry in India

The Indian healthcare industry continued to show resilience in the face of slowdown in FY13 with leading healthcare players recording a double digit growth, both in revenues and net profits. The country is ranked amongst the lowest in the world in terms of government spending on infrastructure. Huge demand-supply gap exists in the Indian healthcare sector. The country lags behind in terms of average number of hospitals, hospital beds, doctors, nurses and other paramedical staff. The huge population accompanied with large prevalence of communicable and non-communicable diseases demands large scale development and growth in this sector. Private sector is playing a big role in this regard accounting for around 70% of the country’s health expenditure.

The government’s flagship programme National Rural Health Mission (NRHM) has been quite successful in raising the standards of people’s health, healthcare infrastructure and healthcare delivery across the country within a short span of seven years. Buoyed by the success of NRHM in raising the rural health standards, the government grouped the National Urban Health Mission with NRHM under one umbrella programme named as the ‘New National Health Mission’.

The outlook for Indian healthcare is positive owing to double digit growth rate in almost all of its  segments, whether its primary healthcare, secondary and tertiary healthcare, health insurance or medical tourism.  The ever growing population, increasing government expenditure on health and growing per capita income will increase the size of this industry in the years to come.

Key Findings

• The central government of India increased the budgeted allocation on Ministry of  Health and Family Welfare by 7% in FY14. Almost 65% of the government spend was on its flagship programme New National Health Mission.
• The healthcare industry has been riding the economic wave in terms of increase in per capita health expenditure which grew at a CAGR of 12% during the  period 2005-11.
• According to World Health Organization, the size of India’s healthcare industry was around USD 73bn as of year 2011. Government accounted for around 31% of  the total spending while the private sector accounted for the remainder.
• Healthcare  has become the preferred choice of foreign investors in the last few years. Capital flows from private equity players, venture capitalists, institutional investors and multinational companies have  increased in last few years. In the first half of 2013, the sector  registered 25 deals with a value of USD 352mn. The sector was second only to technology sector in terms of deals made in 2012.

Chart 28: Private equity investments in healthcare sector (In USD mn)

                   Source: The Economic Times

These are only a few of the insights in the new EMD Report : India Healthcare Industry.
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Indian healthcare industries show resilience in the face of slowdown by recording double digit growth

Indian economy saw a period of slowdown in fiscal year 2012. The country recorded a GDP growth of 5.3% in the fourth quarter which was its worst performance in last nine years. However, Indian healthcare industry continued to show resilience in the face of slowdown with leading healthcare players recording a double digit growth, both in revenues and net profits. The industry is growing at a CAGR of 15% and is expected to cross USD 75 bn by the end of calendar year 2012.

The country’s government spending on infrastructure is low, approximately  1.2% of GDP in 2010. Fiscal year 2012 saw a 13% increase in government budget allocation to the flagship programme named National Rural Health Mission (NRHM). The programme has been quite successful in raising the standards of people’s health, healthcare infrastructure and healthcare delivery across the country within a short span of seven years. However, the country is likely to miss the healthcare targets for 2015 under Millennium Development Goals.

Huge demand supply gap exists in the healthcare sector of India. The country was lagging behind in terms of average number of hospitals, hospital beds, doctors, nurses and other paramedical staff. The huge population accompanied with large prevalence of communicable and non-communicable diseases demands large scale development and growth in this sector. Private sector is playing a big role in this regard accounting for more than 70% of country’s health expenditure.

The outlook for Indian healthcare is positive owing to double digit growth rate in almost all of its  segments, whether its primary healthcare, secondary and tertiary healthcare, medical equipments, disgonotics, health insurance or medical tourism.  The ever growing population, increasing government expenditure on health and growing per capita income will increase the size of this industry in the years to come.

Key Findings

• The Ministry      of Health and Family Welfare increased the planned allocation on public      health from USD 4.97 bn in FY11 to USD 5.96 bn in FY12, an increase of 20%      y/y. The major stressor on the Indian government over the last few years      has been raising the standards of rural health. Almost 75% of the      government spend was on its flagship programme National Rural Health      Mission (NRHM).
• The annual      budget outlay for NRHM increased from INR 109 bn in FY08 to INR 178.4 bn      in FY12. The budget outlay has grown at a CAGR of 13% during the fiscal      period 2008-12.
• The size of      India’s healthcare sector was around USD 66 bn as of year 2010. The sector      size is expected to cross USD 75 bn by the end of calendar year 2012.
• The      existing supply/demand gap is attracting investors to the healthcare      sector of the country. In the first half of calendar year 2012, the sector      registered 25 deals with a value of USD 749 mn. In the same period in year      2011, it recorded equity investment of USD 208 mn only. Health care received      the highest investment, surpassing the long preferred information      technology sector, in terms of total private equity investments during      this period.

Chart: Private Equity Investments in First Half of Calendar Year 2012 (In USD Mn)

Source: The Economic Times

Much more in the Emerging Markets Direct report: India Healthcare Industry 1H12