India’s Healthcare Industry is Touching New Dimensions
Recently, much has been said about the healthcare industry in India and its growth. And rightly so; the industry has been gathering steam and making people take notice of its massive growth.
Last year, Dr. Prathap C. Reddy, Apollo Hospitals group founder-chairman said in Bangalore that the overall industry will show speedy signs of growth mainly because of increase in life expectancy, higher income levels, greater reach of health insurance, and growing lifestyle-related diseases.
In fact, it is already a million-dollar industry that is currently undergoing a rapid expansion phase with 12 percent CGPA (cumulative growth per annum) since 2008. By 2020, the sector will accumulate Rs.1.3 trillion (Rs.12,60,000 crore) in revenues.
“Government initiatives and public-private partnerships will help create better opportunities for nurses, paramedics, emergency medical technicians and specialized doctors across the country,” Dr Reddy said.
According to the Investment Commission of India, the market size of hospitals and nursing homes will grow at 20% every year & projected to stand at Rs. 54,000 crore.
Medical equipment on the other hand will be somewhere close to Rs. 9,000 crore with 15 per cent growth; clinical lab diagnostics with Rs.4,500 crore – a clear 30 per cent increase.
In addition to this, imaging diagnostics will be another money-spinning business standing at Rs.4,500 crore (30 per cent growth).
Other services including training and education, aesthetics and weight loss, and retail pharmacy will stand at Rs. 9,000 crore.
There’s also been an influx of medical tourism, educational services, and leisure tourism in India which is likely to build up in the coming years drawing an additional $6-50 billion in revenue and producing close to 10-48 million direct and indirect jobs by 2020.
Investments in Healthcare
Global Ratings agency Fitch recently said that “India’s healthcare sector will continue to witness investments in 2012 but at a slow pace, driven by a wide gap between the demand for, and supply of, healthcare services,” Fitch Ratings said in its annual report ’2012 Outlook: India Health Care’.
It further added: “This (slow growth) is due to below-par healthcare infrastructure, especially in Tier II and Tier III cities, increasing lifestyle-related health problems, changing demographics, rising disposable income and insurance penetration, and increasing government support and medical tourism.”
“The sector will continue to offer investment opportunities in increasing bed capacity, ancillary industries like medical technologies and diagnostics in Tier II and Tier III cities, while specialty services like cardiology, neurology, joint replacements etc, are likely to attract most of the investments in bigger cities,” the report said.
Rise of the Insurance Industry
The Insurance segment is worth $3 billion (Rs 15,000 crore) as of now. “Health insurance is growing at 20% and will reach around $13 billion by 2020.
So, it is growing at a faster rate than the healthcare industry but, even with that growth, you are talking about a funding gap of over $200 billion.
The gap in rupees crore is so significant that the Indian government will have a serious issue in terms of financing healthcare” says Mr. Antony Jacob, CEO, Apollo Munich Health Insurance.
Competing with other Industries
The healthcare segment is moving ahead on the same line as the pharmaceutical or the software industries here.
Like manufacturing, this segment also has the power to be the engine of the country’s economy. Thanks to this, many foreign companies will continue to invest in it in the years ahead.
The Path Ahead
Already, India’s economy is flourishing and the middle class is getting stronger with more disposable income to spend on healthcare services.
The Government of India too is in the midst of constantly developing all inclusive policies on healthcare that aim to reinforce the sector – a high number of infrastructure and advance medical equipment solutions have been infused in the sector.
In the years ahead, the sector holds greater potential and promise. “Health Insurance as a business, has the potential to show top line growth,” concludes Dr Reddy.
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