detail about health care sector of india

1. Healthcare sector of India
OVERVIEW
The Indian healthcare industry, which comprises hospitals, medical infrastructure, medical
devices, clinical trials, outsourcing, telemedicine, health insurance and medical equipment,
was valued at US$ 79 billion in 2012, and is expected to reach US $160 billion by 2017. The
Indian healthcare sector is expected to grow at about 15 percent year-on-year (y-o-y), on
account of factors such as rapid growth in infrastructure development, creation of demand for
higher levels of healthcare, rising awareness of end users, and launch of innovative insurance,
reimbursement, and financing policies.
Healthcare has become one of India's largest sectors both in terms of revenue and
employment. Of the total healthcare revenue in the country, hospitals account for 71 per cent,
pharmaceuticals 13 per cent, medical equipment and supplies 9 per cent, medical insurance 4
per cent and diagnostics 3 per cent.
According to the Investment Commission of India, the healthcare industry in India has
experienced remarkable evolution of an added 12 per cent per year during the last 4 years,
driven by a number of factors such as increase in the average life expectancy and average
income levels, and rising awareness for health insurance among consumers.
The growth of the Indian healthcare sector is further driven by the 300 million strong middle
class population with significant disposable income, which is likely to demand superior
healthcare services.
According to :( oifc & ibef report)
Segment of healthcare sector
Hospitals
Government Hospitals - includes healthcare
centres, district hospitals and general hospitals
Private Hospitals - includes nursing homes,
mid-tier, and top-tier private hospitals
Pharmaceutical
Healthcare
Healthcare
Diagnostics
Medical Equipment
and Supplies
Medical Insurance
Includes the manufacture, extraction, processing,
purification, and packaging of chemical materials
to be used as medications for humans or animals
Comprises businesses and laboratories that offer
analytic or diagnostic services including body fluid
analysis
Includes establishments primarily engaged in
manufacturing medical equipment and supplies,
such as surgical, dental, orthopaedic,
ophthalmologic, and laboratory instruments, etc
Includes health insurance and covers an
individual’s hospitalisation expenses and medical
reimbursement facility incurred due to sickness

2. Healthcare revenues in India by different segment
Revenues
4% 3%
Hospitals
9%
Pharmaceutical
13%
Medical Equipment
& Supplies
Medical Insurance
71%
Diagnostics
According to : (ibef report)
Region
America
Europe
Africa
Western Pacific Region (WPR)
Eastern Mediterranean Region (EMR)
India
South-East Asia (S-E Asia)
Health
Expenditure as a
% of GDP
14.40%
9.30%
6.50%
6.50%
4.70%
4.20%
3.80%
According to : (ICRA Research Service)
Deal / Investment Activity
The healthcare equipment sector attracted 8.8 per cent of the total investments in terms of
deal value with an aggregate of US$ 249.01 million (20 deals).
The hospital and diagnostics centre in India received foreign direct investment (FDI) worth
US$ 1,597.33 million, while drugs & pharmaceutical and medical & surgical appliances
industry registered FDI worth US$ 10,318.17 million and US$ 622.99 million, respectively
during April 2000 to March 2013, according to data provided by Department of Industrial
Policy and Promotion (DIPP).
The diagnostics sector in India has been witnessing immense progress in innovative
competencies and credibility. In addition, the emerging sectors, such as bio-generics and

3. pharma packaging are also paving way for the pharmaceutical market to continue its upward
trend during FY 2012- FY 2014.
According to : (data released by VCCEdge, Department of Industrial Policy and Promotion
(DIPP),and ibef report)
Market size
Potential Healthcare industry is the world's largest industry with total revenues of approx
US$ 2.8 Trillion. In India as well, Healthcare has emerged as one of the largest service
sectors with estimated revenue of around $ 30 billion constituting 5% of GDP and offering
employment to around 4 million people. By 2025, Indian population will reach 1.4 billion
with about 45% constituting urban adult (15 years+). To cater to this demographic change,
the healthcare sector will have to be about $100 billion in size contributing nearly 8 to 10%
of the then GDP. By then, the 10 large national healthcare networks would be able to absorb
30% of the market share.
According to : (CII report)
Key trends
Shift from communicable to lifestyle diseases
50% of the spending on in-patient beds will be from lifestyle – related diseases, which will
result in increased demand for specialized care
Management contracts
Many healthcare players such as Fortis and the Manipal Group are signing management
contracts to provide additional revenue stream to hospitals
Evolution of telemedicine
Telemedicine is evolving fast in India, supported by the ICT sector. Currently, about 650
telemedicine centers exist throughout India
Expat doctors / Foreign doctors
This trend is being supported by Improved healthcare infrastructure in India, increase in
medical tourism, improved compensation structures and growing restrictions on licensing and
practicing in UK and Europe (e.g. Back 2 Health started by Dr. Shiv Bajaj who returned to
India from Canada, Vardan by the Times of India Group, Active Ortho in Delhi set up by a
German physical therapist etc.)
Holistic well-being
Various hospitals have tied-up with holistic health centers to combine traditional healthcare
knowledge and practices with conventional systems
According to :( Dinodia Capital Advisors Report)
Recent policy

India’s gross domestic product (GDP) growth for 2012-13 was projected at around 7.6 per
cent; however, the actual GDP growth estimate is only five per cent.

4. 
The demand for hospital beds in India is expected to be around 2.8 million by 2014 to match
the global average of three beds per 1000 population from the present 0.7 beds. India needs
100,000 beds each year for the next 20 years.

The Government of India (GOI) has launched a large number of programmes and schemes to
address the major concerns and bridge the gaps in existing health infrastructure and provide
accessible, affordable, equitable healthcare.

The share of hospital and diagnostic centres in cumulative FDI equity inflows amounts to
0.82 per cent.

The GOI has introduced a new medical visa category for the foreign tourists coming to India
for medical treatment. The GOI has also formulated guidelines to address various issues
governing wellness centres, covering the entire spectrum of the Indian systems of medicine.

Research & Development (R&D) occupies the second position in India’s GDP with
consistently high growth at near 20 per cent in the last few years. The GOI has also stressed
the need to enunciate a policy for synergising science, technology and innovation and has
also established the National Innovation Council. The GOI has announced the Science,
Technology and Innovation Policy 2013 and has proposed to increase the gross expenditure
on research and development to two per cent of GDP from the current level of less than one
per cent.

As the Indian healthcare industry has been displaying strong growth prospects, many foreign
players are eager to make investments in India. The private equity (PE) firms have made
three major investments in the healthcare sector during the calendar year ending December
31, 2012. During the year, the PE investments have made investment of $100 million in the
hospitals and clinics sector. The healthcare and life sciences industry attracted $581 million
across 14 investments made by the PE investors. The PE investors have quadrupled their
investment in India’s primary healthcare, betting the sick and ailing will stop approaching
family doctors as the migrants in cities look out for a brand. During the year, the PE investors
have invested $520 million into India’s basic healthcare industry and there is a prediction that
PE investments will surpass $1 billion in 2013.

The Parliamentary Standing Committee on Health and Family Welfare tabled a report in the
Parliament on May 8, 2012 on the functioning of the Central Drugs Standard Control
Organization (CDSCO). CDSCO is the agency mandated with the regulation of drugs and
cosmetics in India. The report covers various aspects of drug regulation including
organisational structure and strength of CDSCO, approval of new drugs, and banning of

5. drugs, among others. Subsequent to submission of the report, the Ministry of Health and
Family Welfare has constituted a committee to verify the procedure of drug regulation.
GOVT. Incentive

The government is taking numerous measures to encourage investments in the sector. There
has been a focussed approach to increase supply of all healthcare professionals, strengthen
primary healthcare delivery by incentivising government health workers and to increase
health insurance coverage among the lower socio-economic population. In addition to these,
some initiatives by the government have been taken, primarily to support private sector
participation. There is a growing appreciation for the role that the private involvement may
have in meeting public demand, and government are considering the use of PPP models to
help improve infrastructure and healthcare provision.

The National Rural Health Mission (NRHM’s) allocation has been increased to $3.82 billion
in 2012-13 from $3.32 billion in 2011-12. Under NRHM, over 1.4 lakhs health human
resources have been added to the health system across the country upto September 2012 and
10,473 sub-centres, 714 primary health centres (PHC’s), 245 community health centres
(CHCs) have been newly constructed. The total plan outlay for the year 2012-13 under the
NRHM, is Rs 2,05,420 million and Rs 27,127 million for schemes/ projects in the north
eastern region and Sikkim.

The Indian system of medicines is also being developed and promoted by integration of
AYUSH in national healthcare delivery through an allocation of Rs 9,900 million plan
outlays in 2012-13.
According to ;(KPMG Union Budget 2013 Report)
Growth Driving factors
Increase in patients population, increasing lifestyle related health issues
Faster diagnosis leading to early treatment, awareness on preventive healthcare
disorders
Affordable treatment costs
Thrust on medical tourism
Improving health insurance penetration
Increasing disposable income
Medical insurance and mandatory wellness checks by corporate houses
Government initiatives and focus on Public Private Partnership (PPP) models are
some of the driving factors for the industry growth
Key Developments

6. Semi-Urban, Rural healthcare sector in the country is also seeing an upsurge.
According to the Ministry of Health (Rural Health Survey 2009) Report, The rural
healthcare sector has added around 15,000 health sub-centers and 28,000 nurses and
midwives during the last 5 years, The number of primary health centers has increased
by 84% , taking the number to 20,107.
Health insurance market (in India) is one of the fastest growing, 2nd largest non-life
insurance segment in the country, according to RNCOS report, The health insurance
premium is expected to grow at a CAGR of over 25 % for the period spanning from
2009-10 to 2013-2014.
Additionally, India’s share in the global medical tourism industry is estimated to be
around 3 % by the end of 2013, by the RNCOS report and is expected to generate
around US$ 3 billion in revenue by 2013.
Indian medical technology industry is expected to reach US$ 14 billion by 2020 from
US$ 2.7 billion in 2008.
The total healthcare infrastructure expenditure is expected to reach US$ 14.2 billion
in 2013, registering an increase of 50 per cent as compared to the 2006 figure.
Majority of healthcare players are now, expanding to tier-II and tier-III cities, also with semi
urban areas, due to significant demand for high-quality, specialty healthcare services and
quick treatment modalities.
According to : (HarNeedi Report)
Challenges of Indian Healthcare sector
The Industrial challenges are many:
Owing to the fact that the healthcare sector in India is one of the largest service segment, as
well it has egressed as on the of most challenging sectors in India. For the healthcare
segment, the challenges future that are assumed to be:
To control cost of treatment
Access to insurance and also bring in more clarity to cashless treatment options
A severe shortage of qualified professionals and the workforce is concentrated in
urban areas. Many Indian people, especially those who living in rural, semi urban
areas, still receiving services from unqualified providers. The emigration of qualified
doctors, nurses, and other medical professionals is substantial.
The training resources, other infrastructure providing to nurses/other medical
professionals in India is still inadequate. The policy designers from government body
urgently needs to address these issues maintain quality norms
India would require another 1.75 million beds by the end of 2025 to reach aratio of
two beds per 1000 population.
According to some reports, “Quantifying the need gap taking into account the year
2020, leaves us with a shortfall of 2 million (Doctors/Physicians), 3.5million
(Nurses), 8 million (Paramedics) and bigger number of other support medical
professionals in India. Going by WHO norms for developing countries, India has an
acute shortfall of Doctors/Practitioners, Nurses (1.4 million and 2.8 million
respectively) and also there is a acute shortage of paramedical and administrative
professionals