Insights and Opportunities
Overview: The Indian healthcare industry is experiencing a rapid transformation. According to a World Health Report, India spends about 5.2% of its Gross Domestic Product (GDP) on the healthcare sector. It is expected that this figure will rise to 6.1% of GDP by 2012. The World Health Organization projected that India needs to create at least 80,000 hospital beds per year for the next five years to meet the expanding local demand. A significant portion of these hospital beds will be in various specialties.
The medical infrastructure in India is far from adequate. Demand for hospitals and beds far surpass availability. The problem is most acute in rural India, which accounts for over half of India’s population. Approximately 80% of available hospital beds are located in the urban centers, leaving only 20% for the larger rural population. Both the government and the private sector have embarked on a path to bring about a rapid growth in the industry and to manage the demand for high quality service. This has also brought a surge in demand for high-end medical devices and equipment. The Indian healthcare industry is estimated at $35 billion and is expected to reach over $75 billion by 2012. The medical equipment market is growing at an impressive rate of 15%. The demand for equipment is expected to reach $5 billion by 2012 from the current figure of $2.7 billion. The specialty hospital facilities depend on the import of high-end medical equipment.
There is a growing domestic demand for quality healthcare service. The Indian population of 1 billion people is growing at a rate of 2.5% per year. The growth in affluence of 200-300 million strong middle-income consumers has increased the demand for, along with the discretionary income to purchase, private health care services. Many in the growing "middle income" segment look for international quality medical services in private super-specialty hospitals. This trend is likely to continue for the next several years, thereby creating demand for a higher standard of healthcare.
The changed demographic profile and the rise of lifestyle-related diseases, has altered the health seeking behavior of the consumer. There is a rise in lifestyle-related diseases such as diabetes, cardiovascular diseases, and diseases of the central nervous system. The number of individuals covered by health plans has increased, but there is a large Indian population that still needs to be insured.
Both the government and private sector are up grading existing hospitals and planning to build new ones. Healthcare is provided through primary care facilities as well as secondary and tertiary care hospitals. While the first two categories are fully managed by the government, it is the tertiary care hospitals that are owned and managed either by the government or the private sector. The public sector is engaged in prevention and elimination of infectious diseases and accessibility of basic healthcare facilities to the rural masses.
The government has launched the National Rural Health Mission (NRHM) 2005-2020 with an aim to provide quality medical care for rural Indians. In its first phase to be implemented in the next seven years, NRHM will identify villages having weak medical care delivery systems and improve the infrastructure. To meet the growing demand, one million beds will be added by 2012 to bring the bed to thousand-population ratio to 1.85. It requires a total investment of $77.9 billion and large part will be from the private sector.
Corporations are sensing the huge untapped opportunity in the delivery of quality healthcare to the Indian masses and are focusing on tertiary-level as wells as preventive and diagnostic healthcare. There are global PE and venture funds that are also vying to explore the opportunities. With this, the medical infrastructure market is expected to grow at 14.5%. Demand for medical equipment is expected to reach $3.27 million in the next two years and $5 billion by 2012, from the current figure of $2.7 billion. Imports account for over 65% of the entire medical equipment market, of which 85% is from the U.S. The medical device market is also becoming too big to ignore. In 2007, India treated 450,000 foreign patients.
Medical tourism is one of the major external drivers of growth of the Indian healthcare sector. With increased competition for healthcare delivery, and promotion of medical tourism, quality healthcare is the key for survival. The National Accreditation Board for Hospitals (NABH) has been set-up to establish and operate accreditation programs for healthcare organizations. Some private hospitals are also applying for accreditation from bodies such as the Joint Commission International (JCI).
The large private healthcare services providers are actively seeking growth by enhancing their reach across the country through the building new hospitals and acquiring and upgrading existing hospitals. There are several groups that operate hospital chains, such as Apollo Group, Fortis Healthcare, Manipal Group, Max Healthcare, and Wockhardt Hospitals. In the medical equipment segment, competition is from the imports from European companies and Japan. India being a price sensitive market there is competition from low priced Chinese products.
Best Products/Services: Medical Infrastructure; Medical and Surgical Instruments; Medical Imaging; Electro medical equipment; Orthopedic and Prosthetic Appliances; Cancer diagnostic; and Ophthalmic Instruments and Appliances.
Opportunities: The growing demand for quality healthcare and the absence of matching delivery mechanisms pose a challenge and certainly a great opportunity. In infrastructure - building, equipping, managing, and financing super specialty hospitals are areas for growth. Some of the best sales prospects in the Indian medical equipment market include cancer diagnostic, cardiac products, medical imaging, plastic surgery equipment, as well as polymerase chain reaction technologies, laboratory products, and orthopedic and prosthetic appliances. India is full of opportunities as most Indian healthcare institutes use foreign medical equipments.