India’s healthcare industry is expected to grow at a compound annual rate (CAGR) of 22% between the 2017-2022 period — from a size of $120 billion in 2017 to $372 billion by 2022. This remarkable estimated growth could primarily be attributed to rising income levels among the country’s ageing population and a growing awareness about preventive healthcare. Factors such as rising demand for affordable healthcare, technological advances, rising health insurance penetration and government initiatives are helping the sector script a healthier growth story.
Easy availability of advanced healthcare at comparatively affordable prices has also turned India into a medical tourism destination. This segment is estimated to be worth over $12 billion by 2022, accounting for 20% of the world medical tourism pie.
On the back of liberal investment guidelines and the existence of well-established domestic private hospital chains, cumulative foreign direct investment (FDI) that flowed into the sector stood at $22.9 billion between April 2000 and December 2018. As the country plans to invest a whopping $200 billion in medical infrastructure by 2024, the sector could garner higher interest from domestic as well as global investors.
Private healthcare currently accounts for almost 74% of the country’s total healthcare expenditure. With average life expectancy in India set to be over 70 years by 2022, coinciding with a rise in the income level of citizens, the demand for quality healthcare in India will grow significantly in the future, to be led mainly by the private sector.
India would need an additional 2.5 million beds to achieve the target of three beds per 1,000 people by 2025. The private sector should be ready to tap that opportunity.
The road ahead
The national average number of hospital beds per 1,000 people is 1.3, well below the World Health Organization-prescribed average of 3.5. These numbers are indicative of the challenges the country faces in terms of providing healthcare to its citizens. These issues could be addressed only through higher and more meaningful private participation.
The government has allowed up to 100% FDI through the automatic route in greenfield projects and 74% in brownfield projects. The increasing income levels and public interest in healthcare has indeed made the sector a rich opportunity to foray into. The country is poised to be ranked among the top three markets by incremental growth by 2020, and with phenomenal activity in this sector, it won’t be long to actualize this target.
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