Sector structure/Market size

The healthcare industry in the country, which comprises hospital and allied sectors, is projected to grow 23 per cent per annum to touch US$ 77 billion by 2012 from the current estimated size of US$ 35 billion, according to a Yes Bank and ASSOCHAM report.

The sector has registered a growth of 9.3 per cent between 2000-2009, comparable to the sectoral growth rate of other emerging economies such as China, Brazil and Mexico. According to the report, the growth in the sector would be driven by healthcare facilities, both private and public sector, medical diagnostic and pathlabs and the medical insurance sector.

Healthcare facilities, inclusive of public and private hospitals, the core sector, around which the healthcare sector is centered, would continue to contribute over 70 per cent of the total sector and touch a figure of US$ 54.7 billion by 2012.

Adds a FICCI-Ernst and Young report, India needs an investment of US$ 14.4 billion in the healthcare sector by 2025, to increase its bed density to at least two per thousand population.

According to a latest report by McKinsey, driven by strong local demand, Indian healthcare market is expected to continue growing close to previously projected rates of 10 to 12 per cent. With average household consumption expected to increase by more than seven per cent per annum, the annual healthcare expenditure is projected to grow at 10 per cent and also the number of insured is likely to jump from 100 million to 220 million.

Health Insurance

Currently only 10 per cent of the Indian population has health insurance, which means that there is tremendous scope for growth in this area.

According to the Yes bank and Assocham report, the medical insurance sector would account for US$3 billion in the next three years, up from the estimated current size of over US$1 billion.

In 2008-09, health insurance has emerged as one of the fastest growing segments in the non-life insurance industry with 30 per cent growth.

Health insurance premium collections touched US$ 1.45 billion in 2008-09 compared with US$ 1.12 billion in the previous year, the Insurance Regulatory and Development Authority said in its annual report for 2008-09.

Investments in Healthcare

The sector has been attracting huge investments from domestic players as well as financial investors and private equity (PE) firms. Funds such as ICICI Ventures, IFC, Ashmore and Apax Partners invested about US$ 450 million in the first six months of 2008-09 compared with US$ 125 million in the same period a year ago, according to an analysis carried out by Feedback Ventures. Feedback Ventures expects PE funds to invest at least US$ 1 billion in the healthcare sector in the next five years.

According to a Venture Intelligence study, 12 per cent of the US$ 77 million venture capital investments in the July-September 2009 quarter were in the healthcare sector.

As part of its ‘Healthymagination’ initiative, GE will spend US$ 3 billion over the next six years on research and development, provide US$ 2 billion of financing over the next six years to drive healthcare information technology and health in rural and underserved areas, and invest US$ 1 billion in partnerships, content and services.

The government, along with participation from the private sector, is planning to invest US$ 1 billion to US$ 2 billion in an effort to make India one of the top five global pharmaceutical innovation hubs by 2020.

The Ajay Piramal Group-owned private equity (PE) firm, India Venture Advisors, will launch its second US$ 150 million healthcare fund next year.

Leading international clinic chain Asklepios International is gearing up for a foray into the Indian healthcare market. As part of the 2.3 billion euro group’s strategy to enter the sub-continent, Asklepios is mulling the launch of a US$ 100 to US$ 200 million fund.

Gulf-based healthcare group Dr Moopen is investing over US$ 200 million for setting up hospitals and eye-care centres across India.

Healthcare major, Fortis Hospitals plans to invest US$ 55 million, to expand its facilities pan-India.