India’s Healthcare Sector: A Thriving Industry with Endless Possibilities

The Indian healthcare sector is one of the largest sectors in the country, both in terms of revenue and employment. It is categorized into two major components - public and private. The government, i.e., public healthcare system, comprises limited secondary and tertiary care institutions in key cities and focuses on providing basic healthcare facilities in the form of primary healthcare centers (PHCs) in rural areas. The private sector provides a majority of secondary, tertiary, and quaternary care institutions with a major concentration in metros, tier-I and tier-II cities.

India's competitive advantage lies in its large pool of well-trained medical professionals. India is also cost-competitive compared to its peers in Asia and western countries. The cost of surgery in India is about one-tenth of that in the US or Western Europe. The low cost of medical services has resulted in a rise in the country’s medical tourism, attracting patients from across the world.

The Indian healthcare sector is expected to record a three-fold rise, growing at a CAGR of 22% between 2016–22 to reach US$ 372 billion in 2022 from US$ 110 billion in 2016, By FY22, Indian healthcare infrastructure is expected to reach US$ 349.1 billion.

The e-health market size is estimated to reach US$ 10.6 billion by 2025. As per information provided to the Lok Sabha by the Minister of Health & Family Welfare, Dr. Bharati Pravin Pawar, the doctor population ratio in the country is 1:854, assuming 80% availability of 12.68 lakh registered allopathic doctors and 5.65 lakh AYUSH doctors.

In terms of investments and developments, the healthcare and pharmaceutical sector in India had M&A activity worth US$ 4.32 billion in the first half of 2022. Startups like HealthifyMe are adding half a million new users every month and crossed US$ 40 million ARR in January 2022. The government has also increased its public expenditure on healthcare, and the Indian medical tourism market is expected to reach US$ 13.42 billion by 2026.

Government initiatives

The Indian government has taken various initiatives to promote the healthcare industry. In the 2023-24 Union Budget, the Ministry of Health and Family Welfare was allocated Rs. 89,155 crore, and several schemes like PMSSY, National Health Mission, and Ayushman Bharat were allotted funds. The government also approved grants for new medical colleges, extended the e-medical visa facility, and launched the Ayushman Bharat Digital Mission. Additionally, the government is planning a credit incentive program worth Rs. 500 billion to boost healthcare infrastructure, and the National Medical & Wellness Tourism Board was established to promote medical tourism.

Road ahead

India's healthcare sector offers vast opportunities in providers, payers, and medical technology. The hospital industry is expected to grow to US$ 132.84 billion by FY22, and India has become a leading destination for high-end diagnostic services. Rising income levels, an ageing population, and growing health awareness are expected to boost healthcare services demand in the future. The Government aims to develop India as a global healthcare hub by increasing public health spending to 2.5% of the country's GDP by 2025.