The Indian healthcare sector isn’t just witnessing tremendous growth, but it’s also undergoing a remarkable transformation. The landscape is evolving with telemedicine services gaining widespread adoption and artificial intelligence playing a more significant role in patient diagnoses. The healthcare ecosystem is getting faster, more efficient, and cost-effective.
However, challenges persist as the growing population and a rise in chronic diseases continue to drive the demand for top-notch healthcare services. Despite these obstacles, the industry remains resilient and innovative in meeting the evolving needs of the population.
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Owing to its increasing coverage, improving services and financing from both public and private sources, the Indian healthcare industry is expanding rapidly. In terms of revenue and employment, the sector has emerged as one of India’s largest sectors.
Hospitals, medical equipment, clinical trials, outsourcing, telemedicine, medical travel, health insurance, and medical devices are all part of India’s healthcare sector. The hospital industry in the country accounts for about 80% of the total healthcare market. It is expected to reach US$132 billion by 2023, from US$61.8 billion in 2017, growing at a CAGR of 16-17%. There are currently 70,000 hospitals in the country, of which the private sector accounts for 63%.
The healthcare market in India was projected to reach US$372 billion in 2022, up from US$73 billion in 2012.
According to the Global Healthcare Report recently released by real estate consultancies Knight Frank and their US partner Berkadia, presently India needs about 2 billion square feet of healthcare space to cater to its existing population base of 1.42 billion.
The report highlighted that the country’s existing bed-to-population ratio is 1.3 beds per 1,000 people and that there exists a deficit of 1.7 beds per 1000 population. The bed-to-population ratio in India is much lower than 13 in Japan, 4.3 in China, 2.9 in the United States of America (USA) and 2.5 in the United Kingdom. The World Health Organization (WHO) recommends a ratio of 3 beds per 1000 people.
As per the report, the country requires an additional 2.4 million beds. A low population-to-bed ratio together with the country’s growing population, highlights the dire need for some substantial enhancement in the country’s healthcare infrastructure.
Knight Frank’s report stated that factors including a steady rise in the ‘ageing population’, increasing per capita incomes, growing health awareness and the increasing use of health insurance, fuel the demand for the healthcare industry in the country. Furthermore, there has also been a significant rise in the incidence of lifestyle diseases including cancer, diabetes and cardiovascular diseases, in the country. This is going to boost the demand for specialized healthcare.
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Looming opportunities
Following the outbreak of the pandemic (COVID-19) healthcare continues to be an attractive investment option for investors exploring long-term income-generating investments/ventures. About 582 potential investment opportunities worth US$32 billion have been identified by the Indian government in medical infrastructure including hospitals.
As indicated in the Attitudes Survey, nearly one-fourth of India’s ultra-high-net-worth individuals have expressed their intent to invest in healthcare-related assets in 2023.
Additionally, there is a growing opportunity to invest in medical research and development to facilitate the discovery of new medications to combat any future outbreak of pandemic-related ailment.
The Knight Frank and Berkadia report states that despite the deficit in healthcare infrastructure, India remains an attractive destination for healthcare tourism (i.e. medical tourism), as it offers quality medical procedures at a relatively low cost. Between 2014-2019, the inflow of foreign tourist arrivals on medical visas soared at a compound annual growth rate (CAGR) of 30%. India was ranked 10th among the 46 tourist attractions worldwide, according to the Medical Tourism Index (2020–21).
Foreign Tourist Arrival for medical purposes has increased from 1.83 lakh in 2020 to 3.04 lakh in 2021.
To encourage medical tourism, the government has introduced the ‘Heal in India’ initiative in 2022. In addition, the National Healthcare Policy of India aims to increase government spending to 2.5% of GDP. The budgetary allocation for the healthcare sector has already increased from 1.2% of GDP in FY 2014 to 2.1% in FY 2023. Also, 100% FDI is allowed under the automatic route for greenfield projects.
Future healthcare to get better and less expensive
The Indian healthcare industry is growing rapidly, and is expected to be worth Rs 110 trillion by 2027, growing with a CAGR of 30.70%.
The revenue of the digital health market in the country is estimated to be worth US$7,373.00m in 2023. It is projected to show an annual growth rate (CAGR 2023-2028) of 18.35% in terms of revenue, with a projected market volume of US$17,120.00m by 2028. (The National Digital Health Blueprint is expected to generate nearly US$200 billion in incremental economic value for India’s healthcare sector over the next ten years).
Rapid digitization, the expanding innovative health-tech platforms, partnerships between start-ups and established companies, and favourable funding environments for viable business models supported by government initiatives, will be among the major growth drivers in the digital healthcare arena.
Numerous healthcare startups have recognized the need for improved accuracy and precision in diagnosis and treatment. They have launched affordable digital devices and software to synthesize digitization in medicine. More than 4,000 Health-tech startups are currently working in India
Healthcare booking platforms, healthcare IT and fitness & wellness tech are the major segments in the health-tech sector that have received the highest funding in 2022.
The ubiquitous influence of artificial intelligence (AI) in healthcare is expected to increase further, impacting not just drug development, but also disease diagnosis, treatment planning, and patient care management. The Internet of Medical Things (IoMT) is expected to grow rapidly, connecting medical devices through wireless networks, remotely monitoring the indicators/symptoms of health and allowing people to care for their health. Insights from vast data sets will revolutionize decision-making and provide a deeper understanding of patient behaviours and market trends.
With over 750 million smartphone users, telemedicine is facilitating online consultations with doctors. It provides accessible and convenient care, thereby addressing the gap in healthcare between urban and rural areas.
The telemedicine market is the maximum potential eHealth segment in India. It is expected to be worth US$5.4 billion by 2025, growing at a compound annual growth rate (CAGR) of 31%. eSanjeevani, which is a national telemedicine service, has recorded around 80 million tele-consultations till December 2022, since its launch three years ago.
5G, which is currently in use in certain parts of the country, is also expected to have a significant impact on the healthcare industry. According to a PwC report, with ultra-low latency internet powered by 5G, a healthcare professional could operate on a patient located even in a different continent, (remote surgery). The report explained that this would be done through equipment that instantly imitates the action/movement of the healthcare professional.
In the upcoming few years, artificial intelligence (AI), data and IoMT, will be grading up from the simple devices designed for tracking vital signs like heart rate and blood oxygen levels to smartwatches capable of complex scans such as ECGs and smart textiles tracking blood pressure and predicting the risk of heart attacks.
The future of healthcare in India is expected to be more technologically innovative. It will reach out to people more at their homes or clinics and hence will become more personalized and more affordable. Consumers will see better access to healthcare and quality of service.
Ayushman Bharat Digital Mission (ABDM) a ‘digital’ health initiative by the government, aims to provide: choices to individuals to access both public and private health services, facilitate compliance with laid down guidelines and protocols, and ensure transparency in the pricing of services and accountability for the health services being provided. Recognizing the importance of preventive healthcare, the government initiatives including Fit India Movement and Yoga aim to encourage healthy lifestyles, preventive screenings, and early intervention programs.
There is an ongoing effort to improve access to high-quality healthcare that is affordable and utilizes technology at its core. This includes the increasing use of telemedicine services and artificial intelligence in patient diagnosis, which are becoming more widespread. However, it’s important to note that the healthcare sector also faces several challenges such as a growing population and an increasing incidence of chronic diseases, which are constantly pushing up the demand for high-quality healthcare services.
