While India has several centers of excellence in healthcare delivery, overall infrastructure and access to healthcare is limited across much of the country. The Indian healthcare sector is large at $40 billion currently but expenditure and infrastructure are still amongst the lowest globally. However, the sector is growing rapidly at over 12% annually due to factors such as rising incomes, increasing disease burden from both infectious and lifestyle diseases, and expansion of health insurance coverage. If challenges around quality, access and regulation can be addressed, the sector is expected to reach $55 billion by 2020 and provide many new jobs.

1. Pharma Bio World40 December 2013
market research
H
ealthcare sector has witnessed
a growth even during recession
and it is being predicted that this
sector will become a major sector that
will add to the economic growth of the
country along with information technology
sector. The growing importance of India
in the international arena has also
contributed in the growth of this sector.
In the past few years, healthcare industry
witnessed huge expansion plan with
many companies showing interest in
investment in this sector.
Healthcare in India
Healthcare is one of the largest sectors,
in terms of revenue and employment.
During the 1990s, Indian healthcare
grew at an annual rate of 16 per cent.
Today, the total value of the sector
is around USD 40 billion. There is
significant growth opportunity for the
private sector in the healthcare segment.
The private sector accounts for more
than 80 per cent of the total healthcare
spending in India. Comparatively, the
Government participation has been low
to the private participation and can also
play an important role in facilitating
the revolution.
One of the key factors for the growth
in the healthcare sector is India’s
Countries Public Spending (%) Private Spending (%)
USA 45.50 54.50
UK 81.70 18.30
Brazil 41.60 58.40
China 44.70 55.30
India 26.20 73.80
Healthcare Industry – An Indian
Perspective
Indian healthcare industry is growing at a much rapid pace. However, Indian healthcare
expenditure is still amongst the lowest globally and there are significant challenges to be
addressed which comprises of the patient care quality and accessibility of healthcare service.
Dr Subroto Ghoshal
increasing population, currently 1.1
billion and increasing at a 2 per cent
annual rate. By 2030, India is expected
to surpass China as the world’s most
populous nation. It is being projected
that by 2050, the population will reach
1.6 billion. This population increase is
due to decline in infant mortality better
healthcare facilities and Government’s
initiative to eradicate diseases.
The Indian healthcare sector currently
represents a USD 40 billion industry.
A break-up of the sector as on 2009
is shown.
Table 1: Percentage spending
Source: KPMG report 2011
Globally compared, India’s healthcare
spend is significantly low. When we
compare the spending as a percentage
of GDP of developed and emerging
economies, we get to see a much
lesser percentage.
USA- 15.7 per cent, UK- 8.40 per cent,
Brazil- 8.40 per cent, China- 4.30 per
cent and India- 4.10 per cent.
While comparing public and private
contribution, there is a major variation
when compared with global scenario.
In India, private sector contribution to
the healthcare sector is highest when
compared with developed and emerging
economies. The table below shows
the percentage spending in some of
the countries:
The Indian healthcare industry is
estimated at USD 40 billion and this
industry is expected to grow to USD
79 billion by 2015 and USD 280 billion
by 2020.
Figure 1: Health industry break-up
Source: IDFC securities hospital sector,
November 2010
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2. Pharma Bio World December 2013  41
Disease Pattern in India
The factor which has contributed in
the growth of India’s healthcare sector
is a rise in both infectious and chronic
diseases. Even though India is on the
threshold of eliminating diseases like
polio and leprosy, some communicable
diseases are still on the forefront like
dengue fever, viral hepatitis, tuberculosis
and HIV to name a few. These diseases
have returned in force and developed
resistance to drugs. Urban India is
now on the threshold of becoming the
disease capital of the world and facing
an increased incidence of lifestyle
related diseases such as cardiovascular
diseases, diabetes, cancer, COPD etc.
Due to more affluent lifestyle and by
adopting unhealthy western diet that
are high in fat and sugar, the country
is expecting a dramatic rise in lifestyle
diseases. Over the next 5 to 10 years,
lifestyle diseases are expected to grow
at a faster rate than the infectious
diseases. This has become a serious
challenge that Indian healthcare system
needs to address.
The population of India has increased
up to 3 times since 1951–2000. It is also
estimated that the urban population has
increased to almost 4.5 times during
this period. This rise in urban population
with change in the standard of living, the
disease pattern has shifted to lifestyle
related diseases. It is estimated that the
spending on in-patient bed would be 50
per cent for lifestyle related diseases
by year 2012.
Infrastructure
Lack of infrastructure and manpower
has also been seen as a hurdle in the
quality of service required to meet
the growth in the healthcare sector.
Accessibility to healthcare service is
extremely limited to many rural areas
of the country. In addition, existing
healthcare infrastructure in unplanned
and is irregularly distributed. Further,
there is a severe lack of trained doctors
and nurses to serve the needs of the
large Indian populous. While India has
several centers of excellence healthcare
delivery, these facilities are limited in
their ability to drive healthcare standards
because of the poor condition of the
infrastructure in the vast majority of
the country. In 2003, private companies
accounted for 82 per cent of India’s USD
30.5 billion expenditure on healthcare.
It is estimated that nearly 70 per cent of all
hospitals in the country are in the private
sector. The private sector has evolved
a multi-pronged approach to increase
accessibility and penetration. Today,
both the sectors have also undertaken
Table 2: Distribution of medical staff per 1000 population
Source: whoIndia.org
initiatives to improve functional
efficiencies in the form of accreditations,
clinical research, outsourcing of
non-core areas etc.
The healthcare infrastructure in India
is inadequate compared with the global
standards. It is below the global average
in terms of healthcare infrastructure
and manpower. India has an average
0.6 doctors per 1000 population against
global average of 1.23.
In 2009, the number of beds available
per 1000 people in India was only 1.27,
which is less than half the global average
of 2.6. There are 369,351 Government
beds in urban areas and a mere 143,069
beds in rural areas. Moreover, the
medical personnel are concentrated in
urban areas. Around 74 per cent of the
graduate doctors in India work in urban
settlement, which accounts for only
approximately 1/4th
of the population.
While the rural poor are under served, at
least they can access the limited number
of Government support medical facilities
that are available to them. The urban
poor fare worse because they cannot
afford to visit the private facilities which
are very expensive.
Health Insurance
Health insurance though established
in many countries still remains largely
untapped in India. Less than 15 per cent
of India’s 1.1 billion people are covered
through health insurance. Over 80 per
Countries No. of doctors per 1000
population (year 2009)
No of nurses per 1000
population (Year 2009)
USA 2.7 9.8
UK 2.1 0.6
Brazil 1.7 2.9
China 1.4 1
India 0.6 1.3
“
“
While India has several centers of excellence
healthcare delivery, these facilities are limited in
their ability to drive healthcare standards because
of the poor condition of the infrastructure in the
vast majority of the country.
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3. Pharma Bio World42 December 2013
Figure 2: Cost comparison in USD for treatment
Source: Mediminds.com
cent of the health financing is private
financing, much of which is out-of-pocket
payments and not by any pre-payment
scheme. India’s first medical insurance
scheme was launched in the 1996–97
budget. The ‘Janarogya Yojana’ scheme
is marketed by the four subsidiaries of
GIC. While public sector health insurance
has not fared well, the market for private
health plan is expanding in India.
In 2001–02, 7.5 million policies were
sold. By 2003–04, the number of policies
issued had increased by 37 per cent to
10.3 million.
Government seems to be initiating the
health insurance scheme like Rashtriya
Swasthya Bima Yojana, Arogyashree
and other schemes which aims to
improve healthcare delivery through
private player to cover the millions
of BPL (Below Poverty Line) patients
in the year to come. With opening of
health insurance to private players, the
insurance is booming. With the rise in
disposable income for the population
in the age group of 15–60 years, the
insurance reach is expected to grow, as
estimated by industry experts. Patients
will have a choice to select between
various providers and this will bring in
better quality care and professionalism.
Medical Tourism
Medical tourism is one of the major
external drivers of the growth of the
Indian healthcare sector. According to a
joint study by CII and Mckinsey, Indian
medical tourism was estimated at USD
350 million in 2006 and has the potential
to grow into USD 2 billion industry by
2012. An estimated 180,000 medical
tourists were treated at Indian facilities
in 2004. India’s private hospitals
excel in fields such as cardiology,
joint replacement, orthopedic surgery,
gastroenterology, ophthalmology,
transplant and urology. To encourage
the growth of medical tourism, the
Government is also providing a variety of
incentives for overseas patients seeking
medical care in India.
Corporate hospitals have taken a major
initiative in attracting foreigners for
medical treatment to India. Some of the
major players in this field are Apollo
hospital, Fortis, Max, Escorts, Narayana
Hridayalaya to name a few, by providing
some of the best facilities compared with
any good international facility. Indian
doctors are considered among the best
doctors in the world. India also has a
major cost advantage over the developed
countries with similar facilities.
India is having a major edge over other
countries because of English speaking
manpower which provides better
communication with the patients. Along
with this, Indian hospitals extensively
use computerised hospital information
system added with 24 hours on ground
support, air ambulance support and
advanced diagnostic facilities. These are
the factors which have put India on the
global medical tourism destination.
Pharmaceutical Industry
Pharmaceutical industry is one of
the leading industries in India and it
represents 8 per cent of the global total
industry by volume. Pharmaceutical
industry is split into organised as well as
unorganised segment. In the organised
segment of pharmaceutical industry, there
are about 250–300 companies, which
account for 70 per cent of the product in
the market with top 10 firms representing
30 per cent. With huge manufacturing
capacity and technical knowhow, India
has become a major supplier to many
multinational generic companies who
are into contract manufacturing. It is
estimated that generic market is worth
USD 350 million and is expected to cross
USD 1 billion by 2012. However, R&D
does not feature majority in the domestic
industry and the expenditure is much
less when compared globally.
The Department of Pharmaceuticals
has estimated that the total revenue of
pharmaceutical industry in India between
2008 and 2009 was USD 21.04 billion.
The domestic market was estimated to
be worth USD 12.65 billion. It is being
anticipated that the Indian pharmaceutical
market will reach USD 55 billion by 2020.
The pharmaceutical industry is booming
with specialties in manufacturing
specialty drugs and advanced technology.
The DoP has prepared “Pharma Vision
2020” with an objective to focus India as
a leading destination for drug discovery
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4. Pharma Bio World December 2013  43
“
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ItisbeinganticipatedthattheIndianpharmaceutical
market will reach USD 55 billion by 2020.
and innovation and to provide support
for scientific information, international
infrastructure, venture fund for R&D
and many other measures. The Indian
market is skeptical about the possible
recession but pharmaceutical industry is
not concerned about the slow down and
is expected to continue to grow with its
good performance in the year to come.
Opportunities in Healthcare Industry
As per the report of investment commission
of India, the healthcare sector in the last
4 years has experienced a growth of
more than 12 per cent per annum. This
growth has been experienced due to
various factors like rising life expectancy,
good health insurance plans, increase in
the level of income and increase in the
lifestyle related and infectious diseases.
Around 40 million new jobs are expected
by 2020.
The private healthcare has been growing
even during the economic slow down and
has been expanding their operations.
There has also been an addition in the
manpower in this industry. By bringing
in foreign tourists to India for medical
tourism, education and leisure tourism,
it is expected that the industry can
generate additional USD 6–50 billion in
revenue and is capable of creating 10-40
million jobs directly or indirectly by the
year 2020.
It was highlighted by Mckinsey-CII
advisory that they estimate the number
of insurance coverage of 315 million with
a potential to generate ` 34,650 crore as
premium by 2015. India is in advantage
with the availability of good medical/
technical universities and 100 million
plus English speaking professionals.
India is one of the top 3 countries where
companies plan to spend in R&D and also
has strong IT industry availability. These
have been contributing for the growth of
the country as well as the industry.
Conclusion
Healthcare sector is at an influx of
paradigm shift in terms of changing
disease pattern, increasing dual disease
burden for both rural and urban India.
Private sector should work in tandem
with the Government on initiatives to
educate for developing more sustainable
delivery models. Both, private and the
Government should work together,
to encourage better penetration and
utilisation of health insurance schemes,
encourage accreditions, making it
mandatory for medical professionals,
which will help ensure quality standards.
Pharmaceutical research is also another
area that is expected to achieve
tremendous growth in the coming
decade, due to India’s huge and growing
population, low per capita drug usage
and increasing incidence of diseases.
Since the income has been increasing
and personal disposable income rising
more than 70 per cent, there is a demand
to have better quality healthcare. The
Government is also focusing on improving
the quality of healthcare delivery system.
In spite of immense opportunities,
healthcare sector is faced with certain
challenges to be addressed.
There are no proper guidelines set by the
Government for setting up of hospitals
and nursing homes. It is felt that without
uniform policy and sharing of information
by the hospitals, a mature healthcare
delivery system cannot materialise.
The private health sector is also highly
unregulated and there is a need for
establishing an accreditation body
which will ensure quality healthcare
through assessing hospitals, for
compliance to set standards and ensuring
proper patient care.
The Government has to explore the
potential to have healthcare insurance
which will support the poorer section of
the population. There is a need to set up
super specialty tertiary care hospitals
across the country to cater to the weaker
section of the society.
Contact: subroto.ghoshal@mindteck.com
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