The Indian healthcare sector is expected to reach US$ 100 billion by 2015 from the current US$ 65 billion, growing at around 20 per cent a year, according to rating agency Fitch. Some of the major factors driving the growth in the sector include increasing population, growing lifestyle related health issues, cheaper costs for treatment, thrust in medical tourism, improving health insurance penetration, increasing disposable income, government initiatives and focus on Public Private Partnership (PPP) models.
Meanwhile, the Government of India has decided to increase health expenditure to 2.5 per cent of gross domestic product (GDP) by the end of the Twelfth Five Year Plan (2012-17), from the existing 1.4 per cent. Prime Minister, Dr Manmohan Singh also emphasized the need for increased outlay to health sector during the Twelfth Five Year Plan.
• FDI inflow in hospital and diagnostic centres was US$ 1.3 billion during April 2000 and March 2012, according to the latest Department of Industrial Policy & Promotion (DIPP) data
• FDI inflow in medical and surgical appliances stood at US$ 521.6 million during the same period, according to the latest DIPP data
• The drugs and pharmaceuticals sector has attracted FDI worth US$ 9.2 billion between April 2000 and March 2012
According to a survey conducted by consulting firm, Grant Thornton, India is expected to witness the largest number of merger and acquisitions (M&As) in the pharmaceutical and healthcare sector in 2012. The survey that was being conducted across 100 companies stated that fourth of the respondents were bullish on acquiring companies in the pharmaceutical space.
"The expectations of M&A activity in the pharma and healthcare sector could be explained by factors such as the impending patent cliff in the US, the increasing attractiveness of India as a low-cost R&D destination and the increasing success of Indian firms in getting ANDA approvals," said Sunil Makharia executive VP (finance) Lupin Pharmaceuticals. Patent cliff refers to expiry of legal protection to top-selling drugs.
According to a report by PriceWaterhouseCoopers, an estimated 189 million people in the country will be more than 60 years of age by 2025, needing higher healthcare spends.
A combined study by an industry body and Ernst & Young suggests that India will need as many as 1.75 million additional beds by the end of 2025. Further, an investment of US$ 86 billion is required to achieve 1 doctor, 2 beds and 2.3 nurses per 1000 population by 2025.
Medical tourism in India has also received a boost with arrival of patients from countries with advanced medical systems. This underlines the fact that India has good infrastructure and talent.
According to a new report published by RNCOS, titled "Booming Medical Tourism in India" India’s share in the global medical tourism industry will reach around 3 per cent by the end of 2013. The report states that medical tourism is expected to generate revenue around US$ 3 billion by 2013, growing at a CAGR of around 26 per cent during 2011–2013. The number of medical tourists is anticipated to grow at a CAGR of over 19 per cent during the forecast period to reach 1.3 million by 2013.
—Source: Consolidated FDI Policy, DIPP