Healthcare Sector Poised To Reach $372 B by Next Year: Niti Aayog

Think tank outlines investment avenues in the different segments of healthcare industry in India

Healthcare Sector Poised To Reach $372 B by Next Year: Niti Aayog
Healthcare Sector Poised To Reach $372 B by Next Year: Niti Aayog
PTI - 30 March 2021

Healthcare has become one of the largest sectors of the Indian economy and is expected to reach $372 billion in 2022, says a report by Niti Aayog. It outlines a range of investment opportunities in the country’s healthcare sector across hospitals, pharmaceuticals and medical devices.

The report, Investment Opportunities in India’s Healthcare Sector, also says that the industry has the potential to generate 27 lakh jobs between 2017 and 2022, which translates into over five lakh new jobs per year.

“India’s healthcare industry has been growing at a compound annual growth rate (CAGR) of around 22 per cent since 2016. At this rate, it is expected to reach $372 billion in 2022,” the report says.

According to the report, FDI inflows in the healthcare sector in India increased from $94 million in 2011 to $1,275 million in 2016 – a jump of over 13.5 times. It also says that in the hospital segment, the expansion of private players to tier-II and tier-III locations, beyond metropolitan cities, offers an attractive investment opportunity.

The hospital industry in India accounts for 80 per cent of the total healthcare market. It was valued at $61.79 billion in 2016-17 and is expected to reach $132 billion by 2023 at a CAGR of 16-17 per cent, the report says.

Around 65 per cent of hospital beds in India cater to almost 50 per cent of the population concentrated in Uttar Pradesh, Maharashtra, Karnataka, Tamil Nadu, Telangana, West Bengal and Kerala. “The other 50 per cent of the country’s population living in the remaining 21 states and eight Union Territories has access to only 35 per cent of hospital beds. Simple arithmetic indicates that there is tremendous potential to grow hospitals beds, by at least 30 per cent, for ensuring equitable access to healthcare for citizens in all parts of the country,” it says.

According to the report, non-metros (Tier-II and III cities) are expected to recover faster than the metropolitan areas and tier-I cities, as they were less badly hit by the Covid-19 outbreak.

The report was released by Niti Aayog Member VK Paul, CEO Amitabh Kant, and Additional Secretary Rakesh Sarwal. “The Covid-19 pandemic has not only presented challenges but also several opportunities for India to grow. All these factors together make India’s healthcare industry ripe for investment,” Kant wrote in the foreword.

According to the report, while the adoption of home healthcare solutions in India is at a relatively nascent stage, it has tremendous potential for growth in the future. It is on account of the rising elderly population in the country, increase in the incidence of chronic diseases, enhanced demand for constant personalised care as well as the emergence of nuclear family structures in urban areas.

The report also points out that technology advancements such as artificial intelligence, wearables and other mobile technologies, along with the internet of things, offer several avenues for investment in key segments.

India’s healthcare sector comprises hospitals, medical devices and equipment, health insurance, clinical trials, telemedicine and medical tourism. These market segments are expected to diversify as an ageing population with a growing middle class increasingly favours preventative healthcare.

“Moreover, the rising proportion of lifestyle diseases caused by high cholesterol, high blood pressure, obesity, poor diet and alcohol consumption in urban areas is boosting demand for specialised care services,” says the report.