The Indian healthcare industry will continue to draw investor attention
- To push investments, India has simplified FDI policies in healthcare. 100% FDI has been allowed under the automatic route to invest in developing hospitals and healthcare centres. Likewise, 100% FDI under automatic route is allowed in medical device manufacturing.
India’s healthcare infrastructure is set for massive growth. By FY 22, the size of India’s healthcare infrastructure will reach USD 349.1 billion, growing by 17% on an annual basis, as per the research by “theIndiawatch.com”, an India-focused business research advisory.
Hospitals and healthcare centres are the biggest categories in the industry, reaching USD 279.2 billion by the end of the current fiscal. Other prominent categories include pharma, medical devices, etc.
As disposable income amongst Indian households is rising, so is the demand for quality healthcare. Moreover, India’s healthcare infrastructure is presently underdeveloped, marked by a visible demand-supply gap. This further is fuelling growth.
As the industry is set for expansion, it will continue to draw investor interest. A sizable portion of the investment will be directed towards hospitals & health centres, pharma companies, and medical equipment manufacturing. Besides, health tech, clinical research, online pharma commerce, etc. are also sunrise sectors and will continue to feature on investor radar.
Simplified FDI policies
To push investments, India has simplified FDI policies in healthcare. 100% FDI has been allowed under the automatic route to invest in developing hospitals and healthcare centres. Likewise, 100% FDI under automatic route is allowed in medical device manufacturing. 100% FDI under automatic route is allowed in greenfield pharma projects, whereas 74% is allowed in brownfield projects. Investments above 74% in brownfield pharma projects require govt. approval.
During 2000-2020, Indian healthcare has received an FDI inflow of USD 26.9 billion, as per govt reports. USD 17.7 billion has been directed towards pharma while hospitals & diagnostic centres received a little over USD 7 billion. The remaining was invested in medical device manufacturing. In the past 12 months, the total FDI poured into the healthcare industry is around USD 1.6 billion.
In addition to simplified FDI policies, the Government of India (GOI) has also introduced other structural reforms to incentivize investments in the healthcare centres. There are attractive tax holidays for healthcare players, especially in smaller towns and rural India. Likewise, there is a provision for income tax waiver for 15 years for domestically manufactured medical technology. There are also attractive PLI schemes in the device manufacturing and pharma sector.
Becoming self-reliant in Device Manufacturing
India aims at becoming self-reliant in the manufacturing of medical devices. In FY 20, the total device manufacturing market in India was sized at around USD 11 billion. By 2025, the industry is expected to grow fivefold to USD 49.5 billion.
Besides a few large manufacturers such as GE Healthcare, Philips, Siemens, etc, the market is mostly import-dependent. However, there is a pressing need to incentivize domestic production. Due to expensive devices, many times pathology centres in smaller towns and rural areas are unable to afford, thereby undermining overall healthcare services. Elevated indigenous manufacturing capabilities can help in making diagnostic services more affordable to average Indians.
To develop domestic capacity, GOI has announced a USD 466 million PLI scheme for 5 years, starting from FY 21.
India’s pharma sector is also set for momentous growth in the foreseeable future. India has around 3000 registered pharma producers and is already a leader in global generics production. The industry has plenty of headspaces to grow in other key categories such as APIs, biosimilars, and biotechnology, etc. A PLI of over USD 2 billion has been introduced for the pharma industry as well.
The Rise of e-health consultation
As per the research by “TheIndiawatch.com”, India’s e-healthcare consulting market is expected to reach USD 290.1 million by FY 22, growing at a CAGR of 78.9% in the past 4 years. The market is still in its infancy when compared to other developed markets in the world. Nevertheless, attractive demographic dividends, evolving consumer behaviours, and availability of cheap 4G internet are driving the industry in a positive direction. The pandemic also gave upward thrust to the digital health industry in India. Post pandemic, millions of Indian households are now comfortable in availing healthcare consultation over the web.
Investment Research Services for Healthcare Investors
As investments will rise across various categories of the healthcare industry, there will be a growing need for tailormade research and insights on the market.
Indian healthcare is an attractive industry to play out backed by strong fundamental growth factors. However, it is also complex and multifaceted and hence investors would require access to actionable insights and data. This is where market research agencies can come into play.
As an India focused research agency, Theindiawatch.com works with enterprises, investors, and trade bodies and offer them custom research solutions that can help in better decision making.
Disclaimer: This is a company press release. No HT journalist is involved in creation of this content.