E-Paper
Next phase of health care investments in India
This article is authored by Mohit Khullar, managing director and leader, corporate finance, A&M.
India’s health care sector is entering a defining decade. What was once a fragmented, capacity-starved system is now evolving into a scaled, strategy-driven and highly investible industry. The next phase will be shaped by three forces: specialised and outcome-led care, sustained capital inflows and consolidation. If the last ten years were about building capacity and networks, the next ten will be about building scaled platforms, clinical differentiation, technology-enabled care models and globally competitive businesses.
India’s health care expenditure is expected to reach $320 billion by financial year (FY) 2028, growing at compound annual growth rate of 10–12%, making it one of the fastest-expanding large health markets globally. The sector has received more than $15 billion private equity investments in the last five years, with hospitals, single specialty businesses, diagnostics and devices together accounting for a majority of capital deployed. As we move to the next phase, we see a few structural drivers shaping the sector such as mid-sized assets growing or consolidating into larger platforms, rising incidents of noncommunicable diseases, digital adoption, and ageing demographics.
Hospital consolidation in India is accelerating, with over 20 transactions exceeding $50 million in the last three years. By 2030, the market is likely to be led by dominant regional champions, each controlling a meaningful share of beds within their micro-markets. Nearly 60% of incremental bed demand will arise from just 12 micro-markets, where clinical talent, specialty depth, and tertiary-care capabilities are already concentrated. Operating leverage across procurement, diagnostics, specialty services, and home care also materialises faster within such clusters. As a result, the next major platform may not be a national roll-up, but deeply entrenched regional players approaching 5,000 beds, backed by long-term capital.
Mother and childcare, oncology, day-care surgery, eye care, and nephrology will continue to be attractive investment themes. These segments benefit from standardised, scalable formats, faster breakeven cycles, clear clinical differentiation, and strong returns on capital employed. The next phase of growth, however, will extend beyond footprint expansion and will be driven by advanced clinical programmes such as oncology, robotic surgery, and fertility genomics; digitally enabled patient journeys; and relatively asset-light expansion into Tier 1B and Tier 2 cities. By 2030, market leaders will be those that successfully combine robust clinical governance with repeatable and strong unit economics.
India’s diagnostics industry is entering its most consequential transformation in a decade—not driven by network expansion alone, but by the emergence of deep capabilities as the true and lasting competitive moat. The sector, expected to grow at CAGR of 12% over the next five years to cross $15 billion, remains one of the most fragmented sectors in health care. The organised diagnostic chains account for 20%-25% of the total market, making consolidation inevitable.
According to PolyMed’s annual report for FY25, medical devices and consumables have become a $ 15 billion opportunity, with Make in India being the first underlying theme. Diagnostics equipment, cardiac stents, ortho implants, syringes, and surgical disposables are achieving cost competitiveness vs imports. The second theme is export momentum. India’s medical devices exports grew 13% CAGR from FY20 to FY24. And third, is MNC outsourcing creating opportunities for specialised contract manufacturers. India is well on its way to emerge as a global manufacturing and R&D hub by 2030, especially in consumables, Point-of-Care (PoC) diagnostic devices, surgical disposables, and mid-tech equipment.
Pharmacy, med-supply chains and hospital B2B logistics are primed for platform creation. We see a rise in investor interest in backing integrated pharma and medical distribution, last-mile fulfilment for hospitals and labs, and data-led procurement optimisation businesses. With scale and credit discipline, we believe this segment can deliver strong RoCE, making this one of the most compelling underpenetrated opportunities.
India’s health care sector is entering a phase where capital will increasingly favour scale combined with deep specialisation. Across hospitals, diagnostics, single-specialty, devices, supply chain, and health-tech, the next decade will give rise to large, focused platforms with clear and defensible competitive moats. However, this opportunity will not be without challenges. Heightened regulatory scrutiny on pricing, quality, and diagnostic standardisation is likely to raise compliance costs, while persistent talent constraints particularly in tertiary-care specialists and experienced leadership will temper the pace of expansion across micro-markets.
Investors are expected to price these risks into valuations, rewarding platforms that demonstrate governance strength and execution discipline. The central question for investors is no longer whether to allocate to health care, but where, how deeply, and at what speed. For operators, success will lie in building disciplined, specialised businesses with scalable operating models and defensible moats.
This article is authored by Mohit Khullar, managing director and leader, corporate finance, A&M.
