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Investment opportunities in healthcare (1 April 2021)

Investment opportunities in healthcare (1 April 2021)

Context:

  • Recently, NITI Aayog released a Report on ‘Investment Opportunities in India’s Healthcare Sector.

Background:

  • The report outlining the range of investment opportunities in various segments of India’s healthcare sector, including hospitals, medical devices and equipment, health insurance, telemedicine, home healthcare and medical value travel.

Summary of the Debate

What the report is conveying and where are the opportunities here?

  • Growth of healthcare industry: Since 2016, India’s healthcare industry has been growing at a Compound Annual Growth Rate of around 22%. At this rate, it is expected to reach USD 372 billion in 2022.

  • Hospital segment:  the expansion of private players to tier-2 and tier-3 locations, beyond metropolitan cities, offers an attractive investment opportunity.

  • Employment: The report has outlined the employment opportunity. In 2015, the healthcare sector employed around 4.7 million people directly and it has the potential to generate 27 lakh jobs in India between 2017 and 2022.

  • Market size for pharmaceuticals in India: Currently it is $41 billion, which is expected to reach $130 billion by 2030.

  • FDI in Healthcare Sector: FDI is permitted up to 100% under the automatic route for the hospital sector and manufacture of medical devices.

  • India’s biotechnology market: It is expected to grow at an average growth rate of around 30% per year to reach $100 billion by 2025.

Challenges in India’s healthcare sector:

  • Doctor-population ratio: There is 1 doctor for every 1,445 Indians as per the country's current population estimate of 135 crore.India is now faced with a dual burden of disease, says NITI Aayog report -  Global Bihari

  • Low expenditure: India spends only 1.13% of GDP on health.

  • Import dependent: There are some historical challenges for instance, in pharma and medical devices sector, India is still very dependent on import.

  • Lack of access: India lacks affordable health care services for the marginalized sections.

  • Poor infrastructures: Public health infrastructures like hospitals, primary health centres are not up to the mark.

  • Covid pandemic: It has impacted many segment of the healthcare sector.

How the present situation has brought up change in the long term outlook towards healthcare sector?

  • So far, India made class-A and class-B medical devices domestically and most of the high-tech devices are either imported or we have multinationals who actually manufacture them.

  • India also has a population which is ageing and that number is going to grow up in the years to come. We already have an increasing burden of non-communicable diseases.

  • But there is tremendous opportunities coming up, that is why there is emphasis Home healthcare in the report in addition to telemedicine.

  • Health as a sector has got very high policy priority over the last few years, even before the pandemic there has been number of structural systematic reform being brought up by government for instance, from medical education reform to Ayushman Bharat to the National Digital Health Mission.

  • Government has launched the telemedicine guidelines just at the start of pandemic in India.

  • After the pandemic, under the Aatmnirbhar Bharat Abhiyaan the pharmaceuticals and medical device sector has got a lot of importance. It is also to make our own domestic manufacturing much more globally competitive.

  • Pandemic has showed us that when we had large scale collaboration between the public and the private sector, we could ramp up the production of PPE kit, mask, ventilation, etc. We had almost zero manufacturing level and today we are in position that we can export to other countries.

Way Forward:

  • There is a need for an increase in expenditure on health sector.

  • How to keep people healthy is something that we need to stress on.

  • Quick and hassle-free delivery of medical services to the marginalized section is the need of the hour.

  • We need cutting edge research in pharmaceuticals and medical device sector.

  • There is a viability gap funding scheme which the government has announced recently which is for upgrading district hospitals and this can be happened through PPP (Public-Private Partnership) route.

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