The Indian healthcare sector is riding the growth curve and emerging as a lucrative site for foreign investments, writes a healthcare analyst.
The Indian healthcare sector is one of the fastest growing sectors with high contribution not only in terms of revenue, but also employment. The Indian healthcare market is expected to rank amongst the top-three healthcare markets in terms of incremental growth by 2020. The sector stood at approximately $113.9 billion in 2016 and is likely to grow at a compound annual growth rate (CAGR) of 11.6 per cent in the next five years to reach $195.6 billion. This growth is driven by the rising income levels, ageing population, increasing healthcare awareness, growing health insurance penetration, increasing government's focus on providing universal healthcare and the growing burden of the non-communicable diseases (NCDs). Along with these drivers, India's unique value proposition in the form of low costs, availability of advanced technologies and skilled workforce are further driving the medical value travel in the country.
These factors combined with recent government conducive policies are responsible for alluring domestic as well as foreign investments from the private equity (PE), venture firms and healthcare players. In the last five years, the sector has attracted approximately $63.9 billion from VC and PE firms. Further, foreign direct investment (FDI) in the sector witnessed an overall investments of $4.75 billion during 2012-16.
Current investment landscape of the sector - Focus on healthcare services and hospital chains
India is gradually becoming a favourable investment destination owing to the high economic growth, low cost labour and the availability of opportunities in several untapped sectors. Additionally, the recent government initiatives to promote the ease of doing business, such as the relaxation of FDI norms, strengthening of research and development (R&D) in the sector and strengthening of intellectual property rights (IPR) regime, along with policies promoting the start-up culture, have fuelled investments.