Market Review
and Outlook
The Indian
Healthcare Market
Investments in India's healthcare sector
have been for many years, on a growth
trajectory, particularly driven by the private
sector introducing leading technologies
and quality healthcare delivery services to
the industry. There are a few key factors
contributing to this growth.
Lagging Investments
The chart below on the expenditure on
healthcare by country shows that India’s
healthcare spending as a percentage of
the country’s Gross Domestic Product
(“GDP”) is low in comparison to developed
economies such as the United States
of America, United Kingdom as well
as against other regional peers. Indian
healthcare is considered to be one of the
key drivers behind the country's economic
growth and contributes significantly to
its country’s employment. The sector has
been forecasted to reach USD 160 billion
to USD 280 billion between 2017 and
2020, and is expected to record a CAGR of
16.5% during 2008-20
1
.
India, with a population of approximately
1.2 billion people, is the second largest
populous country in the world, and is
expected to surpass China as the world’s
most populous nation by 2030
2
. In spite
of its large population, spending on
healthcare in India continues to remain
low at 3.8% of its Gross Domestic Product
(GDP), with government expenditure on
health at 4.3% of the total government
of diabetes sufferers in the world, at
more than 96 million and 66 million
respectively. Such lifestyle diseases tend
to require surgical intervention and in-
patient medical care, which leads to an
increase in hospitalisation. This demand
for healthcare is further driven by the
growing literacy of the population and
their increasing awareness of medical
treatments available.
Increasing Access to
Health Insurance
The Indian healthcare sector is at an
inflection point as it sees a surge in health
insurance both social as well as private.
As per latest data, less than 15.0%
1
of the Indian population is covered
through health insurance. However, that
is changing along with (i) increasing
appreciation of need for medical care
(ii) growing awareness of availability of
health insurance (iii) rising healthcare
costs and burden of new diseases (iv)
government funding for health insurance,
has raised the demand for health
insurance coverage.
Over the past few years, there has
been a marked increase in individual
health insurance premiums collected
– increasing from 35.0% in 2010-11 to
44.4% in 2014-15
7
. An increase in health
insurance penetration would result in
greater affordability of quality medical
treatments. A new health protection
scheme was announced in the Union
Budget 2016
8
, covering INR 100,000
expenditure
3
. The absence of universal
health coverage and limited social health
coverage has led to India having one of
the world’s highest out-of-pocket (OOP)
spending at 87.2%
4
of private expenditure
on healthcare.
Increasing Demand; Rising Living
Standards and Population Aging
Apart from a fast growing population,
there is a growing trend of longer life
expectancy and a growing elderly
population in India, which has
contributed to a rise in chronic illnesses
and demand for acute hospital care and
long term care.
The proportion of working population
in India made up of persons aged 15-60
years old, is expected to increase from
approximately 58.0% in 2001 to almost
64.0% in 2026
5
. A growing young working
population sees the rise of sedentary
lifestyles which contributes to increasing
lifestyle related diseases. Infectious
diseases such as tuberculosis, pneumonia
and malaria which had once been the top
causes of India’s disease burden, have
now been replaced by growing incidences
of lifestyle related diseases associated
with growing affluence such as diabetes,
heart disease and cancer related illnesses.
According to the International Diabetic
Federation, the current number of
people with diabetes globally stands at
387 million and is expected to increase
to 592 million by 2035
6
. China and
India currently have the largest number
(Source: World Health Statistics 2015)
HEALTHCARE EXPENDITUREASA%OFGDP (2012)
20
15
10
5
0
USA Japan
UK Singapore Malaysia India Bangladesh
17.0
10.3
9.3
4.2
4.0
3.8
3.5
3.8%
Total expenditure on
health as a % of GDP
3
4.3%
Government expenditure
on health as % of total
government expenditure
3
74%
Private healthcare accounts for almost
of India’s total
healthcare expenditure
1
Annual report FY2016
007
