Scope to invest in the emerging medical market
By Kealan Finnegan
India’s healthcare sector offers huge scope for UK pharma companies, ICT suppliers, investment funds and advisers. UKIBC sector manager Radhika Pandey sets the scene.
The last decade has seen significant economic growth for India, but it has also suffered a significant increase in lifestyle-related diseases, including diabetes, cancer and cardiovascular.
However, rising incomes, increased awareness about health issues, and greater access to healthcare have seen the sector grow dramatically. Healthcare spending is now more than 4% of India’s GDP, and we expect the sector to retain its momentum for the foreseeable future.
In the last 14 years, India has received some 14.5 billion USD of FDI (foreign direct investment) across various healthcare sub-sectors, which is an impressive figure. Unfortunately though, the sector still trails far behind those of other emerging economies, in terms of relative GDP, underlining both the wide room for growth, and the scope for overseas corporates and funds.
The low level of public healthcare funding (c30% year-on-year) also provides ample scope for private investment throughout the sector, and across the value chain. There is, for example, a gulf between India’s existing hospital infrastructure and global standards, especially in terms of provision of beds and access to qualified medical professionals.
Unlike the UK, where the NHS has long set the international benchmark for public sector healthcare, around 75% of India’s hospitals are privatelyowned, with potential for rapid growth due to rapid urbanisation.
Only the middle and upper-classes can afford such care, although central and state government do provide some treatment free, or at lower rates. Equally, there is much scope for improvement – and for FDI on a massive scale – throughout the healthcare supply chain; pharmaceuticals, diagnostics, medical equipment, supplies and medical insurance.
There is especial interest in the pharmaceutical sector, which attracted 11.6 bn USD of the FDI mentioned earlier, as low costs and a large talent pool make India an attractive destination for both R&D and contract manufacturing.
Key areas of interest to UK-based companies are speciality products, technology-based solutions, medical equipment and supplies, and both primary and tertiary care. As I have said, India’s healthcare sector has significant untapped opportunities, driven not least by the rising population and increasing awareness.
At the same time, government schemes and greater insurance take-up will see the breadth of coverage increase significantly. We expect much overseas investment via either joint ventures or acquisitions, given the liberal FDI policies and the business-friendly nature of the new government. We also expect a rise in the PPP (public-private partnership) model, which should help spread healthcare into the lower strata of Indian society, especially in rural areas.
India is not an easy place for foreign firms to do business though, especially in healthcare, with a fickle regulatory environment, shortage of qualified people, complex distribution infrastructure, and high focus on established credibility in the domestic market among the major challenges.
However, the UKIBC can help guide UK companies through the regulatory maze, and offer specialist support in all healthcare’s sub-sectors, through our research and market-entry teams in London and India.
Our latest sector report, offering a detailed overview of India’s healthcare ecosystem, will be available in print and online this month.
