Private Equity Investment in The Indian Healthcare Sector is Growing. Why?

The Indian healthcare sector that includes hospitals, medical devices, health insurance, telemedicine, medical tourism, and medical equipment, is one of the largest sectors in terms of revenue and employment generation. Rising cases of lifestyle diseases, the demand for affordable healthcare, technological advancements, and penetration of health insurance are some of the key growth drivers for this sector and attracting private equity in India. 

Key Points About Indian Healthcare Industry:

• The healthcare market size is expected to reach $372Bn by 2022.

• The hospital industry is 80 per cent of the total healthcare market, growing at a CAGR of 16-17 per cent and is set to reach $132 Bn by 2023.

• The diagnostics industry is expected to grow at a CAGR of 20.4 per cent and is set to reach $32 Bn by 2022.

• The government has allowed 100 per cent FDI for all Greenfield projects under the automatic route.

The healthcare industry is seeing an expansion by present hospitals in terms of new services through technology platforms, the use of next-generation tools, tie-ups with insurance companies, etc. The sector is also attracting fresh investment by domestic and international healthcare private equity investors to fund expansions by existing large hospital chains as well as for Greenfield projects.

Reasons behind the Healthcare Sector Being an Attractive Investment Option:

• Over the last few years, the insurance sector has witnessed an increased awareness of affordable products in the market. Also, the Indian government has launched the world’s largest government-funded healthcare program. These developments are likely to enhance the affordability of medical expenses.

• The huge dearth in terms of the number of beds required along with the availability of the latest diagnostic equipment is generating a huge demand for large hospital chains, specialty centers, and other facilities to create the related infrastructure to cater to the growing demand.

• Online technology platforms facilitating consultation to remotely located patients are in high demand. The Indian Telemedicine market is expected to reach $32 Mn by 2020.

• The Indian healthcare sector is also attracting a lot of foreign patients due to quality and affordable medical services. The continuous flow of foreign patients will contribute to the development of the overall economy of this sector.

• An increase in per capita income over the last few years has increased the spending power for quality healthcare. Unlike big cities city, small cities are providing a huge opportunity to set up the entire infrastructure. Many large chains of hospitals have already started expanding in small cities by creating small centers and partnering with local reputed doctors.

Hence, it can be concluded that private equity investment in India’s healthcare sector is promising and getting bigger each day and is likely to benefit all the participants.