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Description : This "Indian Healthcare Industry Analysis (June 2020)" is a very good presentation on Indian Healthcare Industry prepared by India Brand Equity Fund ( IBEF ) which works under Commerce Ministry, Govt of India. A very good effort is made to cover all aspects of Indian Healthcare Industry.

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For updated information, please visit www.ibef.org June 2020 HEALTHCARE
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Table of Contents Executive Summary……………….……..….3 Advantage India…………………..….……...4 Market Overview and Trends………….......6 Notable Strategies and Trends Adopted...11 . Growth Drivers...……………………….......15 Opportunities…………….…….............…..26 Key Industry Organisations..……......…….29 Useful information……….…………………31
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For updated information, please visit www.ibef.org Healthcare 3 EXECUTIVE SUMMARY Source: Business Standard, Ministry of External Affairs, Ministry of External Affairs (Investment and Technology Promotion Division), ASSOCHAM-RNCOS joint paper, Lancet study
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HEALTHCARE ADVANTAGE INDIA
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For updated information, please visit www.ibef.org Healthcare 5 ADVANTAGE INDIA Rncisoimnge, i greater health awareness, lifestyle diseases and increasing access to insurance will contribute to growth. tItimiasteeds that India will require 2.07 million more doctors by 2030 in order to achieve a doctor-to-population ratio of 1:1,000. Investment in healthcare infrastructure is benefiting both ‘hard’ ‘soft’ (R&D, education) set to rise, (hospitals) and infrastructure. oTvheernGment of India aims to increase healthcare spending to three percent of the Gross Domestic Product (GDP) by 2022. Availability of a large pool of well-trained medical professionals in the country. Tmhbeernu of doctors with recognised medical qualifications (under I.M.C Act) registered with state medical councils/medical council of India increased to 1,154,686 in 2018 from 827,006 in 2010. TovheernGment aims to develop India as a global healthcare hub. Creation of new drug testing laboratories and further strengthening of the 31 existing state laboratories. Torhlde’sw largest Government funded healthcare scheme, Ayushman Bharat, was launched on September 23, 2018. ADVANTAGE INDIA Note: R&D – Research and Development Source: KPMG, Deloitte, Hospital Market – India by Research on India, Frost and Sullivan, LSI Financial Services, ‘Report on Healthcare, Telemedicine and Medical Tourism in India’- ASA and Associates LLP, Indian Journal of Public Health
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HEALTHCARE MARKET OVERVIEW AND TRENDS
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Hospitals Pharmaceutical Diagnostics Medical equipment and supplies Medical insurance Telemedicine Private hospitals – It includes nursing homes and mid-tier and top-tier private hospitals. Government hospitals – It includes healthcare centres, district hospitals and general hospitals. It includes manufacturing, extraction, processing, purification and packaging of chemical materials for use as medications for humans or animals. It comprises businesses and laboratories that offer analytical or diagnostic services, including body fluid analysis. It includes establishments primarily manufacturing medical equipment and supplies, e.g. surgical, dental, orthopaedic, ophthalmologic, laboratory instruments, etc. It includes health insurance and medical reimbursement facility, covering an individual’s hospitalisation expenses incurred due to sickness. Telemedicine has enormous potential in meeting the challenges of healthcare delivery to rural and remote areas besides several other applications in education, training and management in health sector. THE HEALTHCARE MARKET FUNCTIONS THROUGH FIVE SEGMENTS Source: Hospital Market – India by Research on India Healthcare 7 Healthcare For updated information, please visit www.ibef.org
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STRONG GROWTH IN HEALTHCARE EXPENDITURE OVER THE YEARS Note: F – Forecast Source: Frost and Sullivan, LSI Financial Services, Deloitte 140 160 280 372 0 50 100 250 200 150 300 350 400 2016 2017 2020F 2022F Healthcare has become one of India's largest sector, both in terms of revenue and employment. The industry is growing at a tremendous pace owing to its strengthening coverage, service and increasing expenditure by public as well private players. During 2016-22, the market is expected to record a CAGR of 17.69 per cent. Tothael itndustry size is estimated to touch US$ 372 billion by 2022. Visakhapatnam port traffic (million tonnes) Healthcare Sector Growth Trend (US$ Billion) CAGR: 17.69% 8 Healthcare For updated information, please visit www.ibef.org
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PER CAPITA HEALTHCARE EXPENDITURE HAS RISEN AT A FAST PACE 1.3 1.4 1.4 1.5 1.6 2.5 0 0.5 1 1.5 2 2.5 3 FY16 FY17 FY18 FY19RE FY20BE FY25 Tuehis is d to rising income, easier access to high-quality healthcare facilities and greater awareness of personal health and hygiene. Genretartaetriopn of health insurance aided the rise in healthcare spending, a trend likely to intensify in the coming decade. Economic prosperity is driving the improvement in affordability for generic drugs in the market. TovheernGment’s expenditure on healthcare sector grew 1.6 per cent of Gross Domestic Product (GDP) in FY20BE from 1.3 per cent of GDP in FY16. oTvheernGment is planning to increase public health spending to 2.5 per cent of the country's GDP by 2025. Thahrees of healthcare in GDP is expected to rise 19.7 per cent by 2027. Visakhapatnam port traffic (million tonnes) Government Healthcare Expenditure as a percentage of GDP Note: BE- Budget Estimated, RE- Revised Estimate Source: World Bank, Economic Survey FY18 9 Healthcare For updated information, please visit www.ibef.org
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HEALTHCARE NOTABLE TRENDS AND STRATEGIES ADOPTED
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HEALTHCARE INFRASTRUCTURE HAS RISEN AT A FAST PACE Source: National Health Profile 2018 1,069,734 1,113,315 1,154,686 1,020,000 1,040,000 1,060,000 1,080,000 1,100,000 1,120,000 1,140,000 1,160,000 1,180,000 2016 2017 2018 Number of Doctors 412 462 476 529 0 100 200 300 400 500 600 FY16 FY17 FY18 FY19 Number of Medical Colleges Ienddiciaa’sl emducational infrastructure has grown rapidly in the last 26 years. bTehremnuemdical colleges in India increased to 529 in FY19 from 412 in FY16. Tbehreonfum doctors having recognised medical qualifications (under I.M.C Act) registered with state medical councils/medical council of India increased to 1,154,686 in 2018 from 827,006 in 2010. According to a study in India, there is only one Government doctor for every 10,189 people and there is a deficit of 600,000 doctors, whereas, the nurse to patient ratio is 1:483 . 11 Healthcare For updated information, please visit www.ibef.org
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NOTABLE TRENDS IN THE INDIAN HEALTHCARE SECTOR … (1/2) 12 Healthcare For updated information, please visit www.ibef.org Note: PPP is Public – Private Partnerships, Management contracts - An arrangement under which operational control of an enterprise is given to a separate entity for a fee Source: IRDA, CII, Grant Thornton, Gartner, Technopak
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NOTABLE TRENDS IN THE INDIAN HEALTHCARE SECTOR … (2/2) Source: Business Standard, Ministry of External Affairs, Ministry of External Affairs (Investment and Technology Promotion Division) 13 Healthcare For updated information, please visit www.ibef.org
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STRATEGIES ADOPTED Payrievraste pl in the industry are making their supply chains efficient and leveraging economies of scope to reduce cost. One such example is Narayan Hrudayalaya (NH), where health care is provided at affordable cost. NH reduces cost by high procurement of medical supplies, high-volume by high capacity utilisation and staff productivity and good human capital management (i.e. training). Cost leadership Cayeerrtasin pl in the industry focus only on providing one kind of healthcare service to its customers. This also helps them to be the leader in that service. Many examples can be quoted for hospitals focusing on treatment of cancer and providing leading cancer treatment and eye related problems and treatments in India. Focus Source: PE Roundup – 1H2018 & Jun’18 report by EY 14 Healthcare For updated information, please visit www.ibef.org Players in the industry are trying to differentiate themselves by providing multiple health care services under one roof. Offering a range of healthcare and wellness services under a single brand has become a trend. Patients and healthcare services seekers find it convenient. Demand of such arrangements boosts the healthcare sector. Differentiation and diversified business approach
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HEALTHCARE GROWTH DRIVERS
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INDIAN HEALTHCARE SECTOR IS POISED TO GROW . Rncisoimngesi and affordability . Gderrolywipnogpeullation, changing disease patterns eRdisiceailntomurism . Bareetnteersaswof wellness, preventive care and diagnosis . Growing demand RDIising F and private sector investment. Lucrative M&A opportunities. Fayoerersigsnepttling R&D centres and hospitals. M&A Encouraging policies for FDI in the private sector. Reduction in customs duty and other taxes on life-saving equipment. lNoRcaHteMdal NeaaltihonInasl uHrance US$ 10 billion for healthcare facilities. Mission to cover entire population. Policy support Expanding R&D and distribution facilities in India. oUdseernoftemchnology uPpropvoirdting s . to global projects from India. Focus 16 Healthcare For updated information, please visit www.ibef.org Note: FDI – Foreign Direct Investment, M&A - Mergers and Acquisitions NRHM - National Rural Health Mission Source: Ministry of Health and Family Welfare, Government of India
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RISING INCOME, AGEING POPULATION TO BE KEY HEALTHCARE DEMAND DRIVER Rncisoimnge imeans a steady growth in the ability to access healthcare and related services. aPpeirtac GDP of India is expected to reach US$ 3,277.28 in 2024 from US$ 1,761.63 in 2016. Moreover, changing demographics will also contribute to greater healthcare spending. This is likely to continue as the size of elderly population is set to rise from the current 98.9 million to about 168 million by 2026. aPpeirtac GDP at current prices for 2019-20 stood at US$ 2,181.14. 1,761.63 2,014.01 2,036.20 2,181.14 2,378.67 2,578.11 2,791.31 3,023.39 3,277.28 0 500 1,000 1,500 2,000 2,500 3,000 3,500 2016 2017 2018 2019 2020 2021 2022 2023 2024 Visakhapatnam port traffic (million tonnes) GDP per Capita at Current Prices (US$) Source: International Monetary Fund, World Economic Outlook Database, April 2018 17 Healthcare For updated information, please visit www.ibef.org
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MEDICAL TOURISM: A NEW GROWTH FACTOR FOR INDIA’S HEALTHCARE SECTOR Source: Ministry of Health, RNCOS, KPMG, Deloitte, Medical Tourism Association, LSI Financial Services, Apollo Investor Presentation 18 Healthcare For updated information, please visit www.ibef.org Presence of world-class hospitals and skilled medical professionals has strengthened India’s position as a preferred destination for medical tourism. Superior quality healthcare coupled with low treatment costs in comparison to other countries is benefiting Indian medical tourism, and in turn, has enhanced prospects for the Indian healthcare market. Treatment for major surgeries in India costs approximately 20 per cent of that in developed countries. India also attracts medical tourists from developing nations due to lack of advanced medical facilities in many of these countries. Indian medical tourism market is growing at the rate of 18 per cent y-o-y and is expected to reach US$ 9 billion by 2020. Yoga, meditation, ayurveda, allopathy and other traditional methods of treatment are major service offerings that attract medical tourists from European nations and the Middle East to India. Government of India has been implementing various initiatives to promote Ayurveda, Yoga & Naturopathy, Unani, Siddha and Homoeopathy (AYUSH) systems of medicine on an international level and has allocated Rs 2,122 crore (US$ 303.62 million) in Union Budget 2020-21 for this purpose. The Government of India liberalised its policy by providing 100 per cent FDI in the AYUSH sector for wellness and medical tourism segment. In February 2019, the Government established new All India Institute of Medical Sciences (AIIMS) at Manethi, District Rewari, Haryana at a cost of Rs 1,299 crore (US$ 180.04 million).
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RE-EMERGENCE OF TRADITIONAL MEDICAL CARE Notes: AYUSH - Ayurveda, Yoga, Naturopathy, Unani, Siddha and Homoeopathy Migany b players such as Apollo, VLCC and Manipal Group are setting up wellness centres across India with traditional healthcare remedies as the focus of their offerings. Leading brands and players Trahdeititonal medical sector is developing Traditional Knowledge Digital Library to prevent companies from claiming patents on such remedies. There is a growing interest from numerous PE firms in the traditional healthcare sector in India. Notable trends TndhieanI ayurvedic industry is expected to reach US$ 9 billion by 2022. Ayurveda and Unani medicines consist of more than 90 per cent of plant based formulations. eTchteors has broadened its offerings and now includes services on diet and nutrition, yoga, herbal medicine, humour therapy and spa. Market size and services Offered Touhnetrcy had 393 Ayurveda and homeopathy Government recognised colleges in 2018. As of April 2020, number of sub-centres reached 169,031 and number of primary health centres (PHCs) increased to 33,987. Tothael nt umber of ayurveda practitioners in India increased to 443,704 in 2018 from 419,217 in 2016. Developing infrastructure Source: Ministry of Health, Make in India, RNCOS, KPMG, Ayurveda Industry Market Size, Strength and Way Forward report by Confederation of Indian Industry (CII) 19 Healthcare For updated information, please visit www.ibef.org
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POLICY SUPPORT AND GOVERNMENT INITIATIVES… (1/4) Pradhan Mantri Jan Arogya Yojana (PMJAY) Aulsy o2f01J9, around 125.7 million families were enrolled as beneficiaries under Pradhan Mantri Jan Arogya Yojana (PMJAY). The scheme enrolled 16,085 hospitals, including 8,059 private hospitals and 7,980 public hospitals. TovheernGment has announced Rs 69,000 crore (US$ 9.87 billion) outlay for the healthcare sector that is inclusive of Rs 6,400 crore (US$ 915.72 million) for PMJAY in Union Budget 2020-21. Athlcl ahreeael ducation and training services are exempted from service tax. Increase in tax holiday under section 80- IB for private healthcare providers in non metros for minimum of 50 bedded hospitals. 2en5t0 per c deduction for approved expenditure incurred on operating technology enables healthcare services such as tele medicine , remote radiology. Artificial heart is exempted from basic custom duty of 5 per cent. aInxceoxmeemtption for 15 years for domestically manufactured medical technology products . eTnhefibt of section 80-IB has been extended to new hospitals with 100 beds or more that are set up in rural areas. Ssuch hospitals are entitled to 100 per cent deduction on profits for 5 years. Tax incentives Tnihoen UCabinet approved setting up of National Nutrition Mission (NNM) to monitor, supervise, fix targets and guide the nutrition related interventions across ministries. Toghreamprme is planning to reduce the level of stunting by 2 per cent, under-nutrition 2 per cent, anaemia by 3 per cent and low birth babies by 2 per cent ever year. Over 100 million people are expected to be benefited by this programme – all states and districts will be covered within the programme. InnionU Budget 2020- 21, Rs 35,600 crore (US$ 5.09 billion) has been allocated for nutrition-related programmes. National Nutrition Mission Source: News Articles 20 Healthcare For updated information, please visit www.ibef.org
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POLICY SUPPORT AND GOVERNMENT INITIATIVES … (2/4) DonrutrgollCer General of India (DCGI) has proposed to set up a single window system for start-ups and innovators seeking approvals , consents, and information regarding regulatory requirement. Single window system Source: News Articles 21 Healthcare For updated information, please visit www.ibef.org
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POLICY SUPPORT AND GOVERNMENT INITIATIVES … (3/4) Source: Union Budget 2020-21 22 Healthcare For updated information, please visit www.ibef.org Note: ^ - includes ayurveda, homeopathy and unani practitioners, along with allopathy doctors
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POLICY SUPPORT AND GOVERNMENT INITIATIVES … (4/4) InnioUn Budget 2020- 21, Rs 3,000 crore (US$ 429.25 million) was allocated to the scheme. TovheernGment of India approved phase III of the scheme in August 2019. Under this, 75 more new medical colleges will be established all over the country. Pradhan Mantri Swasthya Suraksha Yojana(PMSSY) TovheernGment of India may provide more funds for Ayushman Bharat, the world's biggest healthcare scheme, in 2019-20. oAvsemofbeNr 2019, about 63.7 lakh people received free treatment under the Ayushman Bharat - Pradhan Mantri Jan Arogya Yojana. Ayushman Bharat Source: News Articles, Press Information Bureau 23 Healthcare For updated information, please visit www.ibef.org
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FDI INFLOW 1e0n0t per c projects. FDI is allowed under the automatic route for greenfield Fowornfiberld project investments, up permitted under the Government route. to 100 per cent FDI is Demand growth, cost advantages and policy support have been instrumental in attracting FDI. During April 2000–March 2020, FDI inflow for drugs and pharmaceuticals sector stood at US$ 16.50 billion. tIonflow in sectors such as hospitals and diagnostic center and medical appliances stood at US$ 6.73 billion and US$ 2.12 billion, respectively, during the April 2000–March 2020. Visakhapatnam port traffic (million tonnes) Cumulative FDI inflow From April 2000 up to March 2020 into the healthcare sector (US$ billion) Note: FDI – Foreign Direct Investment 16.50 6.73 2.12 Drug and Pharmaceuticals Hospital and Diagnostic Centers Medical and Surgical Appliances Source: Department of Industrial Policy and Promotion 24 Healthcare For updated information, please visit www.ibef.org US$ 25.35 billion
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HEALTHCARE OPPORTUNITIES
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OPPORTUNITIES IN HEALTHCARE Additional three million beds will be needed for India to achieve the target of 3 beds per 1,000 people by 2025. Healthcare infrastructure Additional 1.54 million doctors and 2.4 million nurses will be required to meet the growing demand for healthcare. 58,000 job opportunities are expected to be generated in the healthcare sector by 2025. Over US$ 200 billion is expected to be spent on medical infrastructure by 2024. hOeveyreat rs, India has made strategic interventions in National Health Mission and the national disease control programmes to ensure quality and affordable healthcare for all. Cesoenatraccht r is a fast-growing segment in the Indian healthcare industry. Cost of developing new drugs is as low as 60 per cent of the testing cost in the US. oTmo optre the research in traditional system of medicine in Himalayan region, Central Council for Research in Ayurvedic Sciences (CCRAS) established nine institutes in Jammu & Kashmir, Ladakh, Himachal Pradesh, Uttarakhand, Assam, Arunachal Pradesh, Sikkim, Tripura and Nagaland. Research In 2018-19, the medical tourism market is expected to double due to the easier norms for medical visa approvals. The value of medical tourism is forecasted to reach US$ 9 billion by 2020. Curogsetryof s eTh2e1reJoairnt in India is nearly one-tenth of the cost in developed countries. Commission International (JCI) accredited hospitals in India and growing. Medical tourism Source: News articles Tedhiecaml devices market is expected to reach US$ 11 billion by 2022, backed by rising geriatric population, growth in medical tourism and declining cost of medical services. Medical devices 26 Healthcare For updated information, please visit www.ibef.org
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OPPORTUNITIES IN HEALTH INSURANCE Health Insurance Premium Collection (US$ Billion) Increasing healthcare cost and burden of new diseases along with low Government funding is raising demand for health insurance coverage. oMmanpyancies offer health insurance coverage driving market penetration of insurance players. Wncirtehasiing demand for affordable and quality to employees, healthcare, penetration of health insurance is poised to grow exponentially in the coming years. YIn F 20, total gross direct premiums grew at 13.40 per cent y-o-y to Rs 51,637.84 crore (US$ 7.39 billion). The health segment has a 27.3 per cent share in gross direct premiums earned in the country. ^CAGR: 13.17% Note: ^CAGR till FY19 Source: GIC 4.08 27 Healthcare For updated information, please visit www.ibef.org 4.78 5.88 6.51 7.39 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 FY16 FY17 FY18 FY19 FY20
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HEALTHCARE KEY INDUSTRY ORGANISATIONS
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For updated information, please visit www.ibef.org Healthcare 29 INDUSTRY ORGANISATIONS I.M.A. House Indraprastha Marg, New Delhi – 110 002, India Telephone: 91 11 2337 0009, 2337 8819 Fax: 91 11 2337 9470, 2337 9178 Website: www.ima-india.org E-mail: inmedici@vsnl.com Indian Medical Association Model Residency, 605, Bapurao Jagtap Marg, Jacob Circle, Mahalaxmi East, Mumbai – 400 011, India Fax: 23021383 Website: www.fogsi.org E-mail: inmedici@vsnl.com The Federation of Obstetric and Gynaecological Societies of India
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HEALTHCARE USEFUL INFORMATION
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GLOSSARY 31 Healthcare For updated information, please visit www.ibef.org CAGR: Compound Annual Growth Rate EPA: Externally Aided Projects FDI: Foreign Direct Investment FY: Indian Financial Year (April to March) So FY10 implies April 2009 to March 2010 GOI: Government of India ICT: Information and Communications Technology IMF: International Monetary Fund INR: Indian Rupee M and A: Mergers and Acquisitions NHRM: National Rural Health Mission PPP: Public Private Partnerships R and D: Research and Development US$: US dollar WHO: World Health Statistics Where applicable, numbers have been rounded off to the nearest whole number
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EXCHANGE RATES Exchange Rates (Fiscal Year) Exchange Rates (Calendar Year) Source: Reserve Bank of India, Average for the year 32 Healthcare For updated information, please visit www.ibef.org
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DISCLAIMER India Brand Equity Foundation (IBEF) engaged TechSci Research to prepare this presentation and the same has been prepared by TechSci Research in consultation with IBEF. All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval of IBEF. This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the information is accurate to the best of TechSci Research and IBEF’s knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice. TechSci Research and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this presentation. Neither TechSci Research nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this presentation. 33 Healthcare For updated information, please visit www.ibef.org

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