Health Care Industry

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HEALTH CARE INDUSTRY - LANDSCAPE

Contents

Introduction 1 Changing disease patterns: Implication for healthcare infrastructure 8 Building Functional Efficiencies 16 Conclusion 20

Introduction
The Healthcare sector, in India, is at an inflection point and is poised for rapid growth in the medium term. However, Indian healthcare expenditure is still amongst the lowest globally and there are significant challenges to be addressed both in terms of accessibility of healthcare service and quality of patient care. While this represents significant opportunity for the private sector, the Government can also play an important role in facilitating this evolution.

Current State of Healthcare in India

Current Size of the Healthcare Industry
The Indian Healthcare sector currently represents a USD 40 Billion industry. A break-up of the sector as of 2009 is provided:

Source: IDFC Securities Hospital Sector November 2010

India’s healthcare spend is significantly low when compared to the global, developed and other similar emerging economies. To further illustrate this point, we have examined the Indian healthcare spend on various parameters. The Indian healthcare spend is less than half the global average in percentage terms when compared on a “percent of GDP” basis.

Source: WHO World Health Statistics 2010

The healthcare spend, when compared on the basis of public-private contribution, also depicts a skewed picture. As is noted from the comparison below, Private Sector contribution to the healthcare sector at ~75 percent is amongst the highest in the world in percentage terms. Public spending, on the other hand, is amongst the lowest in the world and is ~23 percentage points lower than the global average.

Source: WHO World Health Statistics 2010

Finally, the healthcare spend examined on a per capita basis, both in terms of USD (at average exchange rate conversion) and in terms of Purchasing Power Parity (PPP), is amongst the lowest globally. Further, when compared to the global average, the per capita Indian healthcare spend is ~95 percent lower on an average exchange rate basis and ~87 percent lower on a PPP basis.

Source: WHO World Health Statistics 2010

Source: WHO World Health Statistics 2010

India’s healthcare spending is, however, growing at a healthy CAGR of ~14 percent from 5.5 percent of the GDP in 2009 to 8 percent in 2012.

Growth in the Healthcare Industry

As stated earlier, the Indian Healthcare Industry is currently estimated at USD 40 Billion. The industry is expected to grow to ~USD 79 Billion by 2012 and ~ USD 280 Billion by 2020. The average CAGR for the next 10 years, therefore, has been estimated at ~ 21 percent.

Source: IBEF

Drivers of growth for the Healthcare Sector

A combination of demographic and economic factors is expected to bring about increased healthcare coverage in India which is expected to drive the growth of the sector

Demographic factors:
* Increase in Population: Expected increase in population from about 1.1 billion in 2009-2010 to 1.4 billion by 2026. * Shift in demographics: 60 percent of the population in the younger age bracket and an expected increase of geriatric population from current 96 million to around 168 million by 2026. This represents a huge patient base and creates a market for preventive, curative and geriatric care opportunities. * Rise in disposable income: Households in the above INR 200,000 per annum bracket can benefit from an increase in disposable income from 14 percent in 2009-2010E to 26 percent in 2014-2015 making healthcare more affordable. * Increase in...
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