This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 7/27/2017

Overview

The Indian healthcare sector is experiencing rapid change. Though this change has been underway for many years it has become significantly visible in the last decade, with a renewed thrust from both the government and a growing market for healthcare services and products. Rapid economic growth, rising middle class incomes, and a surge in lifestyle diseases have created a booming life science market. According to the World Health Organization (WHO), Indian per capita health spending stands at just $132 (on a PPP-adjusted basis), ranking 145th amongst WHO nations and less than 2% of the $8,632 spent in the United States. 

Healthcare has become one of India’s largest sectors - both in terms of revenue and employment. Healthcare in India comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment. The Indian healthcare industry amounted to $110 billion in 2016 and is expected to reach $280 billion by 2020 due to increased demand for specialized and quality healthcare facilities. The market is dominated by private players. The industry is rapidly developing, fueled by large investments from existing corporate hospital chains and new entrants backed by private equity investors. This growth will be driven by healthcare facilities, private-public projects, medical diagnostic and pathological laboratories, and the health insurance sector.  In addition, changing demographics, disease profiles, and the shift from chronic to lifestyle diseases in the country has led to increased spending on healthcare delivery.

The Indian population of over one billion is growing at a rate of 1.6 % per year. An ageing population of over 100 million, rising incidences of lifestyle diseases, rising incomes and increased penetration of health insurance are fueling growth of the industry. Considerable challenges exist in terms of service accessibility and patient care quality. As such, government support plays a significant role in the overall development and growth of the sector.

High upfront investments, long gestation periods, and rising real estate costs are compelling private players to innovate with business models and to expand into under-penetrated Tier II and Tier III cities.  As a result, these private players can capitalize on the opportunity to expand. The private sector is likely to contribute 80-85 % of the $86 billion healthcare investment required by 2025.

The Indian medical device market is worth an estimated $4.4 billion (without the inclusion of rural market potential) and is expected to exceed $7 billion by the end of 2020. The medical device industry is a very attractive export sector for U.S. firms, which account for one quarter of exports to India. India imports nearly 80% of its medical devices and barriers to entry are low compared to other industries, despite a 4% additive import tax placed on most categories of devices in 2007. India remains highly dependent on imports for many types of medical devices, particularly higher end products that include cancer diagnostics, medical imaging, ultrasonic scans, and PCR technologies. Imports are growing rapidly as world-class hospital groups such as Fortis and Apollo build high-end infrastructure and open India to medical tourism, which now adds $2 billion to the Indian healthcare market.  Emerging price control mechanisms are causing concern for U.S. exporters, and American companies interested in this segment should ensure they are up to date with the latest developments in India. 

Health insurance is gaining momentum in India. Currently, 15 % of the population is covered by government health insurance companies and 2% by private health insurance. For the purpose of regulation, health insurance companies are classified as non-life companies. General Insurance companies are called Non-Life companies in India. The penetration of health insurance will significantly increase the affordability of healthcare services for the population. Several private insurance companies have entered the market and have empaneled hospitals to provide cashless treatment to subscribers of insurance companies.

In India, healthcare is provided through primary, secondary, and tertiary care hospitals. The first two categories are fully managed by the government. While the tertiary care hospitals are owned and managed by either the government or private sector, the private sector’s contribution to healthcare has been growing at a faster pace than the government. The medical infrastructure market is estimated to have a growth rate of 15 %. Both the government and the private sector are planning several new specialty and super-specialty hospital facilities, as well as modernization of existing hospitals. India currently faces a chronic shortage of healthcare infrastructure, especially in rural areas and Tier II and Tier III cities, and it is expected that India will have a potential requirement of 1.75 million new beds by the end of 2025. The opportunity also exists for overseas organizations to set up hospitals in India through Foreign Direct Investment. The hospital services market, which represents one of the most important segments of the Indian healthcare industry, is currently valued at $80 billion and accounts for 71 % of the industry revenues. 
The new specialty and super-specialty hospital facilities depend on the import of high-end medical equipment, accounting for over 65% of the entire market. There is a need for sophisticated hospital equipment, especially operation theatre products and training through simulation labs. In view of the relatively low customs duty rates (9.2 – 15%) combined with an increasing number of healthcare centers specializing in advance surgery, India offers opportunities for the direct supply of high-technology, specialized medical equipment, products, and systems.

Biotech is one of the fast growing segments of the life sciences sector and represents a diverse opportunity for foreign firms. The Indian biotech industry has an approximately 2% share of the global biotech industry. The industry comprises of about 800 companies and is expected to grow from the current $ 5-7 billion to $100 billion by 2025. India has emerged as a leading destination for clinical trials, contract research, and manufacturing activities owing to the growth in the bio-services sector
The boom in medical tourism in the Indian healthcare sector is encouraging hospitals and hoteliers to strike alliances with each other. The presence of world-class hospitals and skilled medical professionals has strengthened India’s position as a preferred destination for medical tourism. The healthcare industry is now proactively creating standards for the medical tourism industry with the help of credit rating agencies, insurance companies, and others involved in the self- regulation of the sector. According to industry estimates, the medical tourism market is expected to grow from $3 billion to $7-8 billion by 2020.

E-healthcare/Telemedicine, though in its infancy in India, is beginning to take root. Most public hospitals (funded by state governments) and private single and multi super-specialty hospitals have incorporated customized Hospital Management Systems and other medical based IT products. Given the poor availability of quality healthcare facilities outside the large and second tier cities, telemedicine is expected to become viable business proposition. Several major private players like Apollo, AIIMS, and Narayan Hrudalaya have adopted telemedicine services.  With increased private participation, the healthcare sector has also witnessed rise in FDI inflows. The Government of India (GOI) has permitted 100% FDI for all health-related services under the automatic route. 

To ensure quality healthcare, in October 2005 the GOI increased the list of medical devices covered under the Drugs and Cosmetics Act of 1940, bringing fourteen categories of implantable devices under regulatory control. These include hypodermic syringes and needles, stents, heart valves, catheters, intra-ocular lenses, hip and knee implants, in vitro diagnostics devices, and bone cements. An approved central licensing authority must license these devices for manufacture, sale, or distribution. Hospitals are also seeking quality accreditations like JCI, NABH, and ISO.

Unit: $ millions

Medical Devices & Equipment
 
20152016
 
 
2017
(estimated)
Total Market Size69426208563
Total Local Production361939504542
Total Exports148160192
Total Imports347138304213
Imports from the U.S.509751863

 
Total Market Size = (Total Local Production + Total Imports) – (Total Exports)

Data Sources:
Statistical data include unofficial estimates from trade sources and industry. As this industry has not been well documented in the Indian context, the estimates of industry size vary significantly across different sources.
Imports from the U.S.: United States Census Bureau

Leading Sub-Sectors

The most promising sub-sectors in the healthcare and medical equipment sector are:
Medical Infrastructure
Medical and Surgical Instruments
Medical Imaging
Electro Medical Equipment
Orthopedic and Prosthetic Appliances
Cancer Diagnostics
Ophthalmic Instruments and Appliances
Orthodontic Equipment and Dental Implants
Point of Care Testing (POCT) Diagnostic devices

Opportunities

The growing demand for quality healthcare and the absence of matching delivery mechanisms pose a challenge and certainly a great opportunity. In Infrastructure – building, equipping, managing, and financing of super-specialty hospitals in India through the FDI route is another area for future growth. 

A proper supply of equipment and medical consumables will also be an area with significant opportunity for U.S. companies. Several leading U.S. purveyors of hospital equipment and supplies have opened Indian operations to cater to this growing market.  India has become one of the leading destinations for high-end diagnostic services with tremendous capital investment for advanced diagnostic facilities.

Health insurance and hospital administration is another area in which U.S. companies can make a difference. This opportunity includes introducing and maintaining industry standards, and also classifying and certifying healthcare centers. 

Other growth areas include diagnostic kits, reagents, hand-held diagnostic equipment, and simulation for operating rooms. Imports constitute 50% of this market. Hand-held/portable diagnostic equipment (e.g. for blood sugar, blood pressure testing, etc.) is also a fast growing segment since India has around 45 million diabetics, which is expected to swell to 70 million by 2025.
While India’s market has undergone significant economic growth over the last twenty-five years, it remains difficult to navigate.  India should be a part of a company’s long-term business plan rather than a first-to-export destination.

Web Resources
Central Drug Standard Control Organization (CDSCO)
Ministry of Health and Family Welfare (MOHFW)
Indian Medical Association
The Medical Council of India (MCI)
The Federation of Obstetric and Gynecological Societies of India
The Association of Indian Medical Device Industry       

For more information about export opportunities in this sector contact U.S. Commercial Service Industry Specialist:
Ruma Chatterjee at Ruma.Chatterjee@trade.gov

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



India Healthcare Trade Development and Promotion