Valued at US$ 34 billion, the Indian healthcare sector is projected to grow to nearly US$ 40 billion by 2012, says Pricewaterhouse Coopers in its report, ‘Healthcare in India: Emerging market report 2007’. 

The sector’s growth will be driven by the country’s growing middle class, which can afford quality healthcare. Over 150 million Indians have annual incomes of more than US$ 1,000, and many who work in the business services sector earn as much as US$ 20,000 a year. Today at least 50 million Indians can afford to buy Western medicines-a market only 20 per cent smaller than that of the UK.

Funds in the sector have been largely private. In fact, it is believed that the private sector provides 60 per cent of all outpatient care in India and as much as 40 per cent of all in-patient care. It is estimated that nearly 70 per cent of all hospitals and 40 per cent of hospital beds in the country are in the private sector, says PWC. The opportunities presented by the healthcare sector have made it a major draw for potential investors. The healthcare sector attracted US$ 379 million in 2006 - 6.3 per cent of the total private equity (PE) investment of US$ 5.93 billion. The PE deals that the sector attracted in 2006 were as large as inputs into the automotive sector.

With the potential of the healthcare sector being what it is, ancillary industries such as healthcare equipment and information technology in healthcare are also witnessing a spurt.

Investments into the medical and surgical instruments segment amount to US$ 115.29 million over the period August 1991 to April 2007. A recent FICCI-Ernst & Young study has predicted 15-20 per cent growth for the Indian medical equipment market and estimated market size to be about US$ 5 billion by 2012.

Hospitals have realised that information technology (IT) can be an effective tool towards efficient systems. According to a report by Springboard Research, India has the fastest growing healthcare IT market in Asia, with an expected growth rate of 22 per cent, followed closely by China and Vietnam. In fact, the Indian healthcare technology market is poised to be worth more than US$ 254 million by 2012.

The attraction of high quality healthcare facilities at competitive costs has been instrumental in a large number of foreign arrivals to access healthcare services in India. Going by the current pace with which this segment has been growing, the CII-McKinsey study estimates that revenues from this segment could touch US$ 2.2 billion by 2012 (from the current figure of US$ 333 million).

• Indian specialists have performed over 500,000 major surgeries and over a million other surgical procedures including cardio-thoracic, neurological and cancer surgeries, with success rates at par with international standards. • The success rate of cardiac bypass in India is 98.7 per cent against 97.5 per cent in the U.S. 
• India’s success in 110 bone marrow transplants is 80 per cent. 
• The success rate in 6,000 renal transplants is 95 per cent.

The Government has also been proactive in encouraging prospects in this sector with a number of initiatives: 
•  A new category of visa ‘‘Medical Visa’’ (‘M’-Visa) has been introduced which can be given for a specific purpose to foreign tourists coming into India. 
•  Guidelines have been formulated by Department of AYUSH prescribing minimum requirements for Ayurveda and Panchkarma Centres.

With less than 10 per cent of the population having some sort of health insurance, the potential market for health insurance is huge. A McKinsey-CII report estimates the number of potential insurable lives at 315 million. In 2006-07, the fast-growing Indian health insurance business grew 40 per cent to US$ 812 million.

In some cases, the Government is partnering with the private sector to provide coverage at a low cost. For instance, the Yashaswini Insurance scheme, launched in 2002 in Karnataka by a public-private partnership, provides coverage for major surgical operations, including those pertaining to pre-existing conditions, to Indian farmers who previously had no access to insurance.

The Insurance Regulatory and Development Authority (IRDA) has eliminated tariffs on general insurance as of January 1, 2007. This move is expected to drive additional growth of private insurance products. Health insurance is projected to grow to US$ 5.75 billion by 2010, according to a study by the New Delhi-based PHD Chamber of Commerce and Industry.