Health Care Industry

- Praroop Jain- 1066

Health care industry

The health care industry is one of the world's largest and fastest-growing industries.Consuming over 10 percent of gross domestic product (GDP) of most developed nations, health care form an enormous part of a country's economy.

For purpose of finance and management, the health care industry is typically divided

into three categories :

• Hospital Activities

• Medicines and Pharmacy Business

• Medical and Surgical Appliances

All the three are interconnected and overlapping.

Market break-up by revenues

MARKET SIZE• The healthcare sector in India is expected

to grow at a CAGR of 15 per cent to touch US$ 158.2 billion in 2017 from US$ 78.6 billion in 2012, according to a report by Equentis Capital.

• India being a country with a growing population, its per capita healthcare expenditure has increased at a CAGR of 10.3 per cent from US$ 43.1 in 2008 to US$ 57.9 in 2011, and going forward it is expected to reach US$ 88.7 by 2015.

• The factors behind the growth of the sector are rising incomes, easier access to high-quality healthcare facilities and greater awareness of personal health and hygiene.

• Healthcare providers in India are expected to spend US$ 1.08 billion on IT products and services in 2014, a four per cent increase over 2013.

Per-capita healthcare expenditure

• The private sector has emerged as a vibrant force in India's healthcare industry, lending it both national and international repute. The sector’s share in healthcare delivery is expected to increase from 66 per cent in 2005 to 81 per cent by 2015. The private sector's share in hospitals and hospital beds is estimated at 74 per cent and 40 per cent, respectively.

Foreign Investment

According to data released by the Department of Industrial Policy and Promotion (DIPP), hospital and diagnostic centers attracted foreign direct investment (FDI) worth Rs 11,272.32 crore (US$ 1.87 billion) between April 2000 and February 2014.

GOVERNMENT INITIATIVESSome of the major initiatives taken by the government to promote the healthcare sector in India are as follows:

• All India Institute of Medical Sciences (AIIMS) spends at least Rs 2 million (US$ 33,271.51) annually on each faculty member, according to a study by the institute's hospital administration.

• The Union Cabinet has approved the proposal for setting up of National Cancer Institute (NCI) at a cost of Rs 2,035 crore (US$ 338.51 million). NCI will be set up in the Jhajjar campus (Haryana) of All India Institute of Medical Sciences (AIIMS), New Delhi. The project is estimated to be completed in 45 months.

Contd.

• Government of India also runs various awareness programs. • In Indian movies, an advertisement is shown before the movie telling people about harmful effects of smoking.

Private Participation

• Various private groups like Dr. Reddy’s, Fortis and Max are increasing their penetration in tier-2 and tier-3 cities.

• Medanta Medicity in Gurgaon is a world class hospital stated by Dr. Trehan.

• Increased participation by private players is also resulting in medical tourism in india.

• This helps in generating foreign exchange as well building the GDP of the nation.

What is driving change in the sector?

• A revolution in care, enabled by better connectivity and driven by consumer needs and preferences

• Regulatory reform, as governments explore new ways to control costs and improve outcomes

• The impact of advances in science, using the knowledge of biosciences and genomics to deliver safer, more personalized, more preventive and cost-effective healthcare

Medicine and Pharma Triumph

• Indian pharma players are getting more and more USFDA approvals and are slated to capture the US markets.

• Low costs of manufacturing along with great R&D facilities is allowing them to emerge global.

• Companies like Sun pharma, Lupin, Dr. Reddy’s are major medicine exporters to the US and EU and most of their revenues come from the exports to these nations.