Healthcare is one of the largest sectors in India, both revenue and employment wise, which continued to grow at a rapid pace in 2023. The sector includes hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment.
Sizing the Healthcare Sector Components
The hospitals market in India achieved revenue of $120 bn in 2023 and is expected to grow at a CAGR of 3.74% to reach $144 bn by 2028. Since the Covid pandemic in 2020, the hospitals market revenue has grown steadily from $103 bn in 2020, $108 bn in 2021 and $115 bn in 2022. In 2024, the market is expected to touch $124 bn in revenue.
The Indian medical devices market touched $7.325 bn in 2023 and is expected to grow at a CAGR of 9.27% and reach $11.41 bn in 2028. At $892.8 mn, the cardiology devices market contributed the lion’s share of the overall market followed by diabetes care devices and orthopedic and ophthalmic devices.
The Indian clinical trials market size was valued at $2.5 bn in 2023, up from $2.1 billion in 2022 and is anticipated to grow at a CAGR of 8.3% to reach $3.8 bn in 2028. Based on phase, the clinical trials market is segmented into phases I, II, III, and IV. The phase III segment dominated the market with the largest revenue share of 53.3%, especially owing to the cost-intensive nature of this segment. The phase I segment is expected to grow at the fastest CAGR of 10% till 2030 owing to significant R&D investments by global and local pharma and biotech companies.
The telehealth or telemedicine services market in India was estimated at $2.63 bn in 2023, and is expected to reach $7.70 bn by 2028, growing at a CAGR of 23.95%. With 62% of India’s total disease burden attributed to chronic diseases, RPM and mHealth segments have immense potential to act as alternative healthcare delivery channels leading to subsequent market growth.
The India Medical Tourism Market was pegged at $6.79 billion in 2023, and is expected to reach $12.64 bn by 2028, growing at a CAGR of 13.23%. Due to the low-cost treatments available in Indian hospitals, the country ranks #7 amongst the 20 wellness tourism markets. It also ranks #3 in wellness-focused countries in the Asia-Pacific.
The India health insurance market size touched $ 12.86 billion in 2022 and is expected to expand at a CAGR of 11.55% from 2023 to 2030. The public sector insurers dominated the overall market with the largest revenue share of 59.08% while the private sector insurers segment is expected to grow at a lucrative CAGR of 15.50% till 2030. The premiums underwritten by health insurance companies grew to Rs. 73,582.13 crore ($ 9.21 billion). The health segment has a 33.33% share in the total gross written premiums earned in the country.
Trends in the Hospitals Sector
Overall the healthcare industry in India is estimated to reach Rs 110 Tn by 2027 with a CAGR of 30.70%, with the digital healthcare segment having a 17.44% market share. The growing population and increasing prevalence of chronic diseases have led to the growth of more hospitals, both government and much more private. However, this infiltration of private hospitals has elevated the cost of medical care and the country is currently at a crossroads on outlining its future healthcare roadmap.
There are a few key trends though that are shaping up this roadmap. The first one is the growing acceptance of telemedicine especially post the pandemic. The availability of affordable internet and improved mobile connectivity has made it easier for patients to consult with doctors online. The use of AI/ML for medical data is also helping to improve patient outcomes and increase access to care, while also reducing costs. Going forward, this could be especially beneficial in rural and remote areas, where access to healthcare is often limited.
Remote monitoring tools are now proliferating in India as more and more people are using these to improve their health and wellness. Some of the most popular remote monitoring tools today include fitness trackers, blood pressure monitors, heart rate monitors, and glucometers. The patients can wear these devices or place them in their home, transmitting data to the doctors and hospitals regularly and this data can then be used to make necessary changes to the prescriptions and care plans.
The Indian transformational diagnostics market gained popularity after the pandemic. Some of the most promising transformational diagnostic tests that played a crucial role during the pandemic include genomic sequencing, next-generation sequencing, whole-genome sequencing, and RNA-based tests. These tests have the potential to revolutionize healthcare in India especially in the event of similar epidemics and pandemics in the future.
Healthcare software as a service (SaaS) is becoming an increasingly popular solution for hospitals looking to improve their efficiency and quality of care. Hospitals need solutions to store electronic health records and population health management data. SaaS based solutions help these hospitals effectively manage patient medical records, appointments, and billing information. With more and more third party software providers now focusing on patient care, the Indian healthcare SaaS industry is expected to increase at a CAGR of 19.5% and reach $50 billion by 2028.
M&As looks to be the flavor of the season for the Indian healthcare sector in 2023 with most hospital chains looking to expand inorganically. Some of the key areas where M&A activity is expected to increase include expansion into new geographies, entering into new segments (senior care, wellness, and preventive care), increasing focus on specialty care, promoting digital health, and consolidating the hospitals into healthcare chains. For most hospital chains, M&As mean steady and viable business from day one by acquiring the established hospitals. On the other hand, it takes quite a while for the Greenfield hospitals to start generating sustainable business.Â
The hospitals landscape in India is witnessing significant disruptions, particularly in the inpatient departments (IPD) and OPD, largely attributed to the rapid advancements made by healthtech companies. These disruptions have unlocked new value pools within the sector. What is being witnessed in the evolving healthcare landscape is the enhanced collaboration between established hospitals and digital-native startups. This collaboration aims to provide more efficient healthcare solutions tailored to meet the evolving needs of patients.
Developments in the Medical Devices Sector
The Medical Devices industry has grown steadily in recent years. Demand for innovative products leads to increased investment in R&D and the development of medical technologies. However, complex regulatory processes, reimbursement restrictions, and the costly process of developing advanced technologies are increasing the challenges for this industry. All the markets of Medical Devices have been affected negatively by the COVID-19 pandemic, mainly due to fewer new patients, barriers to healthcare access, and postponed treatments.
India ranks fourth in Asia and among the top twenty markets worldwide in terms of market size, behind South Korea, China, and Japan. With a focus on R&D and 100% FDI for medical devices to expand the market, the Government of India has launched a number of efforts to enhance the medical devices sector. According to value and technology for medical devices, India is anticipated to rank among the top 5 worldwide manufacturing hubs. India is also expected to become a world leader in key areas such as molecular imaging, PCR, ultrasonic scans, medical imaging, and cancer diagnostics.
The Department of Pharmaceuticals has been instructed by NITI Aayog to increase local manufacturing capacity by investigating venture capital and private equity. When international supply chains were hampered during the pandemic, the government’s attention was drawn to medical devices, which led to the Atmanirbhar Bharat initiative and domestic production of medical devices.
The government approved the National Medical Devices Policy in 2023. The Government has already initiated implementation of PLI Scheme for medical devices and support for setting up of 4 Medical devices Parks in Himachal Pradesh, Madhya Pradesh, Tamil Nadu and Uttar Pradesh. Under the PLI scheme for Medical Devices, till now, a total of 26 projects have been approved, with a committed investment of Rs 1206 Cr. Out of this, so far, an investment of Rs.714 Cr has been achieved.Â
Under the PLI scheme, total of 14 projects producing 37 products have been commissioned and domestic manufacturing of high-end medical devices has started which include Linear Accelerator, MRI Scan, CT-Scan, Mammogram, C-Arm, MRI Coils, high end X-ray tubes, etc. Remaining 12 products will be commissioned in near future. Five projects out of total 26 projects have been approved recently, under Category B, for domestic manufacturing of 87 products / product components.
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