301020-Healthcare Market Landscape in India - Final-V2.0

Healthcare Market Landscape in India
September 2020
Table of Contents
1. Overview of the Healthcare Market in India ......................................................................... 2
1.1 Healthcare Expenditure in Terms of GDP ............................................................................ 2
1.2 Key Health-related Statistics of India ................................................................................... 3
1.3 Healthcare Burden............................................................................................................... 5
1.3.1 Communicable Diseases ....................................................................................... 6
1.3.2 Non-communicable Diseases ................................................................................ 7
2. Healthcare Market and its Subsegments ............................................................................. 8
2.1. Market Size .................................................................................................................. 8
2.1.1 Overview of the Hospital Market .......................................................................... 10
2.1.2 Overview of the Indian Medical Devices Market................................................... 13
Source: Association of Indian Medical Device Industry (AIMED) ....................................... 14
2.1.3 Overview of the Indian Pharmaceutical Market .................................................... 14
2.1.4 Overview of the Indian Diagnostics Market ............................................................... 17
2.1.5 Overview of the Medical Insurance Market ............................................................... 18
3. Government Initiatives and Targets ................................................................................... 20
4. Key Challenges and Unmet Needs of the Healthcare Market ........................................... 25
5. Key Trends and Evolution in Future ................................................................................... 29
5.1 Current Trends ........................................................................................................... 29
5.2 Market Drivers ............................................................................................................ 30
5.3 Technology................................................................................................................. 31
5.3.1 Telemedicine .............................................................................................................. 32
5.3.2 Blockchain .................................................................................................................. 33
5.3.3 Artificial Intelligence (AI) ............................................................................................. 34
5.3.4 Robotics ..................................................................................................................... 35
5.3.5 Virtual Reality (VR) ..................................................................................................... 35
5.3.6 Internet of Things (IoT) ............................................................................................... 36
5.4 Future Vision .............................................................................................................. 37
6. Healthcare Primary Stakeholder Value Chain in India ....................................................... 38
7. Bibliography....................................................................................................................... 40
8. Appendix ........................................................................................................................... 41
1 Healthcare Market Landscape in India

1. Overview of the Healthcare Market in India
Healthcare has become one of India's largest markets, both in terms of revenue and employment.
The market is growing at a remarkable pace, owing to its growing coverage, services and expenditure
by the public and private market.
Rising income level, greater health awareness, increased precedence of lifestyle diseases and access
to insurance increases the domestic demand of healthcare market.
CAGR of top growing sectors in India (2018–2020)
22.5%
9.5% 8.5% 7.5%

3.0% 2.5%
Healthcare FMCG Financial Sector IT and BPM Agriculture Automobile

Source: IBEF Sector Reports
1.1 Healthcare Expenditure in Terms of GDP1

The government’s expenditure on healthcare market reached to approximately $44 billion* (1.5% of
the country’s GDP) in 2019, compared with $28.3 billion in 2016.
The amount allocated to the Department of Health and Family Welfare has been increased from
$5.24 billion in FY17 to $9.2 billion in FY21.
Per capita healthcare expenditure has been rising at a fast pace, due to increasing income, easier
access to high-quality healthcare facilities and greater awareness of personal health and hygiene.
Improved health insurance penetration has also facilitated the rise in healthcare spending along with
increase in income, which has resulted in growing affordability of the generic drugs in the market.
Government Healthcare Expenditure as a % of GDP (2016–2025)
2.5%
1.5% 1.6%
1.3% 1.4% 1.4%
2016 2017 2018 2019RE 2020BE 2025BE

Source: IBEF–2020
1
IBEF–2020
BE – Budget Estimate
*Calculated using GDP of India and percentage available on secondary sources
RE – Revised Estimate
Conversion rate: 1 USD = INR 70.06

1.2 Key Health-related Statistics of India
Health indicators have witnessed a steady improvement over the years. Health status is determined
based on parameters classified under three categories.2
• Life expectancy at birth

• Under-five mortality rate
Mortality by age and sex
• Infant/maternal mortality rate
•
• Maternal mortality ratio
• TB mortality rate
Mortality by cause
• Malaria mortality rate
• TB notification rate
• TB prevalence rate
Morbidity
• Malaria incidence rate
• Cancer incidence, by type of cancer
However, the most important indicators are life expectancy, maternal mortality and under-five
mortality, which we have covered below in detail.
In India, maternal mortality and under-five mortality rate has been reducing over the years, which has
impacted the life expectancy in India. Other factors that help in increasing the life expectancy are
better sanitation, proper housing and education. Life expectancy in India for male has increased from
67.3 years in 2011–2015 to 68.8 years in 2016–20.3
Projected Level of Expectation of Under-five Mortality and Maternal Mortality Ratio in

Life at Birth in India, 2006–2025 (in years) India, 1990–2016
72.3
Maternal Mortality Ratio

71.1 408
69.8
450
69.6
Under-five mortality
254
68.8 212 178 167 130 250
68.1 122
67.3 94.9 74.3 64 55 49 39 36.6
65.8 50
1997 2004-06 2007-09 2011-12 2011-13 2016 2018

-150
(MMR) (MMR) (MMR) (MMR) (MMR)
1998 2005 2009 2011 2013
(U-5) (U-5) (U-5) (U-5) (U-5)
2006 - 10 2011 - 15 2016 - 20 2021 - 25
Under five mortality (U-5) per 1000 live births
Male Female
MMR per 100,000 live births
Source: National Health Profile–2019 Source: WHO–2019
2
WHO–2019
3
National Health Policy–2019

Goal of Indian Government: Goal of Indian Government:
Increase life expectancy at birth to 69.8 for males and • Reduce under-five mortality to 23 by 2025
72.3 for females by 2025 • Decrease MMR from current levels to 100 by 2020
• Reduce infant mortality rate to 28 by 2019
Source: National Health Profile–2019 Source: WHO–2019
Although the Indian government is performing well to improve health indicators, it still needs
improvement to meet global benchmarks and World Health Organization (WHO)-recommended
norms, owing to large disparity in the condition of healthcare services across states, with the most
populous states being the laggards.
Under-five Mortality Maternal Mortality Rate Life Expectancy at Birth

(per 1,000 live births) (per 100,000 live births)
72
55 178 69.4
36.6 122
67
11 11 11
70
2010-12 2018 2007-11 2018

2011 2018
India WHO Norms India WHO Norms India World Average
Source: National Health Profile–2019, WHO–2019 Source: National Health Profile–2019, WHO - 2019 Source: National Health Profile–2019, WHO– 2019
India needs to improve all the three major health indicators. Currently under-five mortality rate in
India is 36.6 per 1,000 lives in 2018, which should be ideally 11 per WHO norms. Additionally,
maternal mortality rate is 122 per 100,000 lives in 2018, whereas WHO norms suggests it should be
70. In 2018, life expectancy in India was 69.4, which is lower compared with the world’s average,
i.e., 72.

1.3 Healthcare Burden
In India, although there have been substantial achievements in controlling communicable diseases,
they still contribute significantly to the disease burden of the country. Decline in morbidity and
mortality from communicable diseases has been accompanied by a gradual shift to and accelerated
rise in the prevalence of chronic non-communicable diseases (NCDs) such as cardiovascular
disease (CVD), diabetes, chronic obstructive pulmonary disease (COPD), cancer, mental health
disorder and injury.
Disease Incidence
In India, there are many diseases under communicable and non-communicable categories that
killed millions of people in 2018–19. Ischemic heart disease alone killed 1.54 million people in India.
The top 10 diseases are mentioned below along with the number of deaths:
Top 10 Causes of Death in India

Diseases
(In millions)
Ischemic heart diseases 1.54
COPD 0.96
Cancer 0.78
Stroke 0.73
Diarrheal Diseases 0.72
Lower respiratory Infections 0.51
Tuberculosis 0.45
Neonatal Disorders 0.43
Asthma 0.25
Diabetes 0.25
Source: Times of India–2020
Share of Communicable Vs. Non-communicable Proportional Mortality, 2016 (%)

Diseases in India, 2016 (%)
100% = 9,569,000
Injuries
3.82%
Others,
12%
Communicable,
Communicable maternal,
Diseases, 33% perinatal
and nutritional Non-
conditions communicable
21.83% Diseases
Non- 69.47%
communicable
Diseases, 55%
Source: National Health Profile–2019

Source: WHO–2018

1.3.1 Communicable Diseases
In a recent report of India Council of Medical Research (ICMR) published in 2017, it has been
observed that the disease burden due to communicable, maternal, neonatal and nutritional diseases
dropped from 61% to 33% between 1990 and 2016. Some of the key diseases that majorly
contribute from communicable diseases have been mentioned below:
Morbidity Reported in Communicable Disease,

According to the National Health Profile 2019, 65,194,599
2018 (%)
patients were screened at NCD clinics as a part of the
Pneumonia National Programme for Prevention and Control of Cancer,
Tuberculosis 1.54%
1.76% Diabetes, Cardiovascular Diseases and Stroke (NPCDCS)
Malaria
Typhoid 0.66% Other with below results:
3.82% Diseases
0.93%
• Acute respiratory infections contributed 69% to the
Acute Acute
morbidity burden in the country followed by acute
Diarrheal Respiratory diarrheal diseases at 22%.
Disease Infection
21.83% 69.47% • The cases of typhoid went up to 2,308,537 in 2018
from 2,264,453 in 2017 and contributed 4% to the
morbidity burden.
Top Diseases Responsible for Morbidity Due to Communicable Disease, by State, 2018
Disease Number of Cases Leading State (Number of Cases)

Acute Respiratory Infection 41,996,260 Kerala (5,857,820)
Acute Diarrheal Diseases 13,194,775 West Bengal (2,251,152)
Typhoid 2,308,537 Uttar Pradesh (764,272)
Pneumonia 928,485 West Bengal (266,545)
Malaria 399,134 Chhattisgarh (77,140)
Mortality Reported in Communicable Disease,

2018 (%) • Pneumonia contributed 30.65% to the mortality burden
Encephalit Typhoid in the country followed by acute respiratory infection at
is 2.9% Others
Viral Hepatitis 27% and acute diarrheal disease at 10%.
3.86% 7.92%
4.25%
Pneumonia
• Total number of deaths due to H1N1 were 1,103 in
Acute Encephalitis
Syndrome
30.65% India during 2018. In the same year, Assam reported
4.63% maximum number of deaths (147).
H1N1
8.03% Acute
• Total number of deaths due to encephalitis were 530 in
Diarrheal Acute India during 2018. Maharashtra reported maximum
Disease Respiratory number of deaths (461).
10.55% Infection
27.21%

Top Diseases Responsible for Mortality Due to Communicable Disease, by State, 2018
Leading State/Number of
Disease Number of Deaths
Cases
Pneumonia 4,213 Tamil Nadu (757)
Acute Respiratory Infection 3,740 West Bengal (732)
Acute Diarrheal Diseases 1,450 Assam (439)
H1N1 1,103 Maharashtra (461)
Acute Encephalitis Syndrome 637 Uttar Pradesh (230)
Viral Hepatitis 584 Delhi (180)
Encephalitis 530 Assam (147)
Typhoid 399 Uttar Pradesh (224)
1.3.2 Non-communicable Diseases

In the same period (1990–2016), disease burden from non-communicable diseases increased from
30% to 55%. Chronic non-communicable diseases such as diabetes and hypertension have been
on an accelerated rise and dominate communicable diseases in the total disease burden of the
country.
Out of 65,194,599 patients that were examined at NCD clinics in 2018, 4.75% people were
diagnosed with diabetes, 6.19% with hypertension, 0.30% with cardiovascular diseases, 0.10% with
stroke and 0.26% were diagnosed with common cancer. According to GLOBOCON and Global
Burden of disease top three common cancers that affect Indian population are breast, oral and
cervical followed by gastric and lung cancers.
During 2015–16, more than 12.9 million persons have been screened in the designated NCD
Clinics, 8% people were diagnosed with diabetes, 12% with hypertension, 0.70% with
cardiovascular diseases and 0.10% were diagnosed with common cancer.
Number of Patients Diagnosed with Different NCDs, 2015–16 and 2017–18 (%)
Total Number of Patients Screened:
12% 2015-16 = 12.9 million
2017-18 = 65.1 million
8%
6.19%
2015-16
4.76%
2017-18
1.70%
0.70% 0.30%
0.10% 0.26% 0.11%
Hypertension Diabetes HTN&DM CVDs Common Cancers Stroke
Source: National Health Profile–2019 and NPCDCS
While NCDs accounted for 63% of all deaths in 2016 (total deaths = 9,569,000), cardiovascular
diseases contributed the largest number of deaths among NCDs followed by chronic respiratory
diseases and cancers.

Deaths by Non-communicable Diseases (%)
Other NCDs
21%
Diabetes
CVDs
5%
43%
Chronic
Respiratory
Diseases
17%
Cancers
14%
Source: WHO–2018
Government’s Commitment to Invest in Healthcare
To address diseases and their risk factors, as well as complex problems such as antimicrobial
resistance (AMR) and the health impacts of poor sanitation and air pollution, the government has
articulated a shift in focus (in the health policy) from mainly treating diseases to placing more
emphasis on preventive health and promoting wellness. To reach the goals and targets of the National
Health Policy 2017, the government has launched a series of new initiatives and programs.4
• National Viral Hepatitis Control Program (NVHCP) • Efforts to Control NCDs: These include the development of
(2018): A major new initiative aimed at preventing, National Multisectoral Action Plan for Prevention and Control
diagnosing and successfully treating all types of hepatitis of Common Non-communicable Diseases (2017–2022). For
through the public sector. This program aims to diagnose
this, India won an award from the UN Interagency Task
and provide free treatment to the estimated 6–12 million
people infected with hepatitis C, using locally produced, Force in 2018. The efforts also include the launch of
generic, direct-acting antivirals. In addition, the program population-based screening under the National Programme
aims for effective management of the country’s on Prevention and Control of Cancer, Diabetes,
estimated 40 million cases of hepatitis B, using antiviral Cardiovascular Diseases and Stroke, to contribute to the
drugs. This will be the world’s largest free hepatitis B National Health Policy 2017 target of reducing premature
treatment program. mortality from NCDs by 25% by 2025. Work continues on
tobacco control, and the most recent Global Adult Tobacco
• Revised National TB Control Programme (RNTCP):
Launched in 2017 to increase the diagnosis, reporting Survey showed major progress in reduction in tobacco
and appropriate treatment of TB cases, including the consumption in young people.
estimated one million new missing cases each year that
go unreported. The aim is to better control the disease
and reduce the estimated 410,000 annual deaths from • Anemia Mukt Bharat: This program was launched by the
TB. The program boosted by a four-fold increase in Ministry of Health & Family Welfare in 2018 to reduce levels
government funding, provides financial incentives to of anemia among various age groups by 2022, by
patients, private providers and health workers supporting strengthening delivery of key interventions, including
patients under treatment. The strategy uses an IT-based prophylactic iron/folic acid supplementation, deworming and
2. direct-benefit
Healthcare transfer
Market(DBT)and
scheme
its tied to the country’s
Subsegments behavior change communication.
electronic TB patient monitoring system to get patients
2.1.tested
Market Size
and started on effective treatment and to ensure
treatment compliance.
4
Source: WHO–2019

The Indian healthcare market is growing at a CAGR of more than 22.5% and is expected to reach
$372 billion by 2022. The market is the fourth largest employer in India and is expected to generate
40 million jobs by 2030.
Indian Healthcare Market Growth Trend, 2016–2022E (USD billion)

372
280
160
110
2016 2017 2020E 2022E
Source: IBEF– 2020
*These are pre-COVID-19 estimations; they do not include the impact of COVID-19 and are subject to change.
The growth of the Indian healthcare market is driven by four factors — demographic structure, rising
prosperity and healthcare spending ability, broader insurance coverage and digitization of the
market (emerging technological innovations).
Indian Healthcare Market Structure
The healthcare market has been broadly divided into five categories: hospital, medical devices,
pharmaceuticals, diagnostics and medical insurance.
Healthcare
Hospital Medical Devices Pharmaceuticals Diagnostics Medical Insurance
This category will It includes It includes It comprises It includes health

include all the establishments manufacturing, businesses and insurance and
details related to primarily extraction, laboratories that medical
healthcare manufacturing processing, offer analytical or reimbursement
centers, district medical purification and diagnostic facility, covering
hospitals and equipment and packaging of services, an individual’s
general supplies, e.g., chemical including body hospitalization
hospitals. surgical, dental, materials for use fluid analysis. expenses
orthopedic, as medications incurred due to
ophthalmologic, for humans. sickness.
laboratory
instruments.

2.1.1 Overview of the Hospital Market
The hospital market in India is witnessing a huge investor demand from both global and domestic
investors. The hospital market is expected to reach $132 billion by 2023 from $83.9 billion in 2019*,
growing at a CAGR of 16%–17%.
Indian Hospital Market Growth Trend, 2017–2023E (USD billion)

132
83.2
61.8
2017 2019 2023E
Source: Invest India
In the overall hospital market, private market players play a major role and dominate the public
hospitals in terms of number of hospitals and beds. Their share in hospitals alone was estimated at
63%, while the share in hospital beds was estimated at 62%.
Share of Private Vs. Public Hospitals in Share of Private Vs. Public Beds in Hospital
Total Hospital Market, 2019 (%) in Total Hospital Market, 2019 (%)
Total Hospitals = 69,265 Total Beds = 1,899,228
Public Public
Hospitals, Hospitals,
25,778: 713,986 ;
37% 38%
Private
Private
Hospitals,
Hospitals,
1,185,242 ;
43,487;
62%
63%
Source: CDDEP–2020 Source: CDDEP–2020
Hospital Capacity in India
Hospital capacity of India’s public and private health market in terms of number of hospital beds,
Intensive Care Unit (ICU) beds and ventilators:
• In India, approximately 1.9 million hospital beds, 95,000 ICU beds and 48,000 ventilators are
available.
• Most of the beds and ventilators in India are concentrated in seven states, namely Uttar
Pradesh (14.8%), Karnataka (13.8%), Maharashtra (12.2%), Tamil Nadu (8.1%), West
Bengal (5.9%), Telangana (5.2%) and Kerala (5.2%).

Top Ten States with Total Number of Hospitals
Number of Number of Total Number of
State/UTs Hospitals Hospitals in the Hospitals
in the Public Market Private Market (Public + Private)
Uttar Pradesh 4,635 1 12,468 1 17,103
Karnataka 2,842 3 7,842 2 10,684
Rajasthan 2,850 2 2,794 5,644
Telangana 863 3,247 3 4,110
Kerala 1,280 2,062 3,342
Maharashtra 711 2,492 3,203
Bihar 1,147 1,887 3,034
Odisha 1,806 695 2,501
Tamil Nadu 1,217 1,222 2,439
Punjab 682 1,638 2,320
India Total 25,778 43,487 69,265
Source: CDDEP–2020
Top Ten States with Total Number of Hospital Beds
Number of Number of Total Number of

State/UTs Hospital Beds Hospital Beds in the Hospital Beds
in the Public Market Private Market (Public + Private)
Uttar Pradesh 76,260 3 2,05,142 1 2,81,402
Karnataka 69,721 1,92,388 2 2,62,109
Maharashtra 51,466 1,80,293 3 2,31,739
Tamil Nadu 77,532 2 77,834 `1,55,375
West Bengal 78,566 1 34,969 1,13,535
Telangana 20,983 78,936 99,219
Kerala 38,004 61,223 99,227
Rajasthan 47,054 46,122 93,176
Andhra Pradesh 23,138 60,092 83,230
India Total 7,13,986 1,185,242 18,99,228
Source: CDDEP–2020
In India, human resources in the health market are not sufficient and there is a high demand for more
doctors as the doctor to patient ratio across India is only 1:1,456, currently. The government is
investing heavily in this market, due to which the number of medical colleges in India increased to
529 in 2019 from 412 in 2016 and the number of doctors increased to 1,154,686 in 2018 from
1,069,734 in 2016.
Growth in Number of Medical Colleges, Growth in Number of Doctors, 2016–2018
2016–2019 529
462 476
412 1,113,31 1,154,68
5 6
1,069,73
4
2016 2017 2018

2016 2017 2018 2019
Source: IBEF–2020 Source: IBEF–2020

With about 2,500 new hospitals proposed for the next five years (2019–2024), thereby creating 2.5
million additional jobs in the health market, India is expected to meet the WHO norm of 1:1,000
doctor–patient ratio by 2024.
Top Players in the Indian Private Hospital Market in 2018 and Their Positioning5
In India, there are lot of players present at the regional level such as MAX Healthcare, and there are
others that are present at the pan-India level such as Columbia Asia. Apollo is the leading player in
the Indian hospital market in terms of geographical presence, business span and breadth of service
offerings.
Apollo Hospital
PAN India
Columbia Asia
# of Beds: 10,000+
CARE Hospitals* Fortis Hospitals # of Hospitals: 70
# of Beds: 1,006* # of Beds: 2,078 # of Beds: 4,000
# of Hospitals: 10 # of Hospitals: 15 # of Hospitals: 39
Regions
Multiple
Geographical Presence
Aster DM Healthcare HCG Narayana Hrudayalaya

# of Beds: 4,340 # of Beds: 1,872 # of Beds: 7,155
# of Hospitals: 12 # of Hospitals: 24 # of Hospitals: 50
Shalby Hospitals
Region
Manipal Hospitals
Single
# of Beds: 2,482
# of Beds: 7,000
# of Hospitals: 11
# of Hospitals: 15
Medanta
Single
State
# of Beds: 1,600+
# of Hospitals: 15
Sterling Hospitals* Max Healthcare
# of Beds: 1,103 # of Beds: 2,376
# of Hospitals: 7 # of Hospitals: 14
Number of Hospitals
X-axis represents number of hospitals owned

Number of hospitals and beds are based on data available on annual report of these companies in 2019
Bubble size indicates total number of beds
*Indicates data of 2018
5
Company Websites and Annual Reports of Hospitals

2.1.2 Overview of Indian Medical Devices Market
The Indian medical devices market was valued at $11 billion in 2019 and is expected to reach $25
billion by 2025, growing at a CAGR of 14%–15% during 2019–2025.
India imports about 80% of the medical devices, out of which 21% are imported from the USA, 14%
from Germany, 11% from Singapore, 10% from China and 7% from the Netherlands.6
In terms of segment, cardiovascular devices dominated the market with 18% share, followed by
consumables and disposables with 14% share. Orthopedic prosthetics and patient aids segments
are expected to be the two fastest-growing verticals by 2020, and they are projected to grow at a
CAGR of 9.6% and 8.8%, respectively. Both diagnostic imaging and consumables are expected to
grow at a CAGR of 7.1% each during 2015–2020.
Indian Medical Devices Market Growth Medical Devices Share, by Segment,

Trend, 2019–2023E (USD billion) 2018–2019 (%)
Cardiovascular
Devices, 18%
Others, 31%
25
Consumables and
Disposables, 14%
11
Patient Aids and
Implants, 6% Diagnostic Imaging,
General 12%
and Plastic In Vitro
Surgery, Diagnostics
2019 2023E 9% , 10%
Source: Technology Information, Forecasting & Assessment Council– Source: Department of Pharmaceuticals–2019-20
2020
Top Players in the Indian Medical Devices Market

The medical devices market in India consists of large multinationals as well as small and medium
enterprises (SMEs). Around two-thirds of the manufacturers in India are mostly domestic players
(750–800 domestic manufacturers).
6
Technology Information, Forecasting & Assessment Council - 2020

Indian Medical Devices Market Structure
750 Medical Device Manufacturing Firms Players Corresponding to Sales Bracket
Most of the domestic players

65% operating in the consumables
Sales <
segment cater to local consumption
$2 million
with limited exports
25%
Sales = Mix of domestic and MNC
$2-10 million players in the low-to-medium
tech product categories of
various sub-segment(s) catering
5% to local consumption with
Sales = moderate levels of exports
$10-20 million
3% Major domestic and MNC

Sales = players with significant
$20-100 million presence in the domestic and
exports markets
2%
Sales>$100 million
Source: Association of Indian Medical Device Industry (AIMED)
2.1.3 Overview of the Indian Pharmaceutical Market

India is one of the leading countries in terms of global pharmaceutical production. It ranks third
worldwide in terms of production by volume and tenth by value in the global pharmaceutical market.
The Indian pharmaceutical market was valued at $38 billion in 2019, while the India domestic
pharma market was valued at $20.03 billion in 2019.7
At the current rate of 7%–8%, the pharmaceutical market’s annual revenues can grow up to about
$80–90 billion by 2030. If the market grows aggressively with 11%–12% CAGR, the pharmaceutical
market will reach to approximately $120–130 billion by 2030.
Import: About 80% of India's requirements for Active Pharmaceutical Ingredients, by volume, were
fulfilled by China in 2019. India’s organic chemical imports from China were around 38% of its total
organic chemical imports during 2018–198
Export: India caters to over 50% of the global demand for various vaccines, 40% of generic
demand in the U.S. and 25% of all medicine demand in the U.K.9
7
IBEF–2020, Pharma Tutor–2020
8
Indian Express, Technology Information, Forecasting & Assessment Council–2020
9
Ministry of Chemicals and Fertilizers - 2019, Department of Pharmaceuticals–2019-20

The Indian pharmaceutical market manufactures 60,000 generic brands across 60 therapeutic
categories and manufactures more than 500 different active pharmaceutical ingredients (APIs).
Indian Pharmaceutical Market Growth Trend, 2019–2030E (USD billion)
11–12% In 2019, generic drugs accounted for the largest share

of about 70% in the Indian pharmaceutical market. Over
120 - 130
7–8% the counter (OTC) medicines and patented drugs held
21% and 9% shares, respectively, in the market.
80 - 90
Total = $ 38 million
Patented
Drugs, 9%
38.0 Over the
Counter,
21%
Generic
2019 Base Case Aspirational Drugs,
70%
(2030E) Case
(2030E)
Source: IBEF–2020, Invest India, Economic times–2019, The Indian pharmaceutical industry–2019
Top Players in the Indian Pharmaceutical Market
Some of the major players in the Indian pharmaceutical market include Sun Pharmaceuticals, Divis
Laboratories, Dr. Reddy’s, Torrent and Abbott. Below mentioned are the revenues of leading
players for 2019–20
Revenue of the Top Five Players of Indian Pharmaceutical Market, FY2019–20 (USD
Million)
Dr. Reddy's Laboratories Ltd 2,463
Sun Pharma 1,370
Biocon Ltd. 921
Torrent Pharmaceuticals Ltd. 870
Divis Laboratories Ltd. 776

Source: Company websites and Annual reports

Indian Pharmaceutical Market Structure
APIs, finished dosages and PFIs are the major components supplied by back-end stakeholders
(ingredient companies) to pharma companies.
Components Major Suppliers Pharma Companies
Finished dosages
Active pharmaceutical
ingredients (APIs)
Pharmaceutical formulation
intermediates (PFIs)
Polymer
Others (such as chemical

companies)
Source: Company websites and annual reports, research analysis
Future Potential of the Indian Pharmaceutical Market

Medicine spending in India is projected to grow between 9%–12% over the next five years (2020–
2025), directing India toward becoming one of the top ten countries in terms of medicine spending.
Alignment of product portfolio toward chronic therapies for diseases such as acute respiratory
diseases, communicable/infectious diseases, cardiovascular, anti-diabetics, anti-depressants and
anti-cancer is in high demand.10
10
IBEF–2020

2.1.4 Overview of the Indian Diagnostics Market
Due to a significant shift from prescriptive to preventive healthcare and access to quality healthcare,
the Indian diagnostics market is expected to grow at a CAGR of approximately 16% to $12.3 billion
in 2020, compared with $10.5 in 2019.
Indian Diagnostic Market Growth Trend, 2018–2020 (USD billion)
CAGR= 16% 12.3

10.5
9.1
2018 2019 2020

Source: Healthcare Executive–2019
Note: Market size has been calculated based on CAGR and 2018 numbers.
The diagnostics market in India is highly fragmented. It can be classified into pathology testing
services and imaging diagnostic services or radiology. Pathology testing (it involves the collection of
samples in the form of blood, urine and stool and analyzing them using laboratory equipment and
technology) is often the preferred first line of diagnosis for most diseases, and thus, contributes to a
major portion of the diagnostic market.
The standalone centers dominated the market with 47% share, while hospital-based laboratories
held 37% share. Diagnostic chains, which held the remaining 16% share in the market, have been
further split into PAN India chains and regional chains.
Diagnostic Market Segments, 2019 (%) Distribution of Diagnostic Centers, 2019 (%)
Total Markets = $10.5 billion Diagnostic

Chain,
16%
Hospital
Based
Laboratorie
Radiology, s, 37%
42%
Pathology,
58% Standalone
Centres,
47%
Source: Healthcare Executive–2019 Source: Healthcare Executive–2019

Top Players in the Indian Diagnostic Market
Some of the major players under this market are mentioned below with a few data points:
Company Name Domestic Revenue – USD No. of Center No. of Reference

Presence Million Laboratory
(2018–2019)
Dr. Lal’s Path Lab National: 1 in Delhi
PAN India $187.6 Clinical labs – 193
Limited Regional: 1 in Kolkata
Clinical labs – 364 Regional: 4 laboratories, each in
SRL Diagnostics PAN India $146.2 Patient service centers – 1,078 Mumbai, Gurugram, Kolkata and
Pickup points – 6,271 Bengaluru
National: 1 in Mumbai
Regional: 12 laboratories, each in
Clinical labs –106
Rajkot, Guwahati, Raipur, New Delhi,
Metropolis PAN India $120.7 Patient service centers – 1,130
Surat, Bengaluru, Kochi, Pune, Chennai,
Pickup points – 8,500
and Kolkata in India and each in
countries such as Kenya and Sri Lanka
National: 1 in Navi Mumbai
Thyrocare Authorized service providers –
Regional: 8 laboratories, each in New
Technologies PAN India $56.4 3,379
Delhi, Mumbai, Patna, Kolkata, Bhopal,
Limited Collection points – over 30,000
Hyderabad, Coimbatore and Bengaluru.
Source: Healthcare Executive–2019
2.1.5 Overview of the Medical Insurance Market
The health insurance market in India is the fastest growing segment in the non-life insurance
market. The health insurance market in India is expected to grow at a CAGR of 19% from 2019–
2024. In 2019–2020, total gross direct premiums grew at 13.40% y-o-y to $7.39 billion. The health
segment holds a 27.3% share in gross direct premiums earned in the country.
Total Health Insurance Premium Collection in India, 2016–2020 (in USD billion)
6.51 7.39
5.88
4.78
4.08
2016 2017 2018 2019 2020
Source: IBEF–2020
Health insurance service providers in India, including public market institutions, private institutions
and stand-alone insurers, public market institutions held 53% share in the market.
New India Insurance Co. Ltd and National Insurance Co Ltd. are the largest public market players in
the market, with Star Health as the first and biggest stand-alone player. Apollo Munich, Cigna,
Religare and Max Bupa are some of the leading private players in the market.

Share of Public and Private Institutes in the Distribution Premium Earned by Major Players, 2018–19
Indian Health Insurance Market, 2019 (%) (USD million)
Total Market = $6.51 Billion New India assurance Co. Ltd 1,189.4
Oriental Insurance Company Limited 552.6
Stand- Star Health & Allied Insurance… 506.7
Public, alone, National Insurance Company Limited 480.9
53% 24% Bajaj Allianz General Insurance… 238.0
Apollo Munich Health Insurance… 212.4
Religare Health Insurance… 173.2
Max Bupa Health Insurance… 101.3
ICICI Lombard General Insurance… 68.4
Private,
24% Cigna TTK Health Insurance… 57.6
Source: Religare Annual Report 2018-19 Source: Company websites and annual reports
Improvement in Penetration of Private Health Insurance

Affordable healthcare has emerged as a primary need in recent years. In this scenario, the
government formulated the National Health Policy 2017 (NHP), under the aegis of which a target
was set to increase the healthcare spend to 2.5% of the GDP by 2025. This was followed by the
launch of the ambitious Ayushman Bharat Yojana — a National Health Protection scheme which
aims to provide coverage up to INR 500,000 per family for secondary and tertiary care
hospitalizations. This scheme will cover close to 11–12 crore (110 million–120 million) of the poorest
families, which is estimated to be 600 million beneficiaries — approximately 45% of the population.
This initiative coupled with the improvement in penetration of private health insurance increased the
proportion of the insured population to 52% in 2017–2018, from 37% in 2014–2015. Coverage is
projected to grow close to 70%–75% by 2025.11
Population Coverage
Changing Payer Mix: Individual to Institutional
Commercial
Insurance 6% 19%-20%
10%
Employee Schemes
(CGHS, ESIS) 6% 10% 10%-15%
Government
Schemes 25% 32% 40% -
45%40%-
45%
Uncovered 48%
63% 20% -
Population
30%20%-
30%
2014-2015 2017-18 2025E
Source: FICCI–2019
11
FICCI–2019

3. Government Initiatives and Targets12
In the past few years, the Government of India has placed health higher on its political agenda. It is
adopting a multi-market approach toward the health market. The country is focusing on four main
pillars of universal health such as preventive health, affordable healthcare, supply-side interventions
and mission mode intervention.
Indian government has committed to making significant increases in public spending in health. The
National Health Policy 2017 calls for more than doubling in government health spending as a
percentage of GDP by 2025, from 1.15% to 2.5%, to achieve ambitious set of goals and targets to
improve the population’s health status and its access to quality health services in the public market.
Below is a timeline showing the most recent developments in government initiatives for healthcare
in India.
TB Mission 2020
2014 The program was launched by the Government of India with a vision to
achieve a TB-free India. The program provides various free-of-cost,
quality tuberculosis diagnosis and treatment services across PAN India
through the government health system.
Mission Indra Dhanush

The mission was launched by the Ministry of Health and Family Welfare
with the purpose of immunizing all children up to two years of age and
pregnant women against seven vaccine preventable diseases, namely
diphtheria, pertussis, tetanus, polio, tuberculosis, measles and hepatitis
B. The mission has been followed by its two intensified versions with a
target to achieve full coverage by 2020.
National AYUSH Mission

This initiative was launched to promote Ayurveda, Yoga, Unani, Siddha
and Homeopathy for health and well-being through cost-effective
2015 AYUSH services co-located at primary health centers, community
centers and district hospitals. Other responsibilities under the mission
include strengthening of AYUSH educational institutions; quality
assurance of Ayurveda, Unani, Siddha and Homeopathy drugs; and
sustaining the availability of raw materials. The government has
allocated approximately $299 million for the mission in FY 2019–20.
12
Niti.Gov–2019, Walk Water Talent–2019, The Hindu–2019, National Health Mission–2018, Economic Times–2015,
Arogya Legal–2020, PMNDP–2018, SUGAM–2019

E-health
As a part of the Digital India Campaign, e-health was launched to
improve electronic healthcare infrastructure for patients across the
country. Under this, initiatives such as Kilkari, Mobile Academy, ANM
Online (ANMOL), Mera Aspataal, e-hospital and e-rakthkosh have been
rolled out during 2015–2017.
Integrated Health Information Platform (IHIP)

A single platform designed to provide real-time data on disease
2016 surveillance, including outbreak detection and response; patient
treatment and management for multiple health programs; and other
critical health management information. The aim is to improve public
health surveillance and response, the quality and coverage of care, and
the overall health system performance.
Pradhan Mantri National Dialysis Program (PMNDP)

The program is a part of the National Health Mission (NHM) and aims to
provide free dialysis services to the poor under NHM in PPP (Public-
Private Partnership) mode.
Biomedical Equipment Management & Maintenance Program

(BMMP)
This is an initiative by the Ministry of Health and Family Welfare to

provide support to state governments to outsource medical equipment
maintenance comprehensively for all facilities. This will ensure
improvement in the functionality and life of equipment and
simultaneously improving healthcare services in public health facilities —
reducing the cost of care and improving quality of care.
2017 National Health Policy, 2017
The policy focusses on primary healthcare assurance through health

and wellness centers, including care of major non-communicable
diseases, mental health, geriatric health care, palliative care and
rehabilitative care services. The policy proposes free drugs, free
diagnostics and free emergency and essential healthcare services in all
public hospitals in a bid to provide access and financial protection.

Medical Devices Rules, 2017
New medical device rules have been framed and published under the
Drugs and Cosmetics Act to provide separate legal framework for
regulation of medical devices. The new rules will facilitate expeditious
approval of medical devices with comprehensive quality requirements to
be followed by marketers / importers / manufacturers / sellers of notified
medical devices.
Ayushman Bharat
2018 It is a national initiative with two main components:
• Establishment of 150,000 public sector health and wellness

centers that will provide a package of free, comprehensive
primary healthcare services; focus on health promotion and
disease prevention, detection and management; and link with
hospitals and specialists to ensure continuity of care
• PMJAY financial protection scheme that will enable 500 million
poor, near poor and vulnerable people (nearly 40% of India’s
population) to receive free hospital care costing up to about
$7,000 per year in public hospitals, as well as in private hospitals
contracted by the government, to reduce out-of-pocket payments
and catastrophic health expenditures
SUGAM
2019
SUGAM is an e-governance system which was introduced by CDSCO
as a part of the Digital India Campaign, for online processing of
applications, linking of CDSCO HQ with other offices and laboratories,
and for maintenance of database to promote ease of doing business.
Upgradation of district hospitals to medical college hospitals
This proposal is a part of the center-sponsored program Human

Resources for Health and Medical Education, which aims at boosting
availability of human resource for the health sector. The Health Ministry
of India has proposed to convert 75 district hospitals into medical
colleges in the third phase of the scheme (2019).

WHO India Country Cooperation Strategy (CCS) 2019–2023: A
Time of Transition
Launched by the Union Health Ministry of India, CCS provides a

strategic roadmap for WHO to work with the Indian government for
achieving its health sector goals, improving the health of its population,
and bringing in transformative changes in the health sector. WHO’s
technical support to the Government of India will fall under the following
four strategic priorities to contribute to India’s health agenda:
• Accelerate progress on Universal Health Coverage

• Promote health and wellness by addressing determinants of
health
• Better protect the population against health emergencies
• Enhance India’s global leadership in health
Some of the Key Ongoing Initiatives
• Other central schemes of the Ministry of Health and Family Welfare at the national level
include Health Minister’s Discretionary Grant, Rashtriya Arogya Nidhi (RAN) and Health
Minister’s Cancer Patient Fund (HMCPF) within Rashtriya Arogya Nidhi (RAN).
• Under the Pradhan Mantri Swasthya Suraksha Yojana (PMSSY), which was launched in
2003, 22 AIIMS were announced to be build across various locations in the country. The
scheme has entered phase IV, with over six AIIMS fully operational as part of phase I–III.
• State-run health coverage schemes at the state level: Different states also run their own
health coverage schemes. For instance, Yeshaswini and Vajpayee Arogyasri schemes are
state-sponsored schemes run by the Government of Karnataka. The Rajiv Arogyasri Scheme
is being run by the Governments of Andhra Pradesh and Telangana. The Government of
Tamil Nadu runs the Chief Minister’s Comprehensive Health Insurance Scheme. The
Mukhyamantri Amrutam is being run by the Government of Gujarat.
•

Selected Targets of the National Health Policy 201713
Health system financing, health Communicable and non-

utilization and health Women and children's health communicable disease
management information burden
• Increase government health • Reduce infant mortality to 28 • Achieve and maintain a cure
expenditure as a percentage of deaths per 1,000 live births rate of more than 85% in new
GDP from 1.15% to 2.5% by by 2019, and under-five sputum-positive patients for
2025 mortality to 23 per 1,000 live TB and achieve elimination
births by 2025 status by 2025
• Increase health spending by

states to more than 8% of their • Reduce maternal mortality • Reduce premature mortality
budgets by 2020 ratio to 100 per 100,000 live from cardiovascular
births by 2020 diseases, cancer, diabetes or
chronic respiratory diseases
• Decrease the proportion of
by 25% by 2025
households facing catastrophic • Reduce neonatal mortality
health expenditure from current rate to 16 per 1,000 live
levels by 25% by 2025 births and stillbirths to single • Achieve 90–90–90 target for
digit by 2025 HIV/AIDS by 2020, and
ensure 80% of known
• Increase utilization of public
hypertensive and diabetic
health facilities from current • Ensure more than 90% of
individuals at household level
levels by 50% by 2025 infants are fully immunized
maintain controlled disease
by one year of age by 2025
status by 2025
• Ensure a district-level electronic
database of information on • Reduce the prevalence of
• Ensure a relative reduction in
health system components by stunting to 40% in children
prevalence of current
2020, and establish a federated under five years by 2025
tobacco use by 15% by 2020
integrated health information
and 30% by 2025
architecture by 2025
13
WHO–2019

4. Key Challenges and Unmet Needs of the Healthcare Market 14
India is witnessing increased number of government initiatives and public spending. There is a
limited but increasing investment in innovative services as well as development of lucrative and low-
cost digital and device solutions. In India, mobile technology and improved data services are
expected to play a critical role in improving healthcare delivery. However, despite these advances,
India's healthcare market is dealing with a plethora of challenges. These have been summarized
below as the lack of five A’s in the Indian healthcare market:
Lack of Awareness Lack of Affordability

• Level of health awareness is low • With private sector dominating the
among Indians and the major reason healthcare, its costly facilities make
for this is illiteracy or low educational healthcare less affordable for masses.
status in the country. • Fewer public health facilities and the
• Lack of awareness has also led to variation and unreliability in the quality
negligence toward preventive care, of services make it a less preferable
and hence, an increase in burden of option even though the costs are low.
lifestyle diseases on the sector. Other • India’s public healthcare spending is
impact is low insurance penetration. quite low when compared with its peers
and BRICS counterparts.
Lack of Availability • According to National Survey conducted
• There is lack of availability of public
between 2017–2018, only 14.1% of
healthcare services, infrastructure and
Indians in rural areas and 19.1% in
professionals across the country.
urban areas had any form of health
• As the private sector plays an important coverage.
role in healthcare delivery across the
country, a majority of the population living Lack of Accountability
below the poverty line continue to rely on • With cases of medical malpractice
the under-financed and short-staffed public surfacing in the increasingly
sector for its healthcare needs, as a result commercialized private healthcare
of which, their needs remain unmet. sector in India, there is less
accountability from the doctors,
Lack of Access nurses and other healthcare
• There is a huge disparity in accessibility providers.
of healthcare facilities between different • Private healthcare suffers from a
financial, geographic, social and system- weak regulation when it comes to
related domains, even where they are quality of care, rates for
available. procedures or standard guidelines
• Urban and rural divide in the country is for medical treatment.
one instance where urban areas have • Poor patient treatment, lack of
concentration of healthcare respect and quality of services in
professionals and facilities, leaving rural the public healthcare centers raise
areas underserved. trust and accountability issues
with the system.
Lack of Five A’s in the Indian Healthcare Market
14
Quartz India–2018, Health Systems Global–2018, Hindu Business Line–2017, NCBI–2018, India Spend–2019

The challenges in the healthcare market majorly revolve around the lack of affordability, access and
availability. There is a huge mismatch in the demand and supply of healthcare services in India due
to various factors, such as rural-urban disparity, importance of private market and inadequate public
market infrastructure.
Although the public healthcare market has made improvements in the recent past with various new
initiatives and schemes to benefit the patients, there is a huge shortfall of primary healthcare
centers and community health centers with respect to the population.
15
Gap in Healthcare Demand and Supply
Healthcare Services Supply in India
Specialized consultive care Maximum

provided through intensive concentration
care units, diagnostic Urban of healthcare
Tertiary support services and Maximum facilities by
Care specialized medical concentrat top providers
personnel ion of
corporate
healthcare
Involves specific Unorganized sector
expert care and
treatment, majorly Semi-Urban with major focus on
Secondary Care provided in secondary care
hospitals
The basic and general

healthcare facilities, Rural Limited availability
including prevention and access to
Primary Care even the primary
and treatment of
common diseases and secondary
and injuries healthcare
Healthcare Services Demand in India
Key Takeaway: In India, 90% patients need basic healthcare in the form of primary and secondary
care, while tertiary care is required in special cases only. Unfortunately, the supply of even basic
healthcare facilities in rural areas is quite limited. People in these areas are majorly dependent on
public healthcare facilities, which as stated above, do not meet the requirement and lack
accommodation, given the government spending and population in these areas. Physical reach is
one of the basic determinants of access, defined as “the ability to enter a healthcare facility within 5
kms from the place of residence or work” and in the country, 31% of rural population travels more
15
Walk Water Talent–2019

than 30 kms for availing healthcare facilities.16 India’s 70% of population lives in semi-urban and
rural areas, but 80% of India’s healthcare facilities are located in urban areas with the highest
number of top-notch and private healthcare brands17. Over 60% of hospitals, 70% of dispensaries
and 80% of well-trained and qualified doctors operate only in the urban areas. The semi-urban
consumer segment is relatively unstructured and majorly requires secondary care.
Apart from increasing the government spending as well as adding infrastructure and medical
professionals to the healthcare system of the country, an appropriate technological support is also
required. An effective and innovative use of medical technology has the potential of increasing
access, significantly reducing the burden of disease and the load on healthcare delivery services
through early diagnosis, better clinical outcomes, less-invasive procedures and shorter recovery
times.
The healthcare IT market is facing its own set of challenges such as issues related to initial
investments, lack of in-house IT expertise, manpower training requirements, reluctance by the staff
to change management systems and lack of confidence in adoption of newer technologies.18
Impact of COVID-19 on the Indian Healthcare Market*
The pandemic situation has hit the healthcare market performance and has created more
challenges for the market. With an increased focus on managing the pandemic situation in the past
months, the near-term and ongoing health plans have taken a setback. The private healthcare
entities recorded a drop of 50%–70%** in revenues during April and May with a drop of
approximately $1,850 million–3,180 million*** for Q1 FY2021**.19
The impact of the situation on different sub-segments of healthcare is adverse due to different
reasons:
• Medical devices and pharma have been impacted due to breaks in supply chain. With 85% of
pharmaceutical ingredient imports from China, India faced a decrease of 10%–15% in
pharmaceutical revenue.20
• While the health insurance companies see impact on claims, liquidity and reserves due to
inclusion of COVID-19 under active policies, diagnostics witnessed an impact on both B2C and
B2B business.
• The hospitals are the worst hit. Their revenues have seen a downfall due to dip in OPD and IPD
footfall with high burden of fixed costs, which are generally 60%–65% of the total costs. The
table below shows financial performance of private hospitals before and after COVID-19.21
*For details on the topic, refer to the Appendix section

** The numbers were estimated during April–May 2020
*** Conversion Rate used is INR 75.5 per USD
16
Vinamratech–2018
17
WHO–2020
18
Knowledge Wharton–2020
19
Business Standard–April 2020
20
Career Anna–June 2020
21
Medical Buyer–May 2020

Period Occupancy Revenue Growth Revenue Growth EBITDA Annualized EBITDA
(April 2020) (April 2020) (FY2021E) (April 2020) (FY2021E)
Pre-COVID- 75%–80% 5%–8% 5%–8% 12%–18% 12%–18%
19
Post- 25%–40% (65)%–(60)% (30)%–(20)% (35)%–(30)% (10)%–5%
COVID-19
Post-COVID-19 numbers were estimated in May
With easing of restrictions, resumption of postponed elective surgeries and medical tourism, the
healthcare market is expected to get back to normalcy in H2 FY2021. However, the performance
during this period will not be sufficient to compensate for the drop in revenues in H1 FY2021.
Hence, by the end of FY2021, the healthcare market’s full year drop in revenue is projected to be
15%–20%.22
22
Express Health Care May 2020

5. Key Trends and Evolution in Future
The healthcare market in India is undergoing transformations and entering a new phase with
increasing patient awareness, tremendous advancement of technology and model of operations,
especially in the private market. The current challenges, drivers and trends of the market together
are shaping the market’s future.
5.1 Current Trends

The trends in the healthcare market in India are the consequence of the market’s challenges as well
changing times. The preferences of the consumers are changing and moving towards healthier
options, thereby determining the market trends.23
Increased Use of Technology

Use of artificial intelligence, machine learning,
blockchain and telemedicine has been
increasing. Electronic medical records,
mHealth, smart health monitors, human DNA
analysis, medical drones are some of the
technology applications gaining wide
acceptance in the sector.
Diversifying Business Approach
Patients have increasingly been
demanding availability of a range of Shift from Communicable to
services under one roof. Such Lifestyle Diseases
offerings add to the patients’ With change in lifestyle due to
comfort and convenience, and increased urbanization, there has been
hence, they have become a trend in a significant shift to lifestyle diseases
the healthcare market. from traditional diseases. The change
Current Trends of has increased the demand for
the Indian Healthcare secondary and tertiary care.
Market
Changing Dietary Habits Increasing Penetration of Health
People are progressively moving Insurance
towards healthy food habits and With increasing awareness,
diet plans as well as traditional preparedness and increased burden of
healing methodologies inspired by out-of-pocket expenses on healthcare,
Ayurveda, yoga, meditation, and the health insurance sector is witnessing
naturopathy. growth in India.
Increase in Healthcare Spending by

the Public
The rising incomes in the country as
well as awareness around healthcare
and prevention, is expected to result in
higher healthcare spending by the
public and growth of the sector.
23
IBEF Presentation 2020

5.2 Market Drivers
When the trends and other factors prove successful for driving the market’s growth, they are
considered as market drivers. 24
Government Initiatives
Government of India’s schemes such as Ayushman Bharat Yojana or Pradhan Mantri
Jan Arogya Yojana (PMJAY) under the National Health Protection Scheme (NHPS)
as well as Pradhan Mantri Bhartiya Janaushadhi Pariyojana have become the
highlights of the market and will continue to drive insurance, spending and pharma-
related facilities for the common public.
Increased Use of Technology

Use of AI and robotics has made healthcare more developed and reachable. The
healthcare penetration has increased with facilities such as telemedicine in areas with
low healthcare quality and doctor availability.
Health Insurance Penetration

The health insurance market has been growing over the years due to increased
health insurance coverage and penetration. Increasing healthcare costs, low
government spending, increased number of new diseases, and corporate offering of
health insurance coverage to employees are the major reasons for the increased
penetration.
Increased Investments
In recent years, increased investment and expenditure from public as well as private
investors have contributed to the rapid growth of the healthcare market in India. The
emergence of reputed global players investing through FDI has played a pivotal role
in the growth of the healthcare market.
Medical Tourism
India’s medical tourism market is expected to grow by three times to $9 billion in 2020
from $3 billion in 201525. In 2015, India ranked as the third most popular destination
for medical tourism with nearly 234,000 foreign tourists coming into the country on
medical visas. The number doubled to 495,056 in 2017.26
Reemergence of Traditional Medical Care

Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homeopathy (AYUSH) is the
system of alternative medicines in India and is known as the traditional mode of
healthcare. The market’s penetration and size are increasing with higher budget
allocation, increased number of doctors and centers and increased investments and
FDIs. Large brands such as Apollo, VLCC and Manipal Group are also setting up
wellness centers across India, with traditional healthcare remedies as the focus of
their offerings. The market has wide range of offerings from healthcare to beauty and
personal care products, ensuring a larger consumer group.
24
India Health Exhibition Report–2019, IBEF Presentation–2020
25
Economic Times–2017
26
CNN–2019

5.3 Technology27
Technology infusion in India is on its way to improve healthcare accessibility and affordability.
India’s medical technology market is forecasted to reach $9.60 billion by 2022.28
India is leading in the adoption of digital health technology with 76% of healthcare professionals in
the country already using digital health records (DHRs) in their practice. The shift has been possible
due to government’s enthusiasm and initiatives related to innovation and locally made technology
both at the central and local level, support for public-private partnerships and rapid internet
penetration to meet the requirements for efficient delivery of digital solutions.
The government’s push for use of electronic medical records by healthcare providers is enabling AI
to make patient’s data insightful and helpful in delivering better treatment. The medical expertise is
reaching underserved rural markets through telemedicine and tele-consulting programs made
possible with expanding telecom bandwidths.
Currently, the use of technology is concentrated in and majorly limited to top private players. With a
rapid shift, there is still a large scope and opportunity for India to increase the reachability of
technology in healthcare.
Figure below shows how different technologies can help build a complete technology-driven
healthcare system in India:
Technological Opportunities for the Future
Telemedicine Blockchain Artificial Intelligence

Reduces the time it takes to Consists of ordered records
Improves clinical outcomes as
consult a doctor to 10–15 arranged in a block structure,
increasing amounts of health
minutes through optimal which helps it record data,
data become more available
utilization of doctors and by assuring decentralized
and analysis techniques
avoiding the need to travel to network, transparency and
improve
a clinic or hospital immutability
Internet of Things
Robotics Virtual Reality
Collects, stores and analyzes
Play a key role through Transforms pain management,
big data streams in several
enabling endosuturing, stress management and
new forms, and activates
sensing, image guidance, rehabilitation, as we see the
context dependent alarms by
materials, manufacturing, and migration of services beyond
gathering, analyzing and
surveillance strategies in the walls of a doctor's office to
communicating real-time
surgical procedures mobiles, headsets and
medical information to open,
headphones
private or hybrid clouds
27
India Health Exhibition–2020
28
Economic Times–2018

5.3.1 Telemedicine29
Telemedicine is the use of technology to provide remote healthcare services as the entire process
of diagnosis and treatment happens primarily using audio, video or texting. The technology
increases both accessibility as well as affordability.
Telemedicine in India is at an initial expansion stage, although the use of the technology has been
increasing since the pandemic hit the country.
Start-ups such as Practo, M-fine, myUpchar, Tattvan, Lybrate and DocsApp are some of the
providers of telemedical consultation in India.
The telemedicine market in India is expected to reach $5.4 billion by 2025, growing at a CAGR of
31% during 2019–2025.30
Telemedicine Market Size in India, 2016-2025E (USD million)
5,410
3,713
2,626
1,915
1,428
1,081
829
2019 2020E 2021E 2022E 2023E 2024E 2025E
Source: Inc42–2020
Initiative by the Public Private Players31
• Apollo Telemedicine Networking Foundation (ATNF) has tied up with Common Service
centers to provide medical services to suburban and rural India using telemedicine.
29
Economic Times–2020, Express Healthcare–2020
30
Inc42–2020
31
ITU–2020

• Sanjay Gandhi Post Graduate Institute of Medical Sciences (SGPGIMS), Lucknow has tied
up with number of hospitals across the country to provide telemedicine services in the form
of continued education and disease surveillance and management.
• World Health Partners in collaboration with private and NGO resources have set up
telemedicine centers in rural areas to enable providers earn income by connecting patients
with doctors in cities.
Use Cases of Telemedicine in India32
• Digital dispensaries is an initiative launched by Jharkhand Government in association with

Apollo Hospitals in February 2019, with the aim of providing doctor-less villages.
• e-Eye Kendram is a project by Apollo Hospitals and the Government of Andhra Pradesh
launched in 2018 to provide ophthalmology screening, diagnosis and consultations to the
public residing in mandal-level localities across the state.
• HealthNet Global Ltd (HNG), an arm of Apollo Hospitals, signed an MOU with the American
Association of Physicians of Indian Origin (AAPI) in 2019, which will offer virtual second
opinion consultations to the rural population across the country.
• Himachal Pradesh Government initiated Telehealth Services program with Apollo Hospitals
in 2018, to provide remote healthcare services in Lahaul and Spiti districts.
5.3.2 Blockchain33
The blockchain technology collects data in real time, stores it on multiple servers to make it hack
resistant, allows the access to authorized people only and stores a newer version every time the file
is accessed. Hence, the three major and defining features of blockchain are decentralized network,
transparency and immutability.
Blockchain in India is being looked at to optimize and increase the efficiency of the already
implemented electronic health record. It can be used for standardization and interoperability of data
used by EHRs. Blockchain can contain references to the EHR data, while Smart Contracts will
define and enforce access rules to EHR content. This will ensure that only authorized persons/
entities access the EHR data.
On the blockchain ecosystem, every patient will have a unique identity over the blockchain network,
and their clinical data generated at various stages will be stored with his unique identity as EHR
digital asset on the blockchain network. This unalterable data would be accessible by the necessary
parties involved.
Pilot to Self-regulate the Pharmaceutical Drugs Supply Chain Using Blockchain Technology
NITI Aayog organized the initiative to leverage blockchain technology for a unified data system in the
pharmaceutical drugs supply chain with a host of partners in the healthcare and technology domain.
32
Hindustan Times–2019, Apollo Telehealth–2018, eHealth–2019, The Tribune–2015
33
Forbes India–2020, NITI Ayog–2020

It was found that blockchain technology has the potential to improve transparency, efficiency and
reliability of transactions in a heavily regulated pharmaceutical market. Using blockchain,
manufacturers and other supply chain participants can gain real-time data access and greater
visibility throughout the supply chain, starting from the point of manufacture to the point of sale.
Additionally, consumers will have the ability to verify the source of the drugs at the point of purchase.
5.3.3 Artificial Intelligence (AI)34

AI enables healthcare services such as automated analysis of medical tests, predictive healthcare
diagnosis and automation of healthcare diagnosis with the help of monitoring equipment and
wearable sensor-based medical devices. AI enables body scanning 150 times faster than the
traditional method or human radiologists. It provides an effective and strong system to detect acute
neurological events in approximately 1.2 seconds, thereby enabling on-the-spot availability of test
results to avoid wait time of patients and doctors for getting the results and reports.
The Indian healthcare market will continue to reform with increased adoption of AI. It is predicted
that the application of AI in the healthcare space will be worth approximately $6.1 billion* by 2021,
growing at a rate of approximately 40%.35
The capability of AI applications to improve doctor’s efficiency will help in tackling challenges such
as uneven doctor-patient ratio, by providing rural populations high-quality healthcare, and training
doctors and nurses to handle complex medical procedures.
AI can be used in all sub-segments of healthcare and has currently been put to use for the following
functions in India:
• Medical imaging and telepathology

• ECG testing and emergency management
• Genetic testing
• EHR data search and summarization
Government initiatives for encouraging use of AI in healthcare in India:
• The Information Technology Act, 2000, and the Information Technology (Reasonable Security
Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, mandate
that service providers and patients exchange information constantly by using the latest
technologies.
• National eHealth Authority (NeHA) was set up in 2015 to expand and regulate the integrated
health information system in India.
34
ET Health World–2018, Health Management–2018, Siemens Healthineers–2020, AI4Bharat–2019, NCBI–2019
35
Business Wire–2019
*INR 431.97 billion converted at INR 70.96 per USD (2019 average)

• The United States-India Science and Technology Endowment Fund is aimed at helping teams of
innovators and entrepreneurs from India and the U.S., whose products will improve the quality of
healthcare, by utilizing the power of AI.
5.3.4 Robotics36
Robotics play a key role through enabling endosuturing, sensing, image guidance, materials,
manufacturing, and surveillance strategies in surgical procedures. Surgical robotics focus on
providing precise treatment in the best timeframe possible.
Apart from witnessing increase in regular usage, such as instances of robots being used for
laparoscopic surgery and automated pharma and robot nurses (upcoming trend), robotics has been
heavily adopted during the recent COVID-19 situation and is expected to continue growing with the
familiarization and adoption. Below are a few of the cases that witnessed use of robotics during
COVID-19 healthcare:
• Deployment of a robot to deliver food and medicines to COVID-19 patients in isolation wards.
• The interactive humanoid robot deployed at AIIMS stands 92 cm tall, has cameras and sensors
to detect obstacles and can monitor and interact with patients. The second robot deployed at
AIIMS can disinfect floor surfaces using sodium hypochlorite solution. Both robots can move
autonomously and operate without human intervention.
• The robot at Fortis ask questions using face and speech recognition and takes temperature
readings through thermal scanners. After screening and clearing a person, it issues a pass to
enter. If it detects higher body temperature, an alert is sent to the doctors, and the patient can
directly consult the Fortis doctor through the robot screen.
5.3.5 Virtual Reality (VR)37

The healthcare market employs virtual reality throughout its various markets in order to offer a
higher quality of care and efficiency to patients and medical professionals. VR is useful in the entire
value chain of healthcare as well education of medical students.
• For doctors, it helps in analyzing injuries

• For medical students, it enables learning hands-on medical procedures through virtual trainings
• For patients, it provides methods to quicken patient recovery in new and innovative ways; VR
has been proved useful in pain management, therapies and cognitive rehabilitation
Medical practitioners, drug makers and hospitals in the country are increasingly using VR and
augmented reality (AR) technologies to help in therapy, surgery, marketing and spreading medical
awareness with the help of technology providers such as Loop Reality, InceptionX, Health Connect
Digital and Imaginate Labs.
• During cancer treatment, VR pain therapy is done by wearing VR goggles and watching
calming videos, which reduce the pain.
36
Optum–2020, Livemint–2020, Yourstory–2020
37
ET Bureau–2017, Silicon India–2020

• Pharmaceutical companies use VR for marketing their medicines through experiential
marketing tool. For instance, a major drug maker collaborated with InceptionX to create a virtual
reality vertigo attack experience.
• Hospitals and medical institutions use VR surgical training for doctors and students across
the country. In February 2017, Global Hospitals, Hyderabad organized the first-ever live VR
surgical training for 700 doctors and students where they wore VR headsets and witnessed
laparoscopy surgery performed by top urologists in the country.
5.3.6 Internet of Things (IoT)38

IoT in healthcare is being used to track the progression and treatment of diseases to monitor
patients’ health conditions and accordingly alter their medication levels, to track medicine usage
data to ensure adherence to treatment plans, and to provide real-time information on symptoms.
IoT has wide usage across the healthcare system:
• For doctors and hospitals, it cuts cost through real-time access to patient data and improves
workflows via sensor-based smart chips and real-time location systems
• For health insurance companies, it reduces claim payments
• For pharmaceutical companies, it allows patients to begin medications on time due to early
detection of illness and track and ensure compliance to treatments
• For the government, it monitors and sustains population health
Currently, there are few IoT-enabled healthcare devices in India. However, examples given below
throw a light on how IoT has become a focus of med-tech and bio-tech start-ups in the country and
has resulted in successful clinical trials.
• The IoT-enabled Keyar developed by Janitri Innovations is a non-invasive cardiotocography

(CTG) device that can monitor the heart rate of a baby in the mother’s womb and track uterine
contractions of pregnant woman. It is a portable, non-invasive, easy-to-use device and runs on
ordinary batteries. It is a replacement to the traditional, tough-to-afford, bulky equipment, and
hence, can be used in remote areas as well.
• AJO (Anemia, Jaundice and Oxygen saturation) by EzeRx, is a non-invasive, IoT-enabled
device that tests for anemia, liver and lung-related medical problems without any blood tests and
for less than INR 1. It is a user-friendly device and can be operated without any medical
knowledge or expertise. The test result can be transferred by email or text message within 0.5–1
second of test completion.
38
Yourstory–2019, Economic Times–2017

5.4 Future Vision39
The future of healthcare in India sees solutions to the existing challenges and inhibitors with
increased spending and focus from the government along with increased technological applications,
innovations and support.
Government Focus and Healthcare Skilled Technology Personnel to

Spending to Boost Increase
• With the increased number of • Lack of technologically skilled
healthcare schemes, hospital healthcare professional is a challenge
capacities are required to be built up in the healthcare sector. The future
significantly and rapidly to absorb the landscape will witness a close link
benefits from the schemes and serve between healthcare workforce and
the added influx of patients. advances in latest technology. Hence,
• According to Niti Ayog, in the next five the focus will be on ensuring
years India will have 2,500 new adequate training to the existing and
hospitals, which will create 2.5 million upcoming lot of workforce in area of
additional jobs. By 2024, India is also handling newer technologies and soft
likely to attain the WHO norm of skills. This will also ensure the
having one doctor for every thousand efficient use of technology and
patients, which can be achieved improvisation of services.
through certificate courses such as
‘Specialist Training to Tackle the
Burden of NCDs’.
Increase in Preventive Healthcare

• With increasing awareness and spending
by the public, the focus on preventive
care than curative care is expected to
5G Technology and Local Innovations to Drive increase in the coming years.
Growth • This would also increase because of the
• 5G technology is the future of healthcare, rise in awareness around larger number
which is foreseen as AI-driven. Extensive use of lifestyle disease cases, and the
of AR/VR, IoT devices, medical drones and consequent larger expenses on curative
blockchain is expected to bring more care.
transparency.
• The growth in technology and its applications
will be supported by local innovations and
bio-tech start-ups that are increasingly getting
involved with clinical trials.
39
Classic Informatics–2020, Knowledge Wharton–2020

6. Healthcare Primary Stakeholder Value Chain in India
There are five major types of stakeholders involved in the Indian healthcare value chain:
• Manufacturers of pharmaceuticals and medical devices sell their products to healthcare

institutions. These manufacturers sell the manufactured stock to various types of wholesale
and retail distributors. In some cases, patients also buy drugs and devices directly from
these manufacturers.
• Healthcare Delivery Institutions such as hospitals, physicians and diagnostic labs provide
healthcare and diagnosis facilities, respectively, to the patients.
• Wholesale and Retail Distributors of drugs and devices sell them to patients and
healthcare institutions after buying the stock from the respective manufacturers.
• Health Insurance Companies have a tie-up with hospitals and other healthcare providers
for selling their insurance to the end-customers. They also have a tie-up with employers to
provide insurance facilities to their employees. Additionally, they sell insurance to patients
directly.
• Patients are the end stakeholders of the healthcare value chain. As the primary determiner
of the healthcare product demand as well as key users of the healthcare technology, they
drive the market growth and determine the trends and future of the market. They buy
services and products from the above-listed stakeholders.

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8. Appendix40
With less healthcare investment and spending in India, the pandemic outbreak has put the
healthcare system to test, demanding for massive upgrades, which looks unlikely in the short-to-
medium term.
Due to the pandemic, the market has witnessed increased use and awareness of technology,
telemedicine, training of primary health workers and mobile hospitals. Additionally, under the current
situation, near-term and ongoing plans are expected to see a major realignment as the current focus
remains on managing the pandemic.
Private market healthcare has seemingly suffered the most during this situation. Sharp drop in out-
patient footfalls, diagnostic testing and elective surgeries have adversely impacted the cash flows
along with impact on Medical Value Travel (MVT), due to lower international patients.
Impact of the pandemic on various sub-markets of the healthcare has been described below:
Hospitals41
• The hospitals are facing double burden — reduced cashflows due to dip in OPD and IPD
footfalls as well as increased investment in additional manpower, equipment, consumables,
and other resources as preparedness for safety and eventual treatment of patients. With the
dip in overall revenues, and fixed costs remaining constant, EBITDA for these hospitals has
been on an all-time low and will take few more months to come back to pre-COVID level.
• Changes are being made to doctor-engagement models by moving doctors to fully variable
models based on the revenue they generate.
Medical Devices42
• India imports consumables, disposables and equipment, including orthopedic implants,
gloves, syringes, bandages, computed tomography and magnetic resonance imaging
devices from China. Due to the current situation, the medical device manufacturers across
India are finding it difficult to source important raw materials and electronic components from
Chinese factories.
Pharmaceuticals43
• The pharma market has also suffered due to breaks in supply chain. Increased raw material
prices, limited supply, disrupted production schedules, shutting down of factories and high
shipping costs are the major factors impacting the market. The Indian pharma market faces
additional impact due to high raw material procurement dependency on China.
• Manufacturers of generic drugs were unable to launch products or conduct clinical trials as
well due to restrictions amid lockdowns.
40
Economic Times, India Med Today
41
Medical Buyer
42
Economic Times, India Med Today
43
The Pharma Letter

Diagnostics44
• Due to the pandemic, both B2B and B2C businesses of diagnostics have been impacted.
Although now the diagnostics chain labs have shown a strong recovery, the non-COVID-19
revenues are yet to come to the last year’s or pre-COVID-19 levels.
• The labs testing for COVID-19 diagnostics have partially made up for the revenue gap of
such labs. However, the margins made on COVID-19 tests are significantly lower. At the
same time COVID-19–associated costs are quite high. Hence, while the overall revenues
are progressively improving, the higher costs due to COVID-19 and the lower regular non-
COVID-19 business are putting financial strain on sustaining fixed costs and operations.
Health Insurance45
Health insurance companies are facing various challenges and are foreseeing an impact in the
following areas:
• Claim pay out and liquidity
As instructed by IRDAI, insurers are to accept COVID-19–related claims under active health
insurance policies. However, the risk of COVID-19 is not currently priced under active
products, and hence, these claims are expected to cause an additional burden on the books
of insurers if treated outside government hospitals.
Additionally, in view of the country-wide business disruption owing to the pandemic, the
IRDAI has advised insurance companies to extend the grace or delay period by 30 days in
case of policy lapse or renewal. This might pose some immediate liquidity challenges for
insurance companies.
• Product development
With rising concern and awareness about health during the pandemic, enquiries about
health insurance policies have increased by 30%–40%. The pandemic also provides an
opportunity for insurance companies to innovate and serve the evolving needs of a more
informed population. Several insurance companies launched COVID-19 insurance products
in March 2020.
• Reserves requirement
In wake of the pandemic, the government has taken actions toward reducing bond interest
and repo rates, which will create challenges for insurers in terms of maintaining higher
reserves, liquidity risk and credit risk. Hence, the regulator may have to provide some
temporary relaxation on the reserving requirement for insurers, especially for those with
close margins to solvency.
44
Livemint
45
Economic Times

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Healthcare Market Landscape in India

1 Healthcare Market Landscape in India

CAGR of top growing sectors in India (2018–2020)

9.5% 8.5% 7.5%

Healthcare FMCG Financial Sector IT and BPM Agriculture Automobile

1.1 Healthcare Expenditure in Terms of GDP1

Government Healthcare Expenditure as a % of GDP (2016–2025)

2016 2017 2018 2019RE 2020BE 2025BE

2 Healthcare Market Landscape in India

• Life expectancy at birth

Projected Level of Expectation of Under-five Mortality and Maternal Mortality Ratio in

Maternal Mortality Ratio

1997 2004-06 2007-09 2011-12 2011-13 2016 2018

Source: National Health Profile–2019 Source: WHO–2019

3 Healthcare Market Landscape in India

Under-five Mortality Maternal Mortality Rate Life Expectancy at Birth

2010-12 2018 2007-11 2018

India WHO Norms India WHO Norms India World Average

4 Healthcare Market Landscape in India

Top 10 Causes of Death in India

Share of Communicable Vs. Non-communicable Proportional Mortality, 2016 (%)

Source: National Health Profile–2019

5 Healthcare Market Landscape in India

Morbidity Reported in Communicable Disease,

Source: National Health Profile–2019

Disease Number of Cases Leading State (Number of Cases)

Mortality Reported in Communicable Disease,

6 Healthcare Market Landscape in India

1.3.2 Non-communicable Diseases

Hypertension Diabetes HTN&DM CVDs Common Cancers Stroke

Source: National Health Profile–2019 and NPCDCS

7 Healthcare Market Landscape in India

Government’s Commitment to Invest in Healthcare

8 Healthcare Market Landscape in India

Indian Healthcare Market Growth Trend, 2016–2022E (USD billion)

2016 2017 2020E 2022E

Source: IBEF– 2020

Indian Healthcare Market Structure

Hospital Medical Devices Pharmaceuticals Diagnostics Medical Insurance

This category will It includes It includes It comprises It includes health

9 Healthcare Market Landscape in India

Indian Hospital Market Growth Trend, 2017–2023E (USD billion)

2017 2019 2023E

Source: Invest India

Total Hospitals = 69,265 Total Beds = 1,899,228

Source: CDDEP–2020 Source: CDDEP–2020

Hospital Capacity in India

10 Healthcare Market Landscape in India

Top Ten States with Total Number of Hospital Beds

Number of Number of Total Number of

2016 2017 2018

11 Healthcare Market Landscape in India

Aster DM Healthcare HCG Narayana Hrudayalaya

X-axis represents number of hospitals owned

12 Healthcare Market Landscape in India

Indian Medical Devices Market Growth Medical Devices Share, by Segment,

Top Players in the Indian Medical Devices Market