Private Hospital

Private Hospital sector will touch US$

125 bln. by 2017: ASSOCHAM

The Indian private hospitals segment estimated to reach a level of US$ 125 billion by 2017 with a CAGR of 20% against the present level of US$ 70 billion and have significantly increased their investments in Tier II and III cities, according to ASSOCHAM recent Study.

Releasing the ASSOCHAM study on “Healthcare in India” Mr. D S Rawat Secretary General ASSOCHAM said, rising income levels and exposure to international standards of quality have led an increasing demand for quality private healthcare, reveals the ASSOCHAM study.

The study brought out by the two institutions have also projected that the Indian diagnostic and pathology services contribution to healthcare industry shall touch US$ 5.2 billion by 2017 as against US$ 2.5 billion during 2012-13.

The private sector accounts for 80 percent of India’s healthcare delivery market which is higher for India than in any other country in the world. Out of pocket spending by Indians constitutes 94 percent of total spend in the private health industry.

Investments by private players for Tier II and III cities, Mr. Rawat said are increasingly getting momentum and with the economic growth in these cities, healthcare sector is expected to rise exponentially.

Indian pharmaceutical industry is projected to show double-digit growth in near future owing to a rise in pharmaceutical outsourcing and rising investments by multinational companies, adds the study.

Medical tourism industry is pegged at US$ 1 billion per annum, growing at around 18 per cent and is expected to touch US$ 2 billion by 2015. Medical tourism is an important segment because it allows most hospitals to charge a premium of around 20-25 per cent over what it does to local patients, highlights the study.

India attracts patients mostly from Africa, Gulf and SAARC nations, Pakistan, Bangladesh and Myanmar, who come mainly for organ transplant, treatment of orthopedic, cardiac and oncology problems, adds the study.

The private healthcare landscape is poised to be a key contributor to the healthcare industry. With substantial Private Equity investments in private hospital chains not only in urban cities but also in innovative rural models, we expect this large investor appetite to contribute significantly to the increase of private healthcare establishments. Innovative infrastructure financing models will reduce incubation periods stimulating increased investor interest. Large corporations have also begun venturing into this highly lucrative business and we expect to see continuity in this trend.

The study further says the increasing attractiveness of this sector for private investors  has helped fuel the organic and inorganic growth requirements of these companies. The Chamber expected to see a greater interest from private equity players once significant consolidation in the sector takes place along with the verification of an appropriate India specific business model.

Several key players have proposed significant investments into their expansion plans. Dr. Lal PathLabs plans to scale up to a size of 150 laboratories with 3000 collection centres in the next five years.

The industry is highly fragmented and encompasses over 80,000 laboratories, very few of which are accredited. These include the major pathological laboratory chains spread across urban cities referred to as corporate laboratories, the smaller regional laboratories catering to the local population, and hospital run diagnostic facilities.

The corporate laboratories cater to the portion of the population with increasing household income and health awareness; large corporations, and insurance companies; and pharmaceutical companies in their clinical and Research and Development activities. The regional laboratories and hospital run facilities primarily cater to patients with existing medical conditions.