Why this is important to Wisconsin businesses: With growing incomes, the country will be working to bring the number of doctors and hospital beds up to global standards, and will need to rely on imports to fuel growth in many parts of the sector.
Health care is one of the largest and fastest growing sectors in India. The country spends around 4.2 percent of its GDP on health care, of which public health care spending is a mere 1 percent, compared to 3 percent in China and 8.3 percent in the United States. Out-of-pocket (OOP) spending in India is among the world’s highest, at about 60 percent.
In 2015, the Indian health care industry was valued at $100 billion, and is expected to grow at a compound annualized growth rate (CAGR) of over 22 percent to reach $280 billion by 2020. The industry includes areas such as hospitals, medical devices, pharmaceuticals, outsourcing, telemedicine, medical tourism, health insurance and medical equipment. Hospitals, valued at $65 billion, make up about 65 percent of the total market. Hospitals are dominated by private players, with a market share of over 70 percent; the remaining 30 is contributed by government, NGOs, etc.
Pharmaceuticals, valued at $22 billion, make up 22 percent of the total health care market. Low-cost generic drugs make up about 80 percent of the market.
The medical device market in India, estimated at $7 billion, has grown at a CAGR of 17 percent over the last five years. India is an attractive market for global medical device manufacturers, as it is mainly driven by imports, primarily from the U.S.. The diagnostics market, estimated at $3 billion, is expected to grow at a CAGR of 27 percent over the next vie years.
Population growth, rising incomes, changing lifestyles, easier access to high-standard health care facilities, and increasing awareness of personal health and hygiene are the key drivers for the growth of India’s health care industry.
The global standard is three doctors per thousand population, but India has only .7 doctors per thousand. Similarly, the global standard for hospital beds is five beds per thousand population, but India has just 1.4 beds per thousand. This means there is a huge gap between supply and demand, constituting a major opportunity for foreign health care companies.
India’s recent economic reforms have resulted in the integration of its health care industry into the global economy, bringing dramatic expansion. The Indian government now permits 100 percent foreign direct investment (FDI) in the industry. Lower tariffs are levied and higher depreciation is allowed on medical and health care equipment. The overall inflow of foreign investment into the hospital and diagnostics sector reached more than $1 billion during the last decade.
The U.S. has been the largest exporter of medical devices to India, contributing about 25 percent of total imports. Therefore, Wisconsin companies have opportunities to export medical equipment, technology-driven services, insurance, hospitals and infrastructure, contract research and more.