The potential of the segments are attracting both foreign- life insurance companies and standalone health companies, some of which include:

Medical Tourism

• Soaring healthcare costs and long waiting periods for medical procedures in industrialized nations and developing nations (particularly Africa, South and West Asia) are drawing more and more attention to India and other Southeast Asian countries that offer quality medical care at a much lower costs.
• Cost of comparable treatment in India is on average 1/8th .to 1/5th of those in the West.
• In 2007, medical tourism was estimated at US$350 million.
• By 2012, it is predicted to a US$2 billion-a-year business opportunity.

Medical Devices

• The medical devices market is expected to scale up to US$ 1.7 billion by 2010, against US$1.2 billion in 2005.
• Changing disease profile and clinical needs, investments into infrastructure and quality of healthcare, liberalized regulations of the industry are all expected to drive the potential for medical devices.
• The demand for hi-tech medical devices, which contributes to 80% of the overall medical devices market is growing between 12 -15% annually.
• 90 % of the demand for hi-tech medical devised is being met by imports from countries like USA, Japan and Germany.
• Medical device suppliers seeking to enter India’s market typically arrange joint ventures/ licensing agreements to manufacturer their products locally or employ local agents to distribute them.
• One of the most successful tie-ups is between General Electric Medical Systems (US) and Wipro.

In three years of entering the Indian market, GE has achieved second position in the Indian equipment market and using India as a low cost manufacturing base, plans to export its Indian made products to the rest of South Asia.

Hi-Tech Medical Devices

Pharmacy & Biotech

• India is becoming an attractive destination for pharmaceutical R&D activities particularly for generic drugs, as they have the benefit of low-cost manufacturing, production skills and availability of quality manpower.
• Production costs in India are almost 50% less than those of developed countries.
• Indian drug-makers are expected to acquire a 33% share of the global generic drug market by 2009 against the2007’s 4 per cent market share.
• Indian companies are exploring alliances, through strategic partnerships and M&As with MNCs to enlarge their market.

Market Outlook

With Pharmaceuticals and hospital services accounting for 75% of the total healthcare market against a backdrop of rising population, increasing middle class, low production costs, social and economic progress, and need for better infrastructure and services, many FDI opportunities exists for: Hospitals, Medical Tourism, Pharmaceuticals, Biotechnologies, Medical Devices and Health Insurance

• Driving the development of the market will be mostly the private sector, not the public sector. Currently, private sector contributes 75% to the total market and will likely continue to in the long term.
• India’s public health management too premature compared to most countries’ standards, often characterized by resource crunch, political interference, inflexibility and other bureaucratic roadblocks.
• With some 70% of the population residing in the rural areas, much of the development will be invested heavily in rural medical infrastructure, including the quality of medical education institutions.
• The private sector players who will survive in this market are those who provide affordable and quality healthcare. Although the middle class is growing, the majority of the population still cannot afford health insurance to help cover medical expenses.
• The current health insurance penetration rate is still relatively low at 3%.
• Some 80% of the national healthcare expenditure is borne by the patients.
• Consequently, price sensitivity is still quite high and the high-level healthcare facilities are not in the reach of many.

Courtesy: Inbics

Indiabiznews, October 01, 2009