Growing at a compound annual growth rate of 16%, by 2020, India's healthcare sector is expected to be $280 billion in size. But it is in "dire need" of right policy framework and infrastructure push, says a report.
With the healthcare industry seeing a robust growth trajectory, workforce in the sector is expected to be at 7.4 million in 2022, said the report -- 'Healthcare: The Neglected GDP Driver'.
The sector, which was at $73.92 billion in 2011, is expected to grow at a CAGR of 16% to $280 billion in 2020, it said. The report added however that it was high time the country realized the significance of healthcare as an economic development opportunity at national and state levels.
"With the increasing disease burden, the healthcare sector in the country is in dire need to get the right policy framework and infrastructure impetus. Granting infrastructure status may not only help the sector receive investments, but also bring down the cost of healthcare delivery," it said.
The report further said healthcare is traditionally seen as a social sector in India, with less government focus and low budget allocation. "India currently spends cumulatively 4.2% of its GDP on healthcare, with just 1% being contributed by the public sector, amongst the lowest globally," it added.
As per the report the healthcare sector impacts the country's GDP through various routes. It is also one of the largest sectors in India in terms of employment generation. If appropriate investments are made in areas, such as healthcare delivery and education, they are expected to further increase the employment rate and positively impact the country's GDP.
Commenting on the need to increase investment in the sector, KPMG in India Government & Healthcare Partner and Head Nilaya Varma said: "...investment in healthcare propels overall economic growth and is more than just social expenditure in India. Improvements in the health of citizens contribute to overall economic prosperity of the nation."
The Indian healthcare workforce is expected to double to 7.4 million in 2022 from 3.6 million in 2013, the report said. The share of healthcare FDI has almost doubled since 2011, highlighting the growing interest of foreign players in the sector, it added.
"Investment opportunities in the Indian healthcare sector have increased significantly and the sector is expected to be one of the most attractive investment targets for private equity (PE) and venture capital (VC) companies," the report said. The FICC-KPMG report said that medical tourism has emerged as a strong segment due to India's growing strength in healthcare delivery.
People from different parts of the world travel to India to benefit from the comparative cost advantage and quality services. This market is expected to triple to $10.6 billion in 2019 from $2.8 billion in 2014, it added.
India's telemedicine market is also growing significantly due to its potential to offer increased access, lower costs, better patient outcomes, greater patient engagement and improved safety, the report said.
Though in a nascent stage, it is growing by about 20% a year. It is expected to more than double to about $19 million by 2017 from $8 million in 2012, it added. "There is an urgent need for a paradigm shift towards wellbeing that includes both emotional and physical, instead of just focusing on the physical sick care. We have a unique opportunity to adopt healthcare models that can deliver superior outcomes at much lesser costs," FICCI Health Services Committee Co-Chair Ashok Kakkar said.