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India's healthcare ecosystem is one of the fastest growing industries, benefiting from government policies that have made the country a global health hub. Due to the relaxation of foreign direct investment policies in various segments such as hospitals, medical equipment, and health insurance, there is huge room for foreign investment in this field.
India's healthcare market has been expanding at a compound annual growth rate (CAGR) of 22%, driven by factors such as demographics, growing middle class, rising incomes, rising health awareness and rising lifestyle diseases promotion. According to INC42, the Indian healthcare market was valued at $86 billion in 2016 and is currently projected to reach $367 billion by 2023 and $638 billion by 2025. That estimate will reach $372 billion by 2022, up from $160 billion in 2016, according to Statista.
Improving healthcare coverage, services, and increasing spending by both public and private players have fueled the rapid growth of the industry. Indeed, in the wake of the Covid-19 pandemic, calls for self-reliance in the Indian healthcare system are growing, with focus shifting to innovation and research, pharmaceutical and device manufacturing, digital transformation of healthcare delivery, equitable access to healthcare solutions, mental health and healthcare.
An Overview of the Indian Healthcare Ecosystem
India's healthcare industry is one of the major contributors to the Indian economy in terms of income and employment. The industry has grown rapidly over the past five years due to digitization, innovation and new hybrid business models and the consolidation of traditional and technological players.
Additionally, the Covid-19 pandemic has prompted long-term behavioral shifts in personal health and hygiene, health insurance, fitness and nutrition, and health monitoring and screening. The pandemic has also boosted the adoption of digital technologies, including telemedicine.
Moreover, rising incidence of lifestyle diseases in urban areas due to rise in high cholesterol, high blood pressure, obesity, poor diet is also driving the demand for skilled nursing services.
An important part of the Indian healthcare industry
India's healthcare industry includes hospital infrastructure, medical devices and equipment, health insurance, clinical trials, telemedicine, and medical tourism. These segments are expected to diversify as the population ages and the growing middle class increasingly favors preventive healthcare.