Life Sciences & Health
The Indian healthcare sector, growing at a rate of 15% is expected to touch $250 billion by 2020. In the last two decades, India’s health system has undergone a major transformation from being a loosely knit, social sector supported by the Government to $60 billion industry.
Today, the Indian Healthcare industry is a preferred sector for strategic and financial investments. The advent of major private players in the early 2000’s and increasing investments from the Government have transformed the healthcare industry into one of the largest industries in terms of revenue and employment.
India has come a long way from where it was two decades ago. But many challenges remain. The country still faces a shortage of hospitals, doctors, specialists and paramedical staff. The education sector has not kept pace with rapid technological developments in the medical field and quality issues exist in both public and private sector.
To overcome these challenges, the Indian government is doubling its expenditure on healthcare to 2.5% of GDP and investing heavily in public healthcare infrastructure. The private sector is also boosting its investments in healthcare delivery and is currently responsible for 80% of the new bed capacity. Every major private hospital chain has plans for expansion in the near future looking to enter Tier II & III cities. As India moves towards achieving its goals in health infrastructure expansion, there are numerous opportunities for Dutch companies in areas like hospital design, engineering and equipment.
The Indian healthcare sector consists of the following segments:
- Medical equipment and supplies
- Medical insurance and diagnostics.
Hospitals is the largest segment, constituting around 70% of the total industry revenue. Pharmaceuticals is second in line, at 13% of total revenue.
The healthcare sector in India offers a mix of opportunities and challenges. On the one hand, the significant gap between ‘required’ and ‘actual’ healthcare infrastructure has driven significant investment into assets such as hospitals and other facilities. In turn, the growing availability and affordability of healthcare is spurring demand for other services like diagnostics, pharmacies, equipment and so on. The growth of the healthcare industry is also further stimulated by many non-healthcare corporates and private equity firms providing the much needed resources.
Due to the lower cost of procedures, India has become an attractive destination for medical tourism. Nonetheless, the India healthcare industry still faces the following challenges: utilization of resources, minimizing operational costs, maximizing performance and efficiency, scaling of business, rapidly evolving technology and globalization of healthcare delivery quality and standards. These challenges open up many opportunities for Dutch companies, as their knowledge and expertise can be put to good use in India.
Focus areas : New Delhi, Hyderabad, Bangalore and Chennai.
Public (and multilateral) investments are much more limited and likely less feasible. However, interesting options could be explored:
- Central Government: Ministry of Health and Family Affairs, New Delhi.
- State Government: The state of Punjab showed interest in setting up public hospitals and cancer treatment/research facilities.
- Multilateral organizations: World Bank, Asian Development Bank and IFC (contacts to be established)
The projects initiated by the National Government normally are tender-based and generally have longer lead-times and additional complexities compared to projects initiated by private partners. However, there are interesting initiatives coming up in the field of PPP in health care delivery, which might be interesting to explore.
Indian companies are increasingly showing interest to tap into the Dutch Life Science Innovation system. There are an increasing number of partnerships between those Dutch knowledge institutes and SMEs that make up the most dynamic part of our Life Science industry. The industry can benefit from partnering with increasingly cash rich Indian companies that are looking to enhance their innovation pipeline.
Indian pharmaceutical players such as Piramal, Dr. Reddy’s have shown interest to partner in the areas of cancer & diabetes and vaccine manufacturers such as the Serum Institute, Bharat Biotech, Biological-e, Bharat Immunologicals and Gennova have shown interest to partner in the area of infectious diseases & vaccines. Most have indicated an interest to be approached at a stage where proof of concept has been established and some have even shown a willingness to come on board at an earlier stage.
Focus areas : Bangalore, Hyderabad and Mumbai-Pune are major clusters that are at the center of bio-pharma and bio-services industry. Delhi-NCR is of additional importance as major government funding agencies are based there.
The medical devices sector in India is relatively small as compared to the rest of country’s manufacturing industry. Nonetheless, India is one of the top twenty markets for medical devices in the world and the 4th largest market in Asia after Japan, China and South Korea. The Indian medical device industry is fragmented into small and medium enterprises, and is primarily manufacturing products such as disposables/medical supplies. The sector can be broadly classified in four segments:
- Medical disposables and consumables
- Medical electronics, hospital equipment, surgical instruments
- Diagnostics reagents
The medical device industry in India is predominantly import-driven, providing many opportunities for foreign companies. Furthermore, efforts have been made by the Indian government to stimulate innovation in the medical technology sector, opening up opportunities that can benefit both companies and Indian consumers. In order to realize this goal, there will be an increasing demand for foreign knowledge and expertise.
India has been emerging as a country where companies combine the advantages of local production and India’s talent pool to help drive innovations in product technology, service delivery and operating models. A combination of western technology with Indian knowledge and skills in engineering can help bring down cost and drive innovation in the area of affordable healthcare. This way, India represents an opportunity to open up new markets for Dutch Medtech companies that currently focus on high-end & niche products.
Southern states: Bangalore, Hyderabad and Pune
Medical disposables and furniture
Northern states: Chandigarh (Punjab), Faridabad, Ballabgarh (Haryana) and Menasar (Rajasthan)
In addition, India and The Netherlands have signed a Memorandum of Understanding (MoU) in January 2014. The MoU aims to develop and strengthen cooperation in the following areas:
- Communicable diseases with special focus on anti-microbial resistance
- Public health policy
- Health systems strengthening including e-health and governance
- Medical equipment and pharmaceutical products
- Life-sciences and medical technology :
- Imaging and diagnostics
- Regenerative medicine
- Vaccines and infectious diseases
- Medical nutrition
Developments in India provide ample opportunities for Dutch companies and knowledge institutes. There are opportunities for export of medical devices, hospital design and engineering, collaboration in R&D in the areas of bio-pharma and medical devices and market opportunities in areas such as education.
With the right market proposition in terms of pricing, long term focus and organizational flexibility, India could represent an interesting market opportunity for Dutch companies both from an exports and investment perspective.
Due to its private sector dominance, doing business in the healthcare sector might be less complicated than in other, government dominated industries. For Dutch companies and institutions, India could also be an important partner to work with when it comes to cost effective solutions for healthcare. India is already playing this role in pharma and the country has emerged as a source for innovation in cost effective healthcare delivery
The Dutch government and its representatives at the Embassy, Consulate’s and Netherlands Business Support offices in India are ready to support the sector in a coordinated approach to India. The trade network is also ready to help individual companies with advice, market scans, business partner search and matchmaking.
For further information, please have a look at the
presentation on the life sciences & health sector.