The Indian healthcare industry continued to show resilience in the face of slowdown in FY13 with leading healthcare players recording a double digit growth, both in revenues and net profits. The country is ranked amongst the lowest in the world in terms of government spending on infrastructure. Huge demand-supply gap exists in the Indian healthcare sector. The country lags behind in terms of average number of hospitals, hospital beds, doctors, nurses and other paramedical staff. The huge population accompanied with large prevalence of communicable and non-communicable diseases demands large scale development and growth in this sector. Private sector is playing a big role in this regard accounting for around 70% of the country’s health expenditure.

The government’s flagship programme National Rural Health Mission (NRHM) has been quite successful in raising the standards of people’s health, healthcare infrastructure and healthcare delivery across the country within a short span of seven years. Buoyed by the success of NRHM in raising the rural health standards, the government grouped the National Urban Health Mission with NRHM under one umbrella programme named as the ‘New National Health Mission’.

The outlook for Indian healthcare is positive owing to double digit growth rate in almost all of its segments, whether its primary healthcare, secondary and tertiary healthcare, health insurance or medical tourism. The ever growing population, increasing government expenditure on health and growing per capita income will increase the size of this industry in the years to come.

Key Points:

• India's central government increased the budget allocation for the Ministry of Health and Family Welfare by 7% in FY14. Almost 65% of the government spending was on its flagship programme New National Health Mission.

• The healthcare industry has been riding the economic wave in terms of increase in per capita health expenditure which grew at a CAGR of 12% during 2005-2011.

• According to the World Health Organization, the size of India’s healthcare industry was around USD 73bn as of 2011. Government accounted for around 31% of the total spending while the private sector accounted for the remainder.

• Healthcare has become the preferred choice of foreign investors in the last few years. Capital flows from private equity players, venture capitalists, institutional investors and multinational companies have increased in the last few years. In the first half of 2013, the sector registered 25 deals with a value of USD 352mn. The sector was second only to technology sector in terms of deals made in 2012.