“FOREIGN DIRECT INVESTMENT IN INDIAN

HEALTH CARE SECTOR: THE OPPORTUNITIES,

MAJOR ISSUES AND CHALLENGES.”

Dr. C.K. Buttan

Professor & H.O.D.

Dept. of Commerce

Saifia P.G. College, Bhopal

(Email:

drckbpeace@yahoo.com)

Ajay Mishra

Asst. Professor

JSSGIW Faculty of

Management

Bairagarh, Bhopal

(Email:

ajay2708@gmail.com)

Shweta A. Mishra

Asst. Professor

Sant Hirdaram Girls College

Bairagarh, Bhopal

(Email:samishra3009@gmail

.com)

INDIAN HEALTH SECTOR

The Indian healthcare industry, which comprises:

Hospitals

Medical infrastructure

Medical devices

Medical tourism

Clinical trials,

Outsourcing,

Telemedicine,

Health insurance and

Medical equipment

MARKET SEGMENTS

GROWTH

•Growing more than a growth rate of around 27% during the year 2009 to 2012.

•This market is valued for a worth of around Rs. 1.9 lakh crore and

•By the end of the year it is expected to rise by a yearly 30% growth.

• As this much high expectations also raise the requirements of up gradation in

the standards of services in comparison to global markets

ROLE OF PRIVATE SECTOR

Private sector’s share in hospitals and hospital beds is estimated at 74 per

cent and 40 per cent, respectively.

This sector is already predominantly privatized and accounts for more than

80% of the total expenditures on health care in our country.

This becomes more important when we find that almost 80% hospitals are

managed by private

MARKET SIZE

The hospital and diagnostics centre in India receivedforeign direct investment (FDI) worth US$ 2,057.29million,

Drugs & pharmaceutical registered FDI worth US$11,391.03 million and

Medical & surgical appliances industry aUS$ 720.41million, respectively during April 2000 to September2013.

[According to data provided by Department of IndustrialPolicy and Promotion (DIPP)]

MARKET SIZE

The Indian medical device and equipment market is

expected to grow to around US$ 5.8 billion by 2014

and US$ 7.8 billion by 2016.

Growth recorded at a CAGR of 15.5 per cent,

according to a report by Grant Thornton India.

India’s medical device market is currently the fourth

largest in Asia with 700 medical device makers, and

ranks among the top 20 in the world, as per the

data from India Semiconductor Association.

MARKET SIZE

On the back of continuously rising demand, the

hospital services industry is expected to be worth

US$ 81.2 billion by 2015.

In addition, the Indian hospital services sector

revenue is expected to increase at a CAGR of 20

per cent during the period 2012–17, generating

immense possibilities for players in the market,

according to a RNCOS report titled, ‘Indian Medical

Device Market Outlook to 2017’.

FDI INFLOWS

MEDICAL TOURISM

Health tourism is

gaining momentum in

India. It could become

a size US$ 5 billion

business by 2015.

MEDICAL TOURISM

With the finest and experienced specialists and

technological edge along with latest equipment and

state-of-the-art infrastructure, Indian health tourism

industry is gaining momentum.

The industry in India is also expected to record

revenue worth US$ 1 billion per annum, growing at

around 18 per cent and is expected to touch US$ 2

billion by 2015.

MEDICAL TOURISM

India has witnessed

an influx of patients

from Africa, CIS

countries, Gulf and

SAARC nations,

Pakistan, Bangladesh

and Myanmar, who

mainly come for organ

transplant,

orthopaedic, cardiac

and oncology

problems.

MEDICAL TOURISM

Kerala has the potential to become the hub and most

preferred destination for health tourism with highly

qualified doctors and some of the best hospitals and

resorts in the country,

MEDICAL TOURISM

Kerala is

the fastest

growing

tourism

destination

in India.

Last year, 1

million

foreign and

10 million

domestic

tourists

visited the

state.

GOVERNMENT INITIATIVES

According to the Department for Industrial Policy andPromotion (DIPP) the total estimated FDI inflow intoIndia in the hospitals and diagnostics sector for theperiod April 2000–April 2011 was around Rs. 6000 crore.

The Government of India has allocated Rs 3,000 crore(US$ 482.32 million) in the 12th Five-Year Plan (2012–17) for development of the medical device sector

Moreover, 100 per cent FDI is permitted for health andmedical services under the automatic route. Also, theDepartment of Health Research has decided to set up aMedical Technology Assessment Board to evaluate allkinds of Medical Technologies.

MAJOR POLICY AND PROMOTION IMITATED BY

DIPP

National Rural Health Mission (NRHM):-NRHM have contributed to reducing the maternal mortality rate (MMR), infant mortality rate (IMR)

Automatic FDI:- Allowed up to 100%.

Priority status:-Priority to proposals of greater social relevance such as hospitals, life saving drugs and equipment.

National Urban Health Mission (NUHM):- To address the healthcare needs of slum dwellers across urban India; there are nearly 4.26 crore slum dwellers spread across 640 towns and cities in India.

Rise in funding for the sector:- The government has increased the plan allocation for public health spending to USD 5.96 billion in 2011–12 from USD 4.97 billion in 2010–11. Further, the Ministry of Health and Family Welfare has decided to increase health expenditure to 2.5% of GDP by the end of the 12th Five-Year Plan, from the current 1.4%.

Encouraging policies:- reduction in import duties , higher depreciation and other tax incentives.

Reduction in customs duty:- Customs duty reduced to 5% from 25%,

MAJOR CONTRIBUTORS

Trivitron Healthcare with India Value Fund Advisors (IVFA) to financeits next phase of growth. IVFA has invested Rs 150 crore (US$ 24.12million) for a minority stake in the company.

IDFC Alternatives has invested Rs 125 crore (US$ 20.10 million) inMedi Assist Healthcare.

Cadila Pharmaceuticals Ltd (CPL) has decided to invest another Rs100 crore (US$ 16.08 million) on expansion, upgradation andmodernisation of its manufacturing unit at Samba in Jammu district.

Apollo Hospitals and Medtronic Inc are to collaborate to bring aninnovative, affordable and portable haemodialysis system in India.

Medtronic intends to develop and manufacture key components of thishaemodialysis system in India which will be ready for commerciallaunch in 2016

OPPORTUNITY IN THIS SECTOR

The growth rate of Medical tourism in India during the

course of 2009-2012, is remarkable and records around

27%.

India has a large population which is still not covered till

date under any sort of medical and health insurance

Presently there is a huge requirement and demand of

Hospitals both tertiary care and specialty care

India though a developing nation still prominently holds a

large rural and semi rural areas having deficiency of

Medical aids, doctors, physicians, medicines, nurses in

totality Medical and health care facilities.

Challenges

Global Internal

Uncertainties regarding current

reforms, policies, rules and

regulations

Depth knowledge of local

market, culture, management

styles, financial and managerial

control

Privatization in health care

industry

other lucrative and competing

destinations

Post establishment related

operational issues

Missing Roadmap

High cost and long gestation

period

Deteriorating value of Rupee

Lesser Insurance cover

Division of actual availability

and requirement of facilities

Rural and Urban India Disparity

FINDINGS

Indian health care industry projects as a

great sector and attracts FDI as a huge

ocean of opportunities.

FINDINGS

•Best sector to invest money is Hospitals which

come under Indian health care industry offering

them huge and bulk profits.

HEALTHCARE INDUSTRY CATERS TO ONE OF THE MAJOR

FINANCE RELATED ISSUE OF RETURN ON INVESTMENT AS IT IS

MUCH BETTER AS COMPARED TO ANY OTHER NATION, WHICH

CAN ADD ‘A FEATHER IN THE CAP’.

SUGGESTIONS

THE LOCAL GOVERNMENT SHOULD SUPPORT THE FDI

TO HAVE A POSITIVE AND GOOD EFFECT.

FOREIGN INVESTORS MAY PLAN FOR JOINT VENTURES

AND THEY SHOULD BE SUPPORTED FOR THIS OPTION.

COST OF MEDICAL TREATMENT AND REGULAR CHECKUPS IN

INDIA IS MUCH LOWER AS COMPARED TO OTHER DEVELOPED

NATIONS WHICH DEFINITELY GIVES A POSITIVE APPEAL TO FDI.

OUR SYSTEM SUFFERS FROM POOR AND DELAYED TREATMENTS

WHICH CAN CAUSE SITUATIONS OF LIFE AND DEATH SO INVESTORS

HAVE AN GOLDEN OPPORTUNITY TO GUARD, HELP AND FACILITATE

THE MEDICAL AND HEALTH CARE INDUSTRY AND PROVE THEIR

WORTH AS RELIABLE, COST EFFECTIVE AND BEST FACILITATORS.

CONCLUSION

There are many factors present in our Medical and

health care sector serving as innumerable

opportunities

BASICALLY INCLUDING

Demand and supply,

Bridging the gap between demand and supply,

Increasing per capita income,

Increased rate of returns,

Changing Consumer Behaviour

CHALLENGES AHEAD

Non supportive attitude of local government,

Local or private players,

Typical environment,

Deteriorating value of rupee

DRIVING FORCE

Billions of population act as a driving force to FDI

in Indian Health care industry.

This huge population promises great opportunities

to all the FDI and investors abroad as well as

domestic thus need of the hour is

NEED OF THE HOUR

Focus on the Indian healthcare Industry and make

the best out of it and give the public right to healthy

living..

CLEARLY EVIDENT

Medical treatments in India are lower as compared

to other developed nations thus our people should

be given better treatment and medical facilities at

affordable prices within the boundaries of our

country.

TO END ON A POSITIVE NOTE

Economic development of our country would boost

up through the impact of increasing Foreign Direct

Investment in Indian health care sector.

FOR A WONDERFUL AUDIENCE &PATIENT

HEARING……………