September20,2017
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
1) India’spercapitahealthcareexpenditureisoneofthelowestintheworld:privatepercapitaexpenditurewas$188in2014andpublicpercapitaexpenditurewas$81,foratotalof$269—about3%ofthepercapitaexpenditureintheUS.
2) India’spopulationishighlyunderservedintermsofhealthcare,withlessthanonedoctorandonehospitalbedavailableper1,000people.
3) Indians’out-of-pockethealthcareexpenditureisoneofthehighestintheworld,withsome62%oftotalhealthcarecostspaidforbyIndianconsumersthemselves.
4) TheIndiangovernmenthasimplementedapolicytoprovideuniversalhealthcoverageforIndiansby2020,andhaslaidoutspecificgoalsforvariousaspectsofthehealthcaresectorinordertoachievethis.
Healthcare Tech Startups in India,
Part 2: Putting Digital
Health Services in Context
Deborah Weinswig
Managing Director
FGRT
US: 917.655.6790
HK: 852.6119.1779
CN: 86.186.1420.3016
September20,2017
2
DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
TableofContentsTableofContents............................................................................................................................................2
ExecutiveSummary.........................................................................................................................................3
Introduction....................................................................................................................................................4
TheSizeandScaleoftheIndianHealthcareSector..........................................................................................4
CharacteristicsofIndia’sConsumerHealthcareSector....................................................................................61.India’sPopulationAppearstoBeAgingSlowly,butSeniorsAreGrowinginNumber.................................62.India’sPopulationIsHighlyUnderservedintheHealthcareSector.............................................................73.India’sOut-of-PocketHealthcareExpenditureIsOneoftheHighestGlobally............................................84.IndiaHasaLargeRuralPopulation...............................................................................................................9
WhattheIndianGovernmentIsDoingforHealthcare....................................................................................10
WhatWeThink..............................................................................................................................................10
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
ExecutiveSummaryIndia’seconomyisgrowingrapidly,butanumberofchallengesarehinderingprogressinvarioussectors,includinghealthcare:
1. India’sseniorpopulationisgrowinginabsolutenumbers(itcurrentlystandsat77million),althoughitremainsarelativelysmallproportionofthetotalpopulation(about6%).
2. India’spopulationishighlyunderservedintermsofhealthcare,withlessthanonedoctorandonehospitalbedavailableper1,000people.
3. Indianspaysomeofthehighestout-of-pocketcostsforhealthcareintheworld.Some62%ofthepopulation’stotalhealthcareexpenditureisnotcoveredbyinsuranceandisnotreimbursed.
4. About67%ofIndiansliveinruralareas.Thishastraditionallylimitedmanyconsumers’accesstocertainkindsofhealthcareservicesthatareviableonlyinareasofhighpopulationdensity.
SeveralIndianstartupsarecreatingsolutionstoaddressIndia’suniquehealthcareproblems,andthegovernmentisworkingtomakehealthcareaffordableandaccessibletomorepeople.ThegovernmentplanstoprovideuniversalhealthcoverageforIndiansby2020,increasepublichealthcarespendingatthenationallevel,widenstatebudgetsallocatedtohealthcareandgrowthehealthcareworkforceinIndia.
Indianhealthcaretechstartupsarecreatingnichesolutions,manyofwhichcenteronpreventivecareandconvenience.ButtogainglobalrecognitionandhelpsignificantlyreduceIndia’shealthcarecostburden,startupsneedtocreatecurativesolutions.Toencouragethedevelopmentofthese,theIndiangovernmentmightconsiderprovidingbenefitsspecificallydesignedtosupportcapital-intensivehealthcarestartups.
Source:iStockphoto
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
IntroductionIndiahasapromisinghealthcaresectorwithanumberofinnovativestartupscreatingcutting-edgesolutionsthataddresschallengesinhealthcareprovision.WeexaminedsomeofthenotablestartupsinfiveemerginghealthcaretechcategoriesinourfirstreportintheHealthcareTechStartupsinIndiaseries.Inthis,oursecondreportintheseries,weconsiderthesize,scaleandcharacteristicsofIndia’shealthcaresectorandwhatthegovernmentisdoingtopromoteitsdevelopment,andofferourtakeonthesector.
Indiaiscurrentlythesecond-fastest-growingeconomyintheworld,andtheInternationalMonetaryFund(IMF)estimatesthatitwillgrowby7.2%thisyear.Butintermsofhealthcare,thecountryfaresratherpoorly.Ithasoneofthelowesthealthcareexpenditurespercapitaandoneofthehighestout-of-pockethealthcareexpenditurespercapitaintheworld.Thereisasignificantshortageofmedicalpersonnel,too,withlessthanonedoctorforevery1,000people:theWorldHealthOrganizationrecommendsa1:1,000doctor-to-populationratio.
Indiaalsohasoneoftheyoungestpopulationsintheworld,buttheseniorcohortisswellingrapidly.Seniors,whomwedefineasthoseaged65andolder,formednearly6%oftheIndianpopulationin2016,andthatproportionwillincreaseto8.5%by2030,basedonUnitedNations(UN)data.ThatmayseemlikearelativelylowproportioncomparedwithcountriessuchasJapan,whereolderpeopleconstitutemorethan26%ofthepopulationandnumber34million,butintermsofabsolutenumbers,India’sseniorpopulationissignificantlyhigher,at77million.
TheSizeandScaleoftheIndianHealthcareSectorAsisthecasewithotherconsumer-drivensectorsinIndia,thehealthcaresectorisvastandlargelyunorganizedinthecountry.Whilemodernmedicine,alsotermedallopathy,dominateshealthcareacrossthecountry,alternativemedicinesystems,suchashomeopathy,andIndianmedicinesystems,suchasAyurveda,SiddhaandUnani,arealsowidelyusedinthecountry.
HealthcareexpenditureinIndiahasbeengrowingsignificantly.Between2008and2016,privatehealthcareexpendituregrewbyaCAGRof10.5%,to$80billion,andpublichealthcareexpendituregrewbyaCAGRof18.1%,to$53billion,accordingtoestimatesfromTechSciResearchandBMIResearchandtheIndiaBrandEquityFoundation(IBEF).
BasedonthefiguresshowninthegraphbelowandtheWorldBank’sGDPdataforIndia,privatehealthcareexpenditureinIndiarepresentedabout3.5%ofGDPin2016andpublichealthcareexpenditureabout2.3%.Thelatterfigurelookssomewhathigh,giventhattheIndiangovernmenthasstatedthatitsexpenditureonhealthaccountedfor1.1%ofGDPin2015.
Whicheverofthesefiguresweuse,Indialagsdevelopedeconomiesinspendingonhealthcare.WorldBankdataindicatethatUSprivatehealthcareexpenditurerepresentedabout8.9%ofUSGDPin2014andpublichealthcareexpenditureabout8.3%,whileUKprivatehealthcare
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
expenditurerepresentedabout1.5%ofUKGDPandpublichealthcareexpenditureabout7.6%inthesameyear.
Figure1.India:PrivateandPublicExpenditureonHealthcare,2008vs.2016(USDBil.)
Source:TechSciResearch/BMIResearch/IBEF
India’spercapitahealthcareexpenditureisoneofthelowestintheworld.Below,wecompareittothepercapitahealthcareexpenditureinselectedlargeglobalmarketsandotherBRICnationsinordertoprovideasenseofscale.
IntheUS,forexample,privatepercapitahealthcareexpenditurewas$5,032in2016andpublicpercapitaexpenditurewas$4,860,totaling$9,892,accordingtodatafromtheOrganisationforEconomicCo-operationandDevelopment(OECD).
InIndiain2014(thelatestyearforwhichdataareavailable),privatepercapitahealthcareexpenditurewas$188andpublicpercapitaexpenditurewas$81,totaling$269—equivalenttojust3%ofhealthcareexpenditurepercapitaintheUS.
Figure2.SelectedCountries:PrivateandPublicHealthcareExpenditureperCapita,2016(USD)
*Latestavailabledataarefrom2015forRussia,from2013forBrazil,andfrom2014forChinaandIndia.Source:OECD
36
14
80
53
PrivateSector PublicSector
2008 2016E
5,032
974 872 856 718 526 445 324 188
4,860
3,6263,320
4,695
3,801
825549 409
81
US France UK Germany Japan Russia* Brazil* China* India*
Private Public
CAGR=10.5%
CAGR=18.1%PublichealthcareexpenditureinIndiaconstitutesanestimated2.3%ofGDP,whereasitrepresentsabout8%ofGDPintheUSandtheUK.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
InIndia,privatefirmsinthehealthcaresectorreceivedsomeofthehighestinvestmentfundingcomparedwithfirmsinothersectorsuntil2016,whentherewasaslowdown.Accordingtogovernmentstatistics,foreigndirectinvestmentinflowsintotheIndianhealthcaresectordecreasedby21%,to$1.6billion,intheyearendedFebruary2016.Manyanalystsattributethisslowdowntostartupsbeinginbetweenfundingstages,andmanyexpectthesectortoseeincreasedfundingthisyear.
CharacteristicsofIndia’sConsumerHealthcareSectorWhilethehealthcaresectorisreceivingsignificantattention,thereareseveralchallengesuniquetoIndiathathealthcaretechprovidersmustaddresswhencreatingsolutions.Theseincludethecountry’sgrowingseniordemographic,inadequatehealthcareresources,highout-of-pockethealthcarecostsandlargeruralpopulation.
1.India’sPopulationAppearstoBeAgingSlowly,butSeniorsAreGrowinginNumberIndiaappearstohavearelativelyyoungpopulationcomparedwithmanyofthelargeeconomiesoftheworld.Onlyabout6%ofIndianconsumerswereaged65andoverin2016,accordingtoUNdata,andevenin15years,thatproportionwillnotchangesubstantially,giventhescaleofIndia’spopulation(currently1.3billion).Inabsolutenumbers,however,thenumberofpeopleaged65andoverisprojectedtogrowfrom77millionin2016to128millionin2030.
Source:iStockphoto
Overthesameperiod,thegrowthinChina’sseniordemographicwilllikelybemoredramatic.Peopleaged65andoverconstituted10.1%oftheChinesepopulationin2016,andthatproportionwillgrowto17.1%in2030.Inabsoluteterms,thenumberofseniorsinChinaisprojectedtojumpfrom142millionin2016to246millionin2030.
Meanwhile,Japanisforecasttohaveoneofthefastest-agingpopulationsintheworld,asseniorsconstitutedoveraquarter(26.6%)ofthetotalJapanesepopulationin2016andareprojectedtoform30.3%ofthetotalpopulationin2030.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Amongthecountriesshowninthegraphbelow,BrazilistheonlycountryasidefromIndiathatseemstohaveaslowlyagingpopulation,withtheseniordemographicexpectedtogrowfrom8.2%ofthetotalpopulationin2016to13.6%in2030.
Figure3.SelectedCountries:AdultsAged65+(LeftAxis,Mil.Individuals;RightAxis,asaPercentageofTotalPopulation)
Source:UN
2.India’sPopulationIsHighlyUnderservedintheHealthcareSectorHealthcareresourcesinIndiaarecurrentlyinadequatetoservetheneedsofthepopulation.
TheWorldHealthOrganizationstatesthatatleastonedoctorisneededtoserve1,000peoplesufficiently.Indiahadnotmetthisratioby2014(latestdataavailable).Itlagsmanyothercountriesintherelativenumberofhospitalbeds,too.
142.1
76.9
48.4
33.9
19.9 17.4 17.1 12.5 12.1
245.9
128.0
72.2
36.8
27.222.0
30.6
16.2 15.5
10.12
5.81
15.03
26.56
13.79
21.27
8.25
19.3518.35
17.06
8.46
20.37
30.30
19.33
26.79
13.57
23.90
21.96
0
5
10
15
20
25
30
35
0
50
100
150
200
250
China India US Japan Russia Germany Brazil France UK
65+(2016) 65+(2030) 65+%(2016) 65+%(2030)
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Figure4.SelectedCountries:HospitalBedsandDoctorsper1,000People,2014
Country HospitalBeds Doctors
India 0.5 0.7
Brazil* 2.3 1.9
UK 2.7 2.8
US 2.8 2.6
China 3.6 1.7
France 6.2 3.3
Germany 8.2 4.1
Russia 8.8 4.2
Japan 13.2 2.4
*Brazildataarefor2012.Source:WorldBank/OECD
InordertoreachtheWorldHealthOrganization’srecommendedlevels,thenumberoftraineddoctorsinIndianeedstogrow,andforthattohappen,thenumberofmedicalcollegesinthecountryneedstogrowconsiderably.Currently,thereare426medicalcollegesinIndia,offeringatotalof63,835seatstopursueabachelor’sdegreeinmedicine(calledanMBBS),accordingtonewswebsiteIndia.com.
3.India’sOut-of-PocketHealthcareExpenditureIsOneoftheHighestGloballyOut-of-pockethealthcareexpendituresarepaymentsforhealthcaremadebyconsumersthemselves,includingpaymentsthatmaynotbereimbursedbyinsurance.WhileIndiahasoneofthelowesthealthcareexpenditurespercapitaglobally,ithasoneofthehighestpercapitaout-of-pocketexpendituresproportionally.Out-of-pocketspendingaccountsforasubstantial62%oftotalhealthcareexpenditureinIndiaduetothefactthathealthinsurancecoverageisnotverycomprehensiveinthecountry.Government-runclinicsandhospitalsexist,butthecountrydoesnothaveanationalhealthinsurancepolicyorauniversalhealthcaresystem—andmosthealthcareisprovidedbyprivatelyruninstitutions.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Figure5.SelectedCountries:Out-of-PocketExpenditureasaPercentageofTotalHealthcareExpenditure,2014
Source:WorldBank
4.IndiaHasaLargeRuralPopulationIndia’seconomyisgrowingstrongly,andtheIMFestimatesthatGDPgrowthinthecountrywillhit7.2%thisyear.However,urbanizationlevelsremainrelativelylowinIndia:in2016,nearly67%ofthepopulationlivedinrurallocations,comparedwith43%inChina.
ThisdispersalofthepopulationhastraditionallymitigatedagainstaccesstohealthcareprovisioninIndia,asacriticalmassofpeopleinonelocationistypicallynecessarytojustify,say,buildingahospital.However,somehealthcareservicesareleveragingnewtechnologiestoconnectpatientsandhealthcareprovidersdigitally,andthereforebetterserveconsumersinruralareas.
Figure6.SelectedCountries:PercentageofTotalPopulationthatLivesinRuralAreas,2016
Source:WorldBank
62.4%
45.8%
32.0%
25.5%
13.9% 13.2% 11.0% 9.7%6.3%
India Russia China Brazil Japan Germany US UK France
66.9%
43.2%
25.9% 24.5%20.3% 18.2% 17.2%
14.1%
6.1%
India China Russia Germany France US UK Brazil Japan
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
WhattheIndianGovernmentIsDoingforHealthcareChangesinthehealthcaresectorcancontributetotheongoingdevelopmentofIndia,andtheIndiangovernmenthasimplementedapolicytoprovideuniversalhealthcoverageforIndiansby2020.Thegovernmenthaslaidoutspecificgoalsforvariousaspectsofthehealthcaresectorinordertoachievethis.Forexample,ithasoutlineditsgoaltoincreasepublichealthcarespendingfrom2015’slevelof1.1%ofGDPto2.5%ofGDPby2025.PrivateresearchagenciesTechSciandBMIResearchestimatethatpublichealthexpenditureinIndiawas$53billionin2016,representing2.3%ofGDP.
Thegovernmentalsohopestoincreasehealthcarespendingatthestateleveltomorethan8%ofthebudgetforeachstateby2020andtodecreasehouseholdspendingonhealthcareby25%by2025.
Inaddition,theIndiangovernmentaimstoincreasethehealthworkforceinIndiaandimprovethecountry’stechnologyinfrastructureinordertoenableittomovemedicalrecordsonlineby2025.
WhatWeThinkIndia’shealthcaresectorhasreceivedsignificantglobalattention,butitisriddledwithchallengesthatmustbeaddressedbeforeanyimpactfulchangecanbeeffected.Forexample,inordertoincreasepublichealthcareexpenditure,thegovernmentmayhavetodecreasespendingelsewhereorsomehowraisesubstantialcapital.Andtoincreasethenumberofhealthcarepersonnel,thegovernmentneedstogrowthenumberofstudentsintraining.
Authoritiescanalsoencourageinnovationinthehealthcaresector.ManyofIndia’shealthcarestartupsfocusoneitherpreventivecareorprovidingconveniencetoconsumers,butcompaniesinthesectorneedtoinnovatewithnewproductsthattreatmajorconditionsinordertoreducetheoverallcostofhealthcareinthecountry.Thegovernmentneedstocreateastrongersupportsystemforstartupsthathavethepotentialtoprovideinnovative,cost-effectivesolutionsthatcanbescaledandhaveapositiveeffectontotalhealthcarespending.
Healthcarecompanies,suchasthosethatdevelopdrugs,tendtorequiresignificantinvestmentintheearlystagesandtobreakevenonlymuchlater;thisisincontrasttocompaniesinotherconsumer-drivensectors.TheIndiangovernmentalreadyprovidesbenefitssuchastaxbreakstostartupsacrosssectors,butitmightconsiderhealthcarestartupsonacase-by-casebasisandprovideadditionalbenefitstothosethatshowpotential.Suchbenefitsshouldencourageinnovatorstocreatenewsolutionsandhelptakethesectorforward.
Inthenextreportinthisseries,wefeatureexcerptsfromourinterviewswiththefoundersoftwoIndianhealthcarestartups,GrowFit’sJyotsnaPattabiramanandPorteaMedical’sMeenaGanesh.
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DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
DeborahWeinswig,CPAManagingDirectorFGRTNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comSwaroopraniMuralidharResearchAssistant
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