The Indian healthcare sector is poised for unprecedented growth, with its market value projected to climb from $372 billion in 2023 to $638 billion by 2025, according to a recent study by Bajaj Finserv AMC. Demonstrating a compound annual growth rate (CAGR) of 22.5% between 2016 and 2023, the sector has witnessed a significant transformation fueled by innovation across pharmaceuticals, diagnostics, and hospitals. Over the past decade, a 17.5% CAGR growth has been recorded, signaling a robust trajectory.
Private healthcare spending has seen a sharp rise, especially during and after the COVID-19 pandemic. The hospital market, for instance, expanded from $62 billion in 2020 to $132 billion in 2023. India has also emerged as a global vaccine hub, led by institutions such as the Serum Institute of India and Bharat Biotech. Simultaneously, the diagnostics sector has experienced a digital revolution, with demand for home testing kits surging post-pandemic. The functional foods and personalized nutrition market, growing at 16% CAGR, is expected to reach $12 billion by 2027. Similarly, the fitness and wellness industry, estimated to expand at a 27% CAGR, is likely to achieve a valuation of $12 billion by 2025.
Growth Drivers Shaping the Healthcare Sector
India’s evolving demographics have played a pivotal role in driving the healthcare sector’s growth. Life expectancy, projected to rise from 67 years in 2021 to 84 years by 2045, and an aging population are anticipated to increase demand for healthcare services targeting age-related conditions.
Significant investments have bolstered healthcare infrastructure, especially in Tier 2-6 cities. The number of medical colleges in India has grown 1.8 times over eight years, reaching 758 by FY24. Furthermore, the doctor count has risen by 1.1 times over the past four years, while hospital bed availability is expected to increase by 12 times by 2045. Despite these advancements, India still requires an additional 3 million hospital beds and 1.54 million doctors by 2025 to meet global standards.
Healthcare Expenditure and Insurance Penetration
India’s healthcare expenditure remains lower than other emerging and developed economies, offering significant scope for expansion. Currently, out-of-pocket healthcare expenses constitute 54.8% of the total healthcare expenditure, considerably higher than in countries like the UK (17.1%) or the US (11.3%).
The health insurance market, though underpenetrated, is rapidly expanding. Insurance premium collections have increased from $3.82 billion in FY16 to $13.07 billion in FY24. By 2029, the sector is expected to grow from INR 0.91 trillion to INR 1.5 trillion, with broader coverage anticipated in the years ahead.
Wellness and Medical Tourism: Rising Trends
Lifestyle-related diseases such as diabetes and obesity are contributing to the demand for preventive healthcare products. By 2045, India is projected to have 134 million diabetics, with non-communicable diseases accounting for 63% of deaths. Increased awareness and rising incomes have led Indian consumers to spend more on fitness and wellness than their global counterparts.
The medical tourism sector, currently valued at $7.69 billion in 2024, is another rapidly growing area, expected to reach $14.31 billion by 2029. India remains a top destination due to its affordable yet high-quality healthcare services, with major surgeries costing merely 20% of their equivalents in developed nations.
The Road Ahead
While immense progress has been made, the Indian healthcare sector still has ample room for growth. Investments in infrastructure, expanded insurance coverage, and innovations in preventive care are expected to further propel the industry, securing India’s position as a global healthcare leader.
(Input from various sources)
(Rehash/Ankur Deka/MSM)