What does the Future hold for Indian Healthcare?

The government has an unambiguous trajectory to achieve the target of $5 trillion economy mark by 2024-2025. Will healthcare play a significant role in achieving this target?

One forty million Indian households are expected to enter the middle class in the next decade and will drive a two-fold increase in healthcare consumption according to 'The India Life Sciences Report 2019' published by Bain in collaboration with CII. And much of the incremental demand coming from metropolitan and developed rural.

The report also says that the use of disease management tools could result in $8.5 billion in additional drug sales by 2024. It also showcases the unique opportunity that the boom in digital health presents for the life sciences industry, which is now at an inflexion point.

Increase in Disease Burden

"India Life Sciences Report 2019 substantiates what has been previously forecast by healthcare experts and service providers. India has a massive disease burden, and the rise in life expectancy has also led to an increase in chronic disease instances. Since the increase in disease burden is inevitable, it is essential to increase healthcare expenditure accordingly. Home healthcare is all set to play a critical role in serving the rising demand. Further, our existing institutional healthcare services are already overburdened. Hence, digital technology-based home healthcare providers are the best option for those without access to general health services," says Meena Ganesh, MD and CEO, Portea Medical.

Bain and CII surveyed more than 300 doctors across India. The study found that a striking majority–79 per cent, said they find it challenging to keep pace with the breadth and evolution of disease and treatment protocols.

Nearly 30 per cent of them said they feel uneasy about the future, considering that it will become more challenging to deliver high-quality care in the next five years. What is of concern was that more than 85 per cent of doctors said that a more significant proportion of their patients have chronic diseases compared to five years ago.

The report also states that several doctors are looking for multiple types of support to manage this complexity. Almost 85 per cent of doctors is upgrading their clinical skills and 62 per cent of doctors looking to upskill their staff.

Local Innovations to Drive Growth?

Further, the boom in digital health in India will steer the evolution of the life sciences industry and amplify its positive impact on the quality of care. Amongst internet consumers, currently, 140 million individuals are healthcare browsers, while only 10 to 20 million are online health buyers. "Due to an increase in affordability, demand will outweigh the supply. Local innovations will drive this growth," says Dr Manjiri Bakre, CEO of OncoStem, a Bangalore based start-up.

Ayushman Bharat and Healthcare

An SKP's whitepaper titled," India's National Health Protection Scheme: Ayushman Bharat – Growing Opportunities in Affordable Healthcare" states that healthcare providers will benefit the most from schemes like PMJAY. "The healthcare delivery sector would be the largest beneficiary by volume, as hospital capacity needs to be built up significantly and rapidly to service the added influx of patients," says the report.

Penetration of healthcare insurance has almost doubled between FY 2013-17 across urban and rural India, witnessing an upward trajectory.

Corporate Investments

The digital health segment saw more than $500 million of venture capital investments in 2018, underlining this trend. New digital models emerging across the healthcare and life sciences value chain will shift profit pools and patient behaviours. The new digital players emerging across the value chain -providers, pharmacies and diagnostic centres-will also disrupt the industry.

Arushi Jain, executive director of StayHappi Pharmacy, says that there are conflicting signs of recovery in the healthcare sector. "The current economic downturn has considerably affected the start-up space. Investors are carefully choosing the companies and projects before allotting the funds. However, the pharmacy segment saw an investment of over $500 million last year. The venture capital funding has been favourable to the sector due to the inevitability and demand. The pharmacy companies have strived hard to identify newer strategies to allure consumers. They develop complex generics to cope up with the price fluctuations seen with the generic drugs," says the 25-year-old entrepreneur.

The Discrepancy between Supply and Demand

Samara Mahindra, CEO of Carer, an oncology start-up has a different viewpoint. "If healthcare spending is predicted to double by 2030, we will experience a wide discrepancy between supply and demand with the given scenario. Pharmaceutical prices may have to be slashed, and a requirement for massive integration of technology to reach a larger market is foreseen. If it's the upper-middle-income households driving the spend, I see companies delivering precision medicine and personalised care holding the fort. Therefore it could be a boom for health tech and health service businesses. It will eventually come down to the survival of the fittest and their ability for scale and impact."

Not an Easy Road

The new IMF Chief, Kristalina Georgieva, recently pointed out that emerging market economies such as India are experiencing an even more pronounced effect of the global downturn.

Further, India has already moved down ten places to rank 68th in a global index that measures competitiveness, as it fared poorly in most parameters such as infrastructure, the adoption of information, communications and technology (ICT), financial markets, skills and innovation capability compared to last year. The country could not even keep pace with many small but firmly positioned nations such as Colombia, Azerbaijan and Turkey, showed the Global Competitiveness Report 2019, released by the Geneva-based World Economic Forum (WEF) on October 9.

Does the widespread Deceleration mean that Growth will Fall?

Mahindra notes that "While we are witnessing an economic downturn, healthcare is one industry that is usually not as affected as the rest. "Having said that, it doesn't mean that the industry is recession-proof. Factors depend very much on the type of healthcare start-up, what need is it fulfilling (level of criticality) and the size of the company. While various funding opportunities might be curbed, there is still an immense amount of liquid capital available for healthcare start-ups that are relevant and high impact. It will eventually come down to the survival of the fittest and its opportunity for growth and impact."

Does the sector get enough government support?

The government has come out and made declarations on steps that need to be initiated to take the economy ahead and to get growth back on track.

India is a vast nation and would take time to implement any new policy. Many experts believe that banks are still not ready to lend and open up their balance sheets. A lot of problems mires PSU banks, and for them to release funds is going to take some time.

How do you put the nuts and bolts in place?

Healthcare sector requires land and labour reforms to come in quicker. The government is also doing a lot from a skills standpoint, but it needs to be more accelerated.