Background Information on Indian Healthcare Sector

Indian Economic Growth

  • India has been growing annually at an average of 8.8% in the last four years (2003-04 to 2006-07)
  • It registered the highest growth of 9.6% in 2006-07 – the highest in the last 18 years.
  • Inflation in currently high in India touching 12.63% (August 21, 2008)
  • The 2008 budget saw an allotment of Rs. 16, 534 crore to the healthcare sector, an increase of 15% from the previous year.
  • Currently, the government spending on healthcare in 0.9% of India’s GDP. The government desires to reach a target spend of 2 – 3 % of its GDP by 2012. (source: CII-McKinsey study on ‘Health in India’)


Population statistics in India

  • India is the second most populated country in the world, with population of over 1 billion.
  • It registers a growth of 2% per year.
  • India has a population of more that 300 million in the middle class.
  • Medical Insurance penetration in India is at 5% and more than 70% of the total healthcare expenditure is borne out of pocket.


Other Information

  • According to the WHO 2005 statistics for Health Systems (which highlights the healthcare facts and figures of relevance to key Asia Pacific countries and compares them to some of the world’s most developed countries), India, China, and Malaysia clearly stand out as having a significantly low number of beds, physicians and nurses for every 10,000 people in their respective countries. As a result, we expect to see exponential growth of the healthcare industry in these three countries while the more developed countries will focus on reining in the healthcare costs and improving quality.
  • Public spending on health in India is amongst the lowest in the world (about 1% of GDP), whereas its proportion of private spending on health is one of the highest. Households in India spend about 5–6% of their consumption expenditure on health (NSSO). The cost of services in the private sector makes it unaffordable for the poor and the underprivileged.
  • According to a CII-Mckinsey & Company countrywide study of 2002, infectious diseases will take a back seat and lifestyle diseases will form the major chunk of illnesses in India.
  • In 2007 alone, lifestyle diseases accounted for 27% of the total disease afflictions in the year; second only to acute diseases (36%). (source: ICRIER Survey)

Indian Healthcare Sector: Tremendous Opportunity for Growth

Indian Healthcare industry

  • India's healthcare sector has been growing rapidly and estimated to be worth US$ 40 billion by 2012, according to Pricewaterhouse Coopers in its report, 'Healthcare in India: Emerging market report 2007'. Revenues from the healthcare sector account for 5.2 per cent of the GDP, making it the third largest growth segment in India.
  • The sector's growth will be driven by the country's growing middle class, which can afford quality healthcare. Over 150 million Indians have annual incomes of more than US$ 1,000, and many who work in the business services sector earn as much as US$ 20,000 a year (as on 2008). Today, at least 50 million Indians can afford to buy Western medicines-a market only 20 per cent smaller than that of the UK.
  • The growing purchasing power of Indian patients is revealed in the increased business of air ambulance services. Around 365 airliftings worth several millions of rupees happen in Delhi in a year on average.
  • If the economy continues to grow faster than the economies of the developed world, and the literacy rate keeps rising, much of western and southern India will be middle class by 2020.
  • To meet this demand for healthcare services and infrastructure, the country needs US$ 50 billion annually for the next 20 years, says a CII study. India needs to add 2 million beds to the existing 1.1 million by 2027, and requires immediate investments of US$ 82 billion.
  • Funds in the sector have been largely private. In fact, it is believed that the private sector provides 60 per cent of all outpatient care in India and as much as 40 per cent of all in-patient care. It is estimated that nearly 70 per cent of all hospitals and 40 per cent of hospital beds in the country are in the private sector, says PWC.
  • At least 30% of the healthcare medical market segment is occupied by the value / economy segment.

 

Medical equipment and IT

  • With the potential of the healthcare sector being what it is, ancillary industries such as healthcare equipment and information technology in healthcare are also witnessing a spurt.
  • The soaring growth projections have prompted foreign medical equipment makers to float Indian subsidiaries -- 30 of them received import clearances in 2007 alone.
  • Investments into the medical and surgical instruments segment amount to US$ 115.29 million over the period August 1991 to April 2007. A recent FICCI-Ernst & Young study has predicted 15-20 per cent growth for the Indian medical equipment market and estimated market size to be about US$ 5 billion by 2012.
  • Hospitals have realised that information technology (IT) can be an effective tool towards efficient systems. According to a report by Springboard Research, India has the fastest growing healthcare IT market in Asia, with an expected growth rate of 22 per cent, followed closely by China and Vietnam. In fact, the Indian healthcare technology market is poised to be worth more than US$ 254 million by 2012.


Medical Tourism

  • The attraction of high quality healthcare facilities at competitive costs has been instrumental in a large number of foreign arrivals to access healthcare services in India. Going by the current pace with which this segment has been growing, the CII-McKinsey study estimates that revenues from this segment could touch US$ 2.2 billion by 2012 (from the current figure of US$ 333 million). (2008)
  • Indian hospitals are fast becoming the first choice for an increasing number of foreign tourists. India's growing reputation as a major medical tourism destination is attracting more and more visitors from Gulf countries with many travel agents now offering packages combining treatment with a vacation.

Philips’ Positioning in the Healthcare Industry

  • Historically, Philips was among the top three players in the healthcare equipment market and continues to enjoy this position today.
  • Philips in India employs around 4000 employees of which 281 employees are from the healthcare sector.
  • Philips Healthcare in India operates in the diagnostic imaging segment including CT, MRI, X-rays, cardiovascular system, nuclear medicine, PET-CT, and ultrasound imaging systems, and is also a significant player in patient monitoring. Outstanding image quality and reliability, backed by an excellent application and customer support network, has made Philips Healthcare a preferred choice of clinicians and one of the leading suppliers of diagnostic imaging systems. Philips is the clear leader in cathlabs segment with the most comprehensive range of innovative cardiology solutions in India.
  • Philips Healthcare in India grew by 21% in 2007. Philips has supplied the MRI, CT scan and Cardiovascular systems as well as the latest Patient Monitoring Systems and Ultrasound to a number of renowned private and public hospitals throughout the country.
  • The Philips HeartStart Defibrillator has been sold to major governmental institutions, leading domestic airlines and private companies for installation in their premises.
  • Philips revolutionized the medical systems industry with the introduction of the 256-slice Brilliance iCT scanner. Its introduction has benefited not only patients, but radiologists and administrators as well as physicians in terms of results analysis, time savings and hassle-free usage.
  • In India, the first Ambient Experience for 1.5 Tesla MRI was installed at Apollo Hospitals, Hyderabad in 2007
  • Philips is collaborating with Artemis Health Institute, Gurgaon, India in its worldwide research and development efforts. This collaboration will allow Philips to get real time scientific data from India, which can be used for the product development and upgrade in various imaging modalities like PET CT, MR and Cardiac CT.
  • Philips also has a R&D centre, Philips Innovation Campus (PIC) at Bangalore where a team of about 1000 engineers and researchers work on healthcare technologies for emerging markets, especially India.
  • Philips has introduced the SureSigns VM3 patient monitor and the cost-effective Ultrasound HD15 system in India; products specifically designed for India and catered to meet the demands of the various small to mid-sized clinics across the country.
  • Philip already enjoys leadership position in India’s cardiovascular market .With the acquisition of Alpha X-rays Technologies, Philips will now enter the economy /value segment and this will further reinforce leadership position in this important business segment. This acquisition also establishes Philips India’s Industrial footprint in Healthcare.

 

According to Mr. Anjan Bose, Senior Director & Business Head, Philips Healthcare, Philips Electronics India Limited, “The future of healthcare is one of the most pressing global issues of our time. It’s clear we face tough challenges. This reality presents Philips with an enormous responsibility and also a great opportunity for the future.  Philips’ vision is to bring better and earlier screening and diagnosis, more effective patient treatment and an improved ability to manage chronic diseases at home. We want to help shorten hospital stays, reduce costs and improve the quality of people’s lives.”

 

“Philips is a top player in the healthcare market in India and is the leader in patient monitoring, echocardiography and Cardiovascular X-ray market. Our healthcare sector in India has been growing faster than the industry and grew at 21% in 2007. Philips’ high-end MRI, CT scanner, Ultrasound and Cardiac vascular X-ray systems are found in leading hospitals and medical centres around the country. Our value segment offerings in India are designed with a sharp focus on emerging markets and we are committed to leverage Philips’ global expertise to introduce technologically-advanced solutions tailored to the Indian market.”