Private Healthcare Delivery Sector in India 2022

Market insights
In India, the healthcare scenario started developing by the end of 2010 and as of December 2021, almost 87% of services are provided by the private sector, making it a major stakeholder. Moreover, the success of teleconsultation-based services in India promotes opportunities in terms of infrastructure and participation from the private healthcare sector. In terms of revenue, the private hospital sector was valued at INR 13,000.66 Bn in FY 2021. It is expected to reach INR 33,299.68 Bn by FY 2027, expanding at a CAGR of ~17.01% during the FY 2022 - FY 2027 period. The sector recorded cumulative foreign direct investments (FDI) to the value of almost INR 2,044.03 Bn between April 2000 and December 2020. In this, the drug and pharmaceutical sector had the highest investment value of more than INR 1,286.98 Bn.

Segment insights:

The private healthcare delivery sector has three major segments - the private hospitals, private diagnostics, and pharmacy retail sectors. The private hospital sector was the largest segment, having a market share of ~76.88% in FY 2021. The market share of the private diagnostics segment is estimated to increase notably to reach ~13.39% by FY 2027.

The private hospital sector plays a crucial role in delivering healthcare services in India. High disposable income (capital saved or spent after income tax deduction) in urban and rural areas, growing population, and changes in disease profiles fuel the market.

Increased healthcare expenditure and life expectancy, rise in income levels, advanced diagnostic test offering, increase in lifestyle-related diseases, and major government initiatives are the key drivers for the private diagnostics sector. Diagnostic services are primarily provided at the lowest price globally. Therefore, the rise of preventive healthcare and wellness, along with increased reliance on evidence-based treatment has fuelled the sector’s growth.

The pharmacy retail market has grown rapidly in the past few years. Factors such as population explosion, growing burden of chronic diseases, rise in patient pool, and improved affordability, accessibility, and authenticity are the key drivers of the business. Also, increased internet penetration and technological advancements facilitated the adoption of online retailing.

Impact of COVID-19:

COVID-19 has had a massive impact on the private healthcare delivery sector in terms of business operations and financial performance. The implementation of the strict lockdown led to a rapid decline in the number of patients in private hospitals, as well as diagnostic centers. The cancellation of elective surgeries and the closure of outdoor patient departments (OPDs) have caused a severe reduction in industry revenue. Furthermore, travel restrictions and the closure of inter-state borders created hurdles in the supply chain and logistics. However, strategies, including digital transformation, implementation of regulatory framework, enhanced collaborations between public and private hospitals, and improvement in the awareness of health insurance have helped in the sector’s recovery.