Press Trust of india

Healthcare sector may touch Rs 8.6 tln by FY22: Report

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Mumbai, May 13 (PTI) The healthcare industry is expected to grow annually at 16-17 per cent to reach to Rs 8.6 trillion by FY22 on the back of the Centre’s Ayushman Bharat scheme which if implemented successfully can  go a long way in meeting the severe shortage of healthcare infrastructure, say a brokerage report.

The significant interest seen in acquiring Fortis Healthcare from multiple players both domestic as well as international ones including non-healthcare companies clearly signifies the attractiveness of the domestic healthcare industry, says the report.

“We believe the key reasons for this interest are the shortage of healthcare infrastructure in the country, including bed capacity, medical practitioners etc, and government’s mega plan of expanding healthcare reach across the country through Ayushman Bharat scheme,” ICICI Securities said in a weekend note.

Hospitals are expected to grow at 16-17 per cent CAGR to reach to Rs 8.6 trillion by FY22 from Rs 4 trillion in FY17. That means if the above scheme is implemented successfully, healthcare delivery market can grow multi-fold, the report added.

Interestingly, the present strength of doctors in the country can handle about double the current beds considering the ratio of beds per doctors in other emerging nations and also global average.

“We believe the Ayushman Bharat scheme can provide significant growth opportunity for hospitals with a potential addressable market of Rs 50 trillion, though the successful implementation of the scheme has to be seen,” it noted.

Looking at the infrastructure shortage in the sector as a growth opportunity, the report notes that the country has just 0.7 beds per 1,000 people compared to the global average of 2.7 and the WHO recommendation of 3.5 beds. This is the key reason for hospitals to be in continuous expansion mode.

In terms of manpower, the country has just 0.7 physicians and 1.7 nurses per 1,000 people compared to the global average of 1.4 physicians and 2.9 nurses respectively.  Therefore, there is significant untapped opportunities.

The ambitious Ayushman Bharat targets to provide healthcare coverage of Rs 5 lakh each for 100 million families. If implemented successfully, the scheme will be one of the largest government-funded healthcare schemes globally with an addressable market opportunity of Rs 50 trillion.

Implementation of such a large plan will be challenging and time-consuming but if successful it can provide huge growth potential for the healthcare companies, the report said.

The industry also has been facing several challenges lately on pricing and margins front. Considering the government focus on providing low-cost healthcare services to the poor, these challenges are expected to continue.

However, despite these challenges, we believe the opportunity is significant for the industry to grow. To overcome such pricing challenges, hospitals should focus on diversified speciality mix rather than single therapeutic area, as diversification can lower the impact of such risks, says the report.

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