April 2008

Investment and Financing in Healthcare Sector

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Background

The Indian healthcare sector is on a high-growth trajectory propelled by unparalleled domestic growth, increasing public awareness and growing global interest in India's delivery capabilities. The government's focus on making healthcare a priority sector, increasing penetration of health insurance, rising per capita income and increased incidence of lifestyle related diseases is resulting in an increase in the patient base. The sector is currently estimated at about US$ 30 billion and is expected to grow at a CAGR of 12-15% out for the next 10-15 years.

According to industry estimates, over next 6 years about US$ 78 billion worth of investment would be required in the Indian healthcare sector.  However, the government spending in the healthcare sector still lags behind other developing nations. According to WHO, government spending on healthcare in 2004 amounted to 24.8% of the total health expenditure in India, as compared to 45.3% in Brazil and 49.4% in South Korea. As a result, private sector participation in this sector is crucial to meet the shortage of quality healthcare facilities

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